TaxTMI 
TaxTMI 
2017 (1) TMI 253
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....ribunal is correct in law in sustaining the action of the Respondent in tinkering the profit and loss account prepared in accordance with the Companies Act while computing book profits under section 115JA of the Act even though the appropriation account appearing below the linewas part of the profit and loss account especially in terms of section 349 of the Companies Act and Accounting standard AS 5? T.C.A.No.1419 of 2007 1. Whether the Appellate Tribunal is correct in Law in concluding that the additions made by the Respondent towards excess depreciation written back and provision for Taxation while computing the book profits in terms of Section 115JA of the Act even though the provisions governing permissible adjustments would not authorise such additions in the computation? 2. Whether the Appellate Tribunal is correct in law in sustaining the action of the Respondent in tinkering the profit and loss account prepared in accordance with the Companies Act while computing book profits under section 115JA of the Act even though the appropriation account appearing below the linewas part of the profit and loss account especially in terms of section 349 of the....
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....1st day of April, 1997 (but ending before the 1st day of April, 2001) shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation; The above sub-clause was inserted by Finance No:2 of Act 1989 with retrospective effect from 1.4.1988 and hence would be applicable to both assessment years in question. 6. The Tribunal was also of the view that the embargo placed on an assessing officer by the Supreme Court in interpreting the provisions of section 115 JA (2) was restricted to the items in profit and loss account, which in this case had not been disturbed except to the extent permissible under the Explanation. Reliance was placed by the Tribunal on the decision of the Coordinate Bench of the Tribunal in the case of Southern Petro Chemicals Limited Vs Deputy Commissioner of Income Tax since affirmed by this Court in T.C. (Appeal) Nos.1109/2004, 1444 to 1445 of 2005 and 872/2010, vide order dated 22.8.2011. 7. As noted earlier, the assessing authority does not refer to any specific clause in the Explanation to Section 115JA while effectin....
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.... have been made in a previous year relevant to the assessment year commencing before 1st April 1988, or (ii) If the reserves have been created or provisions have been made in a previous year relevant to the assessment year commencing on or after 1st April 1988, and have gone to increase the book profits in any year when the provisions of s.115J of the IT Act were applicable. 24.5. This amendment will come into force w.e.f. 1st April 1988 and will accordingly apply in relation to the asst. Year 1988-89 and subsequent years 10. The object of the amendment is to permit the reduction from book profit of any amount withdrawn from reserves or provisions and credited to the profit and loss account upon condition that the book profits for the year in which such provisions or reserves had been created had been correspondingly increased by such reserves or provisions. 11. The Tribunal proceeds on the basis that the adjustment was, in fact, made in terms of sub-clause (i) of the Explanation. However there is no finding as to the satisfaction or otherwise of the condition set out in the proviso thereunder which is fundamental to the adjustment itself. The decision of th....
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....dustry Vs. Deputy Commissioner of Income Tax in T.C.A.Nos.1109 of 2004 etc. batch vide order dated 22.8.2011. The officer shall take note of the same in the proceedings to be completed denovo. We are conscious that the assessment years in question are 1998-99 and 1999-2000. However in the circumstances as seen above, we believe that a remand is called for even at this distance of time. 13. We now address the second question in both appeals. The contention of the learned counsel for the assessee is to the effect that the assessing officer, by effecting the impugned adjustments, tinkeredwith the P and L a/c, which is impermissible. We dont agree. All that the assessing officer had done is to commence application of the Explanation to s.115JA to the book profits, albeit, in an incomplete fashion. Admittedly, the assessee has availed the reduction in terms of sub-clause (i) of the Explanation and it remains to be seen if the condition precedent to availing of the reduction as per the proviso thereto has been satisfied. The exercise has to be carried to its logical conclusion and the error committed by the officer is limited to this aspect of the matter. To label the action of the as....