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2015 (6) TMI 27 - AT - Income TaxAddition to the book profit u/s 115JB - Held that - We are not inclined to concur with the finding of CIT(A) who has confirmed the addition of ₹ 33,91,715/- made to book profit u/s. 115JB of the Act. We find that Tribunal in assessee s own case for A.Y. 06-07 allowed the appeal by following the decision of CIT vs. Meghmani Organics Ltd. (2014 (7) TMI 673 - GUJARAT HIGH COURT ), wherein it has been held that material aspect of Tribunal s recording the fact is that amount of ₹ 71 lacs was reduced by assessee passed on after approval of company in its AGM, which was also accepted by the auditors. If that be so, the Assessing Officer thereafter could not have made any further adjustment dehors the provisions of Section 115JA of the Act. Nothing contrary brought to our knowledge on behalf of revenue. Facts being similar so following same reasoning, we are not inclined to conquer with the finding of CIT(A) and Assessing Officer is directed to delete the addition of ₹ 33,91,715/- as discussed above. - Decided in favour of assesse.
Issues Involved:
1. Addition of Rs. 33,91,715 to the book profit under section 115JB of the Income Tax Act. 2. Confirmation of addition of Rs. 35,99,516 for the reversal of provision of income tax to the book profit under section 115JB of the Act. 3. Consideration of credit parts of prior period expenditure and ignoring debit parts. Analysis: Issue 1: Addition of Rs. 33,91,715 to the book profit under section 115JB of the Income Tax Act: The appellant contested the addition, arguing that the CIT(A) erred in law and on facts by confirming the addition. The appellant highlighted various judicial pronouncements to support their claim for deletion of the addition. The assessing officer disallowed prior period expenses claimed by the appellant, stating that they were not matching with the year of earning revenue and lacked proof for the crystallization of the expenditure in the current year. The First Appellate Authority upheld the addition, emphasizing that prior period items are not deductible from book profit. However, the appellant referenced a similar case decided by the ITAT in their favor for the A.Y. 2006-07, where the Tribunal allowed the appeal based on judicial precedents, directing the Assessing Officer to delete the addition. Issue 2: Confirmation of addition of Rs. 35,99,516 for the reversal of provision of income tax to the book profit under section 115JB of the Act: The appellant did not press the issue regarding this addition, leading to its dismissal. However, the assessing officer added back the difference of Rs. 35,99,516 in the book profit, which the appellant claimed was a reversal of excess provision for income tax pertaining to a past period. The CIT(A) confirmed this addition, stating that the appellant failed to establish their claim with records or documents, thereby justifying the addition to the book profit. Issue 3: Consideration of credit parts of prior period expenditure and ignoring debit parts: The appellant argued that the CIT(A) erred in only considering the credit parts of prior period expenditure and ignoring the debit parts. The assessing officer disallowed certain expenses related to prior periods, emphasizing the need to add back certain amounts while arriving at the book profit. The First Appellate Authority confirmed this adjustment, stating that only prior period expenses were not deductible from book profit, while prior period income and other items could not be adjusted. In conclusion, the Tribunal partially allowed the appeal filed by the assessee, directing the Assessing Officer to delete the addition of Rs. 33,91,715 to the book profit under section 115JB of the Income Tax Act based on the reasoning and precedents discussed in the judgment.
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