TaxTMI 
TaxTMI 
2014 (8) TMI 1139
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.... 2"The Appellant prays that the order of Ld. CIT (A) on the above grounds be set aside and that of the Assessing Officer be restored". 3"The appellant craves leave to amend or to alter any ground or add a new ground, which may be necessary". 2. Assessee, an individual, filed his return of income on 31. 10. 2005 declaring total income of Rs. 24, 57, 970/-. Assessing officer (AO) finalized the assessment u/s. 143 (3) of the Act, on 24. 12. 2009, determining the total income at Rs. 74, 47, 470/-. Effective ground of appeal is about recomputing the accumulated profits of the company for the purposes of section 2 (22) (e) and reducing the amounts of capital subsidy from the profits of the company. Br....
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.... capital subsidy received by UHPL. 2.2. Aggrieved by the order of the AO, the assessee filed an appeal before the First Appeal Authority (FAA). During the appellate proceedings the assessee filed the new evidences in the form of letter from Joint Director Industries Nashik and Sicom Ltd along with balance sheet and other details to prove the receipt of capital investment subsidy of Rs. 30 lacs by the company. Since these were new evidences, the FAA forwarded the documents to the AO. He furnished the remand report vide letter dated 4/5/2011, wherein the AO accepted the contention of the appellant that capital subsidy of Rs. 30 lacs has to be excluded from the reserves, but the Investment allowance reserves of 1, 33, 159 neede....
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....ial sense had to be considered and not the profits assessable as per the Act, that all the amounts which were in the nature of profits of the company would be part of accumulate profits even if they were to be kept aside for some other purposes under provisions of Act, that mere transferring the profits to special reserves for meeting the provisions of the Act would not take away the character of such amounts being part of commercial pofits, that the taxes paid by company had to be reduced for arriving at commercial profits though the same were not deductible under the Act. He relied upon the decision of the P K Badiani (105ITR642) delivered by the Apex Court and held that the receipts which were part of commercial profits initially would r....
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....ier years as well as current year profits before tax, as reduced by capital investment subsidy of Rs. 30 lacs, Income tax paid of Rs. 3,32,000/-, Dividend distribution tax of Rs. 63, 514/- and prior period expenses of Rs. 5, 85, 474/-and only thereafter to make the addition, to the extent of such accumulated profits, in hands of the appellant u/s 2 (22) (e) of the Act. 2.3. Before us, Departmental Representative (DR) supported the order of the AO. Authorised Repre sentative (AR) referred to remand report sent by the AO to the FAA during the appellate proceeding. He referrred to cases of K.C.Rajan (12 taxmann. com 498), Rajasthan Wires (P.) Ltd. (1 SOT 648), V. Damodaran (2 taxman397), P.K. Badiani (supra) and P.SatyaPr....