TaxTMI 
TaxTMI 
2019 (1) TMI 788
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....the Cross Objection filed by the assessee being C.O. No. 123/KOL/2017. 2. The main issue involved in the appeal of the Revenue relates to the deletion by the ld. CIT(Appeals) of the addition of Rs. 605.23 crores made by the Assessing Officer on account of Capital Reserve while computing the book profit of the assessee-company under section 115JB of the Income Tax Act, 1961 and the same is raised by way of Grounds No. 1 to 4, which read as under:- "1. That the Ld. CIT(A) has erred in law as well as on fact by deleting the addition of Rs. 605,23,24,263/- being the sum credited to Capital Reserve to Book Profit computed u/s. 115JB of the IT Act, 1961. 2. That the Ld. CIT (A) has erred in law as well as on fact that the ass....
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....y of sale of its Wholesale and Retail businesses to TPG Wholesale Private Limited and Airplaza Retail Holdings Pvt. Ltd. (referred to as Acquiring Companies) respectively. The Master Restructuring Agreement and other settlement agreements were entered into by the Company with the Acquiring Companies and its Lenders to effect the said restructuring and COR proposal of the Company. As a result of the said agreement the liabilities to the extent of Rs. 823.20 crores and assets of Rs. 393.78 crores wee taken over by the acquiring companies against a consideration of Rs. 70 crores. The Slump Sale transaction resulted in a Capital Reserve of Rs. 499.42 crores. As a part of the said restructuring some unsecured lenders of the company also....
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.... the AO has no power to recast the audited profit and loss account. The Apex Court's judgments have been recently applied by some courts in various rulings as below: In the case of Forever Diamonds (P) Ltd. vs Deputy Commissioner of Income Tax, Central Circle -I, (Mumbai) (supra) - (order passed on 23-01-2013) it has been held as follows: "The issue raised has already been considered and decided by the Supreme Court In the case of Apollo Tyres Ltd. v CIT [2002] 255 ITR 273/122 Taxman 562 the Supreme Court observed that section 115J provisions of which were similar to those of section 115JB, was introduced in the Income tax Act with a deeming provision which made companies liable to pay tax at least at 30 per cent of book profit shown in....
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...., therefore, be sustained. Therefore, order of Commissioner is set aside and the addition made is deleted". The aforesaid Judgment has been recently affirmed by the Bombay High Court dated August 12, 2015 wherein, it has been held that the issue stands settled by the decision of the Apex Court in Apollo Tyres Ltd v. CIT [255 ITR 273 (SC)), and In Adbhut Trading Co. (e) Ltd.[2012] 338 ITR 94(Bom), the question as proposed does not give to any substantial question of law. Accordingly the appeal was dismissed. In the case of Adbhut Trading Co. (P.) Ltd. [2012J 338 ITR 94 (Bom.), the Hon'ble Bombay High Court held that where accounts are certified by authorities under Companies Act, the Assessing Officer cannot contend that accounts a....
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....nt made by the Assessing Officer on account of the amount in question carried directly by the assessee to Capital Reserve was permissible as per Clause (b) of Explanation (1) to Section 115JB. He has contended that the ld. CIT(Appeals), however, has completely ignored the said provision and deleted the adjustment made by the Assessing Officer by following blindly the decision of the Hon'ble Supreme Court in the case of Apollo Tyres (supra). However, as rightly pointed out by the ld. Counsel for the assessee, the adjustment on account of the amounts carried to any reserves, by whatever name called is permissible as per Clause (b) of Explanation (1) to Section 115JB only if such amounts are debited to the Profit & Loss Account as clearly prov....