The Asstt.Commissioner of Income-tax Circle 3(3) Mumbai.Vs. M/s.Yasheka Impex Pvt.Ltd. 101-B Wing, Mittal Court Nariman Point, Mumbai 400 021.
November, 04th 2014
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IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "G", MUMBAI
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Before Shri B.R.Baskaran, AM and Shri Amit Shukla, JM
ITA No.7452/Mum/2012: Asst.Year 2009-2010
The Asstt.Commissioner of Income-tax M/s.Yasheka Impex Pvt.Ltd.
Circle 3(3) / 101-B Wing, Mittal Court
Mumbai. Vs. Nariman Point, Mumbai 400 021.
PAN : AAACY0293N.
( /Appellant) (×/Respondent)
/Appellant by : Shri Pavan Kumar Beerla
× /Respondent by : Shri J.P.Bairagra
Date of Hearing : 14.10.2014 Date of Pronouncement : 31.10.2014
/ O R D E R
Per Amit Shukla (JM) :
This appeal has been preferred by the Department against the order
dated 22.08.2012 passed by the Commissioner of Income-tax (Appeals)-7,
Mumbai, for the quantum of assessment passed u/s 143(3) for the
assessment year 2009-2010, mainly on the following ground:-
"Whether on the facts and circumstances of the case and in
law, the ld.CIT(A) was justified in deleting the addition made by
the AO of Rs.45,41,120/- to the book profit without appreciating
the fact that the same is being the arbitrary trading loss shown
by the assessee in its books of accounts and the assessee has
suo moto offered the same for taxation in the assessment
completed by the AO u/s 143(3) of the Act."
2 ITA No.7452/Mum/2012.
M/s.Yasheka Impex Pvt.Ltd.
2. The assessee is a company engaged in the business of general
trading, import and export, financing and investments, dealing in property
etc. In the trading of fabric the assessee had shown loss of Rs.45,41,120.
During the course of assessment proceedings, the assessee surrendered the
loss and offered to tax the trading loss to buy peace, as the sales and
purchases of fabrics during the year could not be substantiated. Accordingly,
the Assessing Officer added the loss of Rs.45,41,120 to the total income of
the assessee under the normal computation of income. Further, the
Assessing Officer made the similar addition while computing the book profit
u/s 115JB, against which assessee felt aggrieved.
3. Before the CIT(A) the assessee submitted that the profit and loss
account was prepared by the assessee as per the Companies Act, 1956, and
was adopted by the company in its Annual General Meeting. Hence, no
addition on account of trading loss surrendered during the course of
assessment proceedings can be added in the book profit, which is only
subject to adjustment as per Explanation 1 to sub-section (2) of section
115JB of the Income-tax Act, 1961. Section 115JB(2) is a self-contained
code in itself and no other adjustment can be made, except provided therein.
Reliance was placed on several decisions by the assessee which has been
noted by the CIT(A). The assessee's entire submission has been
incorporated by the CIT(A) at pages 2 and 3 of the appellate order. The
learned CIT(A), after taking note of the assessee's submission and also the
decision of the Hon'ble Apex Court in the case of Apollo Tyres Ltd. v. CIT
[255 ITR 273 (SC)], held that no such addition in the book profit can be made
as the A.O. cannot alter or make any addition beyond envisaged in
3 ITA No.7452/Mum/2012.
M/s.Yasheka Impex Pvt.Ltd.
Explanation 1 to section 115JB(2). Thus, the addition made by the A.O. in
the book profit was deleted.
4. Before us, the learned Departmental Representative, submitted that
the loss surrendered by the assessee was on account of trading loss, which
is part of the profit and loss account, and hence, the same should be taken
into account while computing the book profit u/s 115JB.
5. On the other hand, the learned Counsel submitted that the profit and
loss account prepared in accordance with the Companies Act and as
adopted by the company in general meeting can only be taken as a book
profit for the purpose of section 115JB, and whatever adjustment is required
to be made, the same can be made, only as per Explanation 1 to sub-section
(2) of section 115JB. He thus strongly relied upon the order of the CIT(A).
6. After considering the rival submissions and on perusal of the impugned
order, we agree with the reasoning given by the CIT(A) that no addition is
permitted to be made by the Assessing Officer beyond the specific provisions
as enumerated in the clauses given in Explanation 1 to sub-section (2) of
section 115JB. The Assessing Officer, while computing the book profit of a
company u/s 115JB, can examine the profit and loss account as provided
under the Companies Act, 1956 and his power is only limited to make any
increase or deduction as provided in Explanation 1 to sub-section (2) of
section 115JB. The A.O. do not have any power or jurisdiction to go beyond
the net profit shown in the profit and loss account except to the extent
provided in the Explanation. This proposition of law is well supported by the
4 ITA No.7452/Mum/2012.
M/s.Yasheka Impex Pvt.Ltd.
decision of the Hon'ble Apex Court in the case of Apollo Tyres Ltd. (supra).
Thus, we affirm the order of the CIT(A) and the ground raised by the
Revenue is dismissed.
7. In the result, Revenue's
appeal is dismissed.
Order pronounced on this 31st day of October, 2014.
(B.R.Baskaran) (Amit Shukla)
/ ACCOUNTANT MEMBER Û / JUDICIAL MEMBER
Mumbai; Dated : 31st October, 2014.
/ Copy of the Order forwarded to :
1. / The Appellant
2. × / The Respondent.
3. () / The CIT, Mumbai.
4. / CIT(A)-7, Mumbai
5. , , / DR,
6. [ / Guard file.
/ BY ORDER,
× //True Copy//
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai