TaxTMI 
TaxTMI 
2016 (7) TMI 837
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....earned Assessing Officer. 2. The learned CIT(A) erred in holding that the appellant has furnished inaccurate particulars of income in respect of excessive claim of depreciation which was not in accordance with the books of accounts maintained by the appellant as prescribed under Parts II and III of Schedule VI of the Companies Act. 3. The learned CIT(A) further erred stating that the appellant has accepted the decision and no further appeals pending on this matter and hence, it becomes an undisputed matter of furnishing inaccurate particulars of income. 4. The learned CIT(A) erred in observing that the appellant has excessively claimed depreciation knowing fully well that the helipad was never used for its business purposes in the initial year of its claim of depreciation.' 3. We have heard the parties, and perused the material on record. 3.1 The relevant clause of Explanation 1 to section 115JB, where-under only the permitted adjustments to the profit (or loss) as per the profit and loss account, prepared in accordance with Part II and III of Schedule VI to the Companies Act, 1956 could be made, reads as under: 'Special provision for payment of tax by certain companies. 11....
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....bsp; Appropriation: Statutory Reserve 48.82 0.00 Proposed Dividend 0.00 0.00 Dividend Tax for Earlier Year 0.00 23.70 General Reserve 0.00 0.00 Balance carried to Balance Sheet 27,635.29 25,863.14 27,684.11 25,886.84 Basic and Diluted Earnings Per Share (Rupees) 0.84 (32.24) (Refer Note 13 of Schedule 15) Significant Accounting Policies 14 Notes to Accounts 15 Schedules forming part of accounts As 31st March, 2006 (Rs. Lacs) As at 31.3.2006 As at 31.3.2005 Schedule 2 Reserves and Surplus Statutory Reserve As per last Balance Sheet 22,108.82 22,108.82 Add: Amount transferred from Profit and Loss Account 48.82 0.00 22,157.64 22,108.82 General Reserve &nbs....
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....lected in the books of account. To be more explicit, Part I of the said Schedule VI provides that the debit balance in the profit and loss account is shown as a deduction from uncommitted reserves. That, however, is only form of presentation and does not mean that the loss (represented by the debit balance in the profit and loss account) is absorbed by past reserves in the books of account. Further, the assessee has already accepted the adjustment to its' returned book profit, i.e., in the quantum proceedings, and it's explanation on merits is only qua penalty proceedings, which are separate and distinct proceedings and, further, that a wrong claim for deduction would not automatically result in a liability toward penalty. What would save penalty is a plausible explanation (for the claim for deduction), coupled with disclosure of all material facts, i.e., material to the computation of income - in short, a bona fide conduct. The fore-going sums up the assessee's case. 3.3 All that the law obliges the assessee, i.e., to eschew penalty, is to exhibit its' bona fides in making the claim it has per its return. The provision, read with Explanation 1 thereto (which need not be separatel....
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....entation - of which much is made out, the same would reveal or reflect the same figure, i.e., qua a particular aspect, as for example, the loss brought forward. Why, both are supposed to reflect the position - be it of the working results (for the account period) or the state of affairs (as at the end of the account period), only as per the books of account, implying their being in consistence and in agreement therewith. That is, the two (the P&L A/c and the Balance Sheet), though functionally different, designed to yield different information about the reporting enterprise, are only, and only necessarily so, as per the books of account. Reference to one (profit and loss account) in preference to the other (balance-sheet), as does the assessee, is misleading. Could the books of account reveal different figures, whether one may look at the profit and loss account or the balance-sheet, both of which, termed final accounts, are drawn only from the books of account, and are to be read together. This would even otherwise be apparent from a mere browse of the final accounts, reproduced hereinbefore. The balance in the 'Profit & Loss A/c', whether one looks at the said account or the Bala....
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....loss for the immediately preceding year at Rs. 20 (say), and of brought forward balance in the profit and loss account at a profit of Rs. 120/-, so that the balance in the profit and loss account, as per the balance-sheet as at the end of the of such year (or at the beginning of the current year) is Rs. 100/-. Going by the assessee's argument, there would be two sets of figures of profit (or loss) brought forward, i.e., profit of Rs. 120/- and a loss of Rs. 20/-, for the current year as per the books of account. Could it possibly be? Surely not, in-as-much as both profit and loss cannot co-exist, so that the profit or loss brought forward is only the net profit of Rs. 100/-. The accounts bear only one account for the profit or loss, i.e., the 'Profit & Loss A/c', the balance wherein, at any given point of time, reflects the profit or, as the case may be, loss, that is brought forward from one year to the next - the account being prepared annually. A loss (for a particular year) would only go to add to the amount of loss, if any, being carried forward in books or reduce the profit being, likewise, carry forward. When the loss is so adjusted, there is no carry backward of loss, so to....
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....ss/es is to be reckoned, i.e., whether inclusive or exclusive of depreciation, and which stands considered by the Apex Court in Surana Steels (P.) Ltd. v. Dy. CIT [1999] 237 ITR 777 (SC). There is reference to the decision in the case of Peico Electronics & Electricals Ltd. vs. CIT [2011] 339 ITR 506 (Cal) in the assessee's written submissions (to the ld. CIT(A)). Though, in fairness, the said decision was not referred to by the ld. AR while pleading assessee's case, in-as-much as there is no reference to the said decision in the impugned order, we consider ourselves obliged to consider the same. The same stands carefully perused. The same is on a different aspect of the matter, from which therefore no support can be drawn. The issue in that case was whether it is the loss, gross of unabsorbed depreciation (Rs. 1648.74 lacs) or net of it (Rs. 261.04 lacs), that is required to be adjusted/set off for the purpose of deduction u/c (iv) of s. 115 J(1A) (corresponding to clause (iii) of Explanation 1 to s. 115 JB), i.e., for the purpose of computing the book-profit u/s. 115-J (the extant provision). The Hon'ble Court decided in favour of net loss, being lower than the unabsorbed deprec....