TaxTMI 
TaxTMI 
2017 (8) TMI 1480
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....holding that the amount of Rs. 43,52,50,000/- is not to be included for calculating book profit u/s 115JB, ignoring that the said amount is a revenue receipt?" 3. Counsel for the appellant Mr. Singhi has taken us to the order of the Tribunal and contended that tribunal has committed serious error in considering the capital receipt whereas it is revenue receipt. He has also contended that the assessee is not entitled for the benefit u/s 115JB, therefore, he has contended that appeal deserves to be allowed. 4. However, counsel for the respondent Mr. Jhanwar has relied upon the following decisions and contended that in view of the Supreme Court decision, the amount received by the assessee is capital receipt. 4.1 In Oberoi Hotel (P) Ltd. vs. Commissioner of Income Tax reported in 1999 103 Taxmann 236 SC wherein it has been held as under:- "11. The aforesaid principle is relied upon in the case of Karam Chand Thapar and Bros's case (supra). Considering the aforesaid principles laid down as per Article XVIII of the Principal Agreement, the amount received by the assessee is for the consideration for giving up his right to purchase and or to operate the property or for getting ....
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....r buying and selling of units by the assessee company can be treated as a speculative business? For this purpose, the Revenue argues that the units purchased by the assessee company from the UTI are shares, therefore, as per Explanation to Section 73 of the Act, the said business of purchasing and selling of shares will have to be treated as a business of speculation. The Revenue in support of this argument, relies on Section 32(3) of the UTI Act which reads as follows : "(3) Subject to the foregoing sub-sections, for the purposes of the Income-tax Act, 1961, -- (a) any distribution of income received by a unit holder from the Trust shall be deemed to be his income by way of dividends; and (b) the Trust shall be deemed to be a company." 9. Relying on the above provision of the UTI Act, the Revenue contends that if the UTI is a company and income from its units is dividend then ipso facto the units will have to be shares, therefore, the business of purchase and sale of units conducted by the assessee company will have to be deemed to be a business in shares which business, according to the Revenue, attracts Explanation to Section 73. On this basis, it is contended that t....
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....977 : [1977]107ITR609(Bom) and Commissioner of Income-tax v. Michel Postal MANU/MH/0141/1977 : [1978]112ITR315(Bom) and the Madhya Pradesh High Court in Commissioner of Income-tax v. Jaswant Lal Dayabhai MANU/MP/0099/1978 : [1978]114ITR798(MP) have taken the view that the receipt on the transfer of goodwill generated in a business is not subject to income-tax as a capital gain. On the other side lies the view taken by the Gujarat High Court in Commissioner of Income-tax v. Mohanbhai Pamabhai [1978] 91 I.T.R. 393 and the Calcutta High Court in K.N. Daftary v. Commissioner of Income-tax that even if no cost is incurred in building up the goodwill of the business, it is nevertheless a capital asset for the purpose of capital gains, and the cost of acquisition being nil the entire amount of sale proceeds relating to the goodwill must be brought to tax under the head "Capital gains". It is apparent that the preponderance of judicial opinion favours the view that the transfer of goodwill initially generated in a business does not give rise to a capital gain for the purposes of income-tax." 4.4 In Rajasthan Spinning & Weaving Mills vs. Deputy Commissioner of Income Tax (2006) 150 Taxman....
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....for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI of the Companies Act, 1956 : Provided that while preparing P&L a/c, the depreciation shall be calculated on the same method and rates which have been adopted for calculating the depreciation for the purpose of preparing the P&L a/c laid before the company at its annual general meeting in accordance with the provisions of Section 210 of the Companies Act, 1956." A perusal of the aforesaid provision goes to show beyond any doubt that any such scrutiny into claim of depreciation while resorting to alternative tax is not permissible by the AO under proviso to Sub-section (2) of Section 115JA, who has to accept the claim of depreciation which has been adopted for the purpose of preparing P&L a/c laid before AGM in accordance with the provisions of Section 210 of Companies Act, 1956, and approved by AGM. We may notice that w.e.f. 1st April, 1997 the assessments are governed by Section 115JA and not by Section 115J. The applicability of Section 115JA stopped after asst. yr. 1990-91. As a matter of fact, the order of CIT as affirmed by the Tribunal is founded on wholly erroneous ....