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2016 (1) TMI 1501 - ITAT CHANDIGARHMAT computation u/s 115JB - disallowance of prior period items in the net profit of the company for the purpose of working out the book profit of the company u/s 115JB - whether Prior Period Expenses are to be adjusted to the net profit to arrive at the book profits? - HELD THAT:- As per Schedule –VI, Part –II and the prescribed Accounting Standards, net profit for the current year is to be arrived after adjusting prior period items. In the present case the undisputed fact is that the Net Profit shown in the profit & loss account has been arrived at after reducing the prior period expenses - this Net Profit, is in compliance with Schedule-VI Part-II of the Companies Act and the prescribed Accounting Standard, i.e. AS-5. No adjustment, on account of prior period expenses, is required to be made to the same. Moreover, even as per Explanation—1 to section 115JB, no adjustment on account of prior period expenses is required to be made to the net profits reflected in the profit and loss account of the assessee. Therefore we hold that no adjustment of prior period expenses is to be made by the assessee to arrive at the book profits for the purpose of levying tax u/s 115JB. Decided in favour of assessee.
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