TaxTMI 
TaxTMI 
2016 (1) TMI 499
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.... "CIT(A)") are bad in law and void ab-initio. 2. The Addition made by the AO and confirmed by CIT(A) in book profit of the interest received on tax refund of Rs. 2,50,737/- is incorrect as interest for the year 2010-11 (up to the date of receipt of refund) was already included in income of the Company. The addition is arbitrary, unlawful and against facts. 3. The appellant prays for leave to add, alter, amend or withdraw from any of the grounds of appeal at or before the time of hearing. 2. The facts in brief as culled out from the orders of the lower authorities are that in the revised return of income filed, the assessee declared loss of Rs. 15,32,790/- as per normal provisions of the Income Tax Act, 1961 (hereinafter....
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....tion 115JB of the Act. The learned CIT(A) did not accept the submission of the assessee and sustained the addition made by the Assessing Officer. 3. Before us, the learned Authorized Representative of the assessee reiterated the arguments/submissions made before the learned CIT(A) that the AO cannot alter the book profit except the circumstances permitted under the Income-tax Act. In the written submission filed before us, the assessee submitted that in the return filed for AY 2009-10, the principal amount of refund due was of Rs. 46,61,141. It was further submitted that as the assessee followed mercantile system of accounting, the interest of Rs. 4,66,110 was accrued at the rate of 6 percent per annum for the period from 1st April, 2008....
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....st April, 2010 to November, 2010. The ld AR stated that interest of 1,85,663 was pertaining to the period from 1st April, 2010 to November, 2010, which falls in the assessment year under consideration, so the balance interest of Rs. (4,66,110- 1,85,663=) 2,80,447/- pertains to assessment year 2010-11, as per the mercantile system of accounting followed by the assessee. Firstly, we don't agree with the contention of the assessee that the interest on Income-tax refund was accrued as per mercantile system of accounting. The section 244A of the Act says that where refund of any amount becomes due to the assessee under the Act, he would be entitled to receive interest thereon. For clarity, the relevant part of the section is reproduced as un....
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....refund of the excess. So as per the section 237 of the Act, refund is due to the assessee only when it is determined by the Assessing Officer and the interest on refund would also be due once the refund is determined by the Assessing Officer. In the case of the assessee, the refund was determined in previous year 2010-11, corresponding to assessment year 2011-12 i.e. present assessment year, so the interest also accrued only in assessment year 2011-12 and not in any year earlier to it. Therefore, we hold that the interest of Rs. 4,66,110 accrued in relevant assessment year only. Before the CIT(A), the assessee also duly accepted that it was mistake at lower level in his office therefore, it could not credit the full amount. 6. Now, issue....
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.... power to alter the net profit. In the following two cases, the AO can rewrite the P&L a/c i.e. to say that AO should recalculate the net profit and then follow the adjustments of MAT as usual: (1) If it is discovered that P&L a/c is not drawn up in accordance with Part II and Part III of Sch. VI of the Companies Act. However, the AO cannot disturb the net profit as shown by the assessee where there are no such allegations, fraud or misrepresentation but only a difference of opinion as to whether a particular amount should be properly shown in the P&L a/c or in the balance sheet, (2) If accounting policies, Accounting Standards are not adopted for preparing such accounts and method, rates of depreciation which has been incorrectly adopted f....