TaxTMI 
TaxTMI 
2016 (1) TMI 1501
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....llowance as confirmed by the CIT(A) is against the judgment of Delhi Bench of the ITAT in the case of ACIT Vs. UFLEX Ltd. as reported in 55 SOT 43 and of the Mumbai Bench of the ITAT in the case of Shivshahi Punarvasan Praklp Ltd. Vs. ITO as reported in 135 ITD 51 (Mum). 3. Brief facts of the case are that the assessee is in the business of manufacturing mosquito coils, with its unit located at Samba, J&K. During the impugned Assessment year the assessee was chargeable to tax as per the provisions of Section 115JB of the Income Tax Act and paid taxes on its book profits. During assessment proceedings the AO noted that as per computation of income, the assessee had added following amounts, while arriving at total income. Prior Period items 46,64,504/- Interest on PLA 3,635/- Interest on TDS 6050/- The AO further noted that these amounts had not been added while computing the book profit u/s 115JB of the Income Tax Act. The AO accordingly added these to the total income of the assessee and recomputed the book profits u/s 115JB of the Income Tax Act. 4. Before the Ld. CIT....
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....amounting to Rs. 46,64,504/- to the net profits of the assessee u/s 115JB the AR reiterated the arguments made before the Ld. CIT(A) and further relied on the following judicial decision. 1. CIT Vs. Khaitan Chemicals & Fertilizers Ltd. (2008) 307 ITR 150(Del) 2. CIT Vs. RTCL Ltd. ITA No. 612/2009 dt. 28/03/2012 3. Gulf Oil Corporation Ltd. Vs. ACIT (2007) 112 TTJ (Hyd) 138 4. Riddhi Siddhi Gluco Biols Ltd. in ITA No. 3234/Hyd/2007 dt. 29/12/2011. Ld. DR on the other hand relied upon the order of the CIT(A). Ld. DR further relied upon the decision of the Kerala High Court in the case of Sree Bhagawathy Textiles Ltd. Vs. ACIT 342 ITR 244 and stated that after considering the decision rendered by the Delhi High Court in the case of Khaitan Chemicals & Fertilizers Ltd. (2008) 307 ITR 150, the Kerala High Court had held that no adjustment of prior period is to be made to arrive at the Book Profit for the purpose of Section 115JB. 6. We have heard the rival submissions and perused the orders of the authorities below as also the documents placed before us. The only issue to be adjudicated upon is whether for the purpose of calculating book profit u/s 115JB, prior period expenses....
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....epreciation, shall be the same as have been adopted for the purpose of preparing such accounts including profit and loss account and laid before the company at its annual general meeting in accordance with the provisions of section 210 of the Companies Act, 1956 (1 of 1956) : Provided further that where the company has adopted or adopts the financial year under the Companies Act, 1956 (1 of 1956), which is different from the previous year under this Act,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including profit and loss account; (iii) the method and rates adopted for calculating the depreciation, shall correspond to the accounting policies, accounting standards and the method and rates for calculating the depreciation which have been adopted for preparing such accounts including profit and loss account for such financial year or part of such financial year falling within the relevant previous year. Explanation 1.-For the purposes of this section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by- (a) the amo....
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....) of section 115JB by the Finance Act, 2015, w.e.f. 1-4-2016 : (k) the amount of gain on transfer of units referred to in clause (xvii) of section 47 computed by taking into account the cost of the shares exchanged with units referred to in the said clause or the carrying amount of the shares at the time of exchange where such shares are carried at a value other than the cost through profit or loss account, as the case may be; if any amount referred to in clauses (a) to (i) is debited to the profit and loss account or if any amount referred to in clause (j) is not credited to the profit and loss account, and as reduced by,- (i) the amount withdrawn from any reserve or provision (excluding a reserve created before the 1st day of April, 1997 otherwise than by way of a debit to the profit and loss account), if any such amount is credited to the profit and loss account: Provided that where this section is applicable to an assessee in any previous year, the amount withdrawn from reserves created or provisions made in a previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 shall not be reduced from the book profit unless the book profit ....
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....unt the cost of the shares exchanged with units referred to in the said clause or the carrying amount of the shares at the time of exchange where such shares are carried at a value other than the cost through profit or loss account, as the case may be; (iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account. A bare perusal of Explanation 1 to the section reveals that the starting point for calculating the book profit is the net profit as shown in the Profit and Loss account of the assessee. This profit and loss account has to be prepared in the manner prescribed u/s 115JB(2), which states that it should be in accordance with the provision of Part-II of Schedule -VI to the Companies Act, 1956 and should have been prepared by adopting the accounting policies, and accounting standards and methods and rate of depreciation which have been adopted for preparing the final accounts to be laid before the company in its AGM as per section 210. Section 211 of the Companies Act prescribes the Form and content of the Balance Sheet and Profit & Loss Account to be laid before the company in its AGM. Section 211(3A) of the Companies Act st....