1998 (9) TMI 672

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....43(1)(a) of the Act. (b) The learned CIT(A) XII erred in confirming that the AO could tax capital receipt under s. 115JA though not taxable under the IT Act, 1961. 2. The CIT(A) XII failed to appreciate that if receipt cannot be brought to tax under the provisions of IT Act, 1961 other than 115JA, it cannot be brought to tax under s. 115JA of the Act. 2. During the previous year under consideration (relevant to asst. yr. 1997-98), the company entered into an agreement with BASF of Germany, whereby BASF would exclusively distribute certain dyes in the whole world except India and USA 'the territory') and the company would not compete with BASF within the territory in respect of such dyes. BASF paid pound sterling....

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.... to the extent of Rs. 33,06,05,633 in respect of receipt from BASF, Germany, included in the 'sale and operating income' is prima facie inadmissible, as not covered by any of the prescribed adjustment under s. 115JA(2) for the purpose of computation of book profits and hence not allowable. Thus the AO made an addition to the above extent under s. 143(1)(a) of the IT Act. The assessee went, in appeal before the CIT(A) against this addition made under s. 143(1)(a). 2.2. The learned CIT(A) after making lengthy discussions agreed with the AO and upheld that addition made by the AO under s. 143(1)(a). Aggrieved, the assessee is on second appeal before us with the grounds mentioned elsewhere in this order. 2.3. The learned counsel f....

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....ion is permitted from the P&L a/c laid before the annual general meeting of the company if such variations are in accordance with Parts II and III of Sch. VI of the Companies Act issofar it applies to the purposes of s. 115JA. The purpose of s. 115JA is to quantify the total income chargeable to tax on a basis other than the basis under which the total income is computed under the normal provisions of the IT Act. Even in such a computation of total income chargeable to tax under s. 115JA there could be more than one view whether the concept of 'income' or a characteristic of income can be lost sight of. In other words if a particular receipt/credit does not bear the characteristic of income whether it could be excluded from the P&L ....