Book profit must be computed strictly in accordance with the audited accounts prepared under the Companies Act, and no adjustment beyond those expressly specified in Explanation [1] of section 115JB is permissible; accordingly, the addition of CSR expenditure to book profit was unjustified and directed to be deleted.

59. [2025] 125 ITR(T) 556 (Amritsar – Tribunal)

DCIT vs. Jammu and Kashmir Power Development Corporation Ltd.

I.T.A. NOS. 364, 385 & 386/ASR/2023

A.Y.: 2016-17 to 2018-19

Section 115JB DATE: 15.05.25

Book profit must be computed strictly in accordance with the audited accounts prepared under the Companies Act, and no adjustment beyond those expressly specified in Explanation [1] of section 115JB is permissible; accordingly, the addition of CSR expenditure to book profit was unjustified and directed to be deleted.

FACTS

The assessee-company was engaged in the generation and sale of power mainly to Government, in the State of Jammu and Kashmir. It filed its return of income and also filed two sets of computations of total income, one under normal provisions and another under MAT provisions.

The amount of CSR under section 37(2) (i.e. 2 per cent of average net profit of preceding three years) was computed at ₹5.99 crores and had remained as a provision in the balance sheet.

The Assessing Officer