March 2010
Company: Book profit: S. 115J of I. T. Act, 1961: A. Y. 1989-90: Book profit as per the accounts prepared in accordance with Parts II and III of Sch. VI of the Companies Act and not as per the accounts approved at the annual general meeting has to be cons
By K. B. Bhujle | Advocate
New Page 1
Reported
:
54 Company: Book profit: S. 115J of I. T. Act, 1961: A. Y.
1989-90: Book profit as per the accounts prepared in accordance with Parts II
and III of Sch. VI of the Companies Act and not as per the accounts approved at
the annual general meeting has to be considered
[Dy. CIT Vs. Arvind Mills Ltd.; 228 CTR 208 (Guj)]
In the A. Y. 1989-90, for the purpose of section 115J of the
Income-tax Act, 1961, the assessee company had worked out the book profits in
the accounts prepared in accordance with Sch. VI, part II and III of the
Companies Act. The Assessing Officer adopted the book profit as worked out in
the P & L a/c as per published audited accounts, approved by the annual general
meeting. The Tribunal accepted the assessee’s claim.
In the appeal filed by the Revenue, the following question
was raised before the Gujarat High Court:
“That the Tribunal has seriously erred in law and on facts
in holding that preparation of P & L a/c in accordance with Sch. VI, part II
and III of the Companies Act, which is different from the P & L a/c approved
at the annual general meeting is permissible”
The Gujarat High Court upheld the decision of the Tribunal
and held as under:
“i) The only requirement of provisions of sub-section (1A)
of section 115J is that the accounts, more particularly, the P & L a/c, for
the relevant previous year has to be
prepared in accordance with Part II and III of Sch. VI of the Companies Act
and accounts so prepared have to be certified by the Chartered Accountant. In
the facts
of the present case, it is not found by any authority that the revised
accounts submitted with revised return of income were not audited. In fact,
the positive averment made by the assessee before CIT(A) remains unrefuted.
ii) In the circumstances, the AO had no powers or
jurisdiction under the provisions of the Act to take a different view of the
matter and had no option but to proceed to determine the taxable profits u/s.
115J as per the said provisions without disturbing the accounts in any manner
whatsoever, including discarding of such accounts, except to the extent
provided in the Explanation to s. 115J. The AO is not vested with any powers
to ignore accounts prepared in accordance with requirements of Parts II and
III of Sch. VI of the Companies Act.
iii) Therefore, the impugned order of Tribunal which holds
so does not suffer from any legal infirmity so as to warrant interference”
