TaxTMI 
TaxTMI 
2025 (8) TMI 627
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....as 'ld. CIT (A)] dated 10.01.2024 for Assessment Year 2016-17. 2. Brief facts of the case are, assessee filed its return of income for AY 2016-17 on 30.11.2016 disclosing total loss at Rs. 18,48,04,981/- under normal provisions but paid taxes under section 115JB of the Income-tax Act, 1961 (for short 'the Act') on the income of Rs. 2,37,67,603/-. The case of the assessee was processed under section 143(1) on 08.12.2016 accepting the returned income. The case of the assessee was selected for scrutiny under CASS and accordingly notices u/s 143(2) and 142(1) were issued and served on the assessee through ITBA Portal. In response, assessee furnished relevant information as called for through ITBA portal. 3. Assessee is engaged in the busi....
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....te proceeding, I am constrained to concur with the AO's observation. The fact of the matter is that the appellant had not debited prior period expenses in its P&L account as evident from assessment order and the submissions of the appellant and without the same being debited to P&L account, it cannot be deducted for the purpose of MAT computation as per the Act, as rightly held by AO. 7.3 Further, the appellant in its submission has harped on the decision of its -Jurisdictional High Court (Delhi) in CIT v Khaitan Chemicals & Fertilizers Ltd. [307 ITR 150] pronounced in 2008, where the Court held that prior period expenses/items below the line are a part of the profit and loss account of the company and thus, such expenses below....
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....d Commissioner of Income Tax Appeals (NFAC) has erred in law and on facts in confirming an addition of Rs. 2,14,05,190/- made by the Assessing Officer to the Book profits of the company u/s 115JB of the Income Tax Act, on account of prior period items, with total disregard to the facts and circumstances of the case." 6. At the time of hearing, ld. AR of the assessee submitted that the prior period expenses is part of the book profit declared by the assessee and submitted that the assessee has adjusted the prior period expenditure and for the purpose of section 115JB provided to be considered is the profit before tax as per the Profit & Loss account declared by the assessee. In this issue, he submitted that it is a covered issue as held b....
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....be computed only after deducting the prior period expenses / extraordinary items. We feel that the fundamental flaw that entered into the Assessing Officer's approach was that he was under an impression that the assessee was claiming a reduction in the net profit The assessee had all along contended that the net profit was to be computed on the basis of the profit and loss account which, in turn, was to be in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act. Such a computation of net profit, in view of the prescribed Accounting Standard (AS 5), required the prior period expenses / extraordinary items to be shown separately. This did not mean that because these items were shown separately, they did not c....
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....me is the position with extraordinary items which may be income or expenses. The conclusion that one can arrive at from this discussion is that prior period items and extraordinary items form part of the net profit or loss. 11. Paragraph 15 of AS 5, which has been extracted earlier, makes it clear that the nature and amount of prior period items should be separately disclosed in the statement of profit and loss in a manner that their impact on the "current" profit or loss can be perceived. Two approaches have been indicated in paragraph 19 of the said accounting standard (AS 5). The normal approach is to include prior period items in the determination of net profit or loss for the current period. The alternative approach is to show....