2012 (10) TMI 1241 - AT - Income Tax

Summary

Issues Involved:
The judgment involves issues related to assessment under section 115JB, disallowances of various expenses, adjustments in computation of total income, determination of book profits, and levy of interest under different sections.

Assessment under Section 115JB:
The assessee, a manufacturer and trader of cement, filed its return of income declaring 'NIL' income but paid tax under section 115JB. The AO made various disallowances and additions, leading to a demand of Rs. 70,77,340. The CIT(A) held that the AO erred in disturbing the computation of income and deleted most additions except for loss on sale of fixed assets. The CIT(A) directed the restoration of income as per section 115JB at Rs. 1,51,12,20,047. The revenue appealed against this order.

Disallowances and Additions:
The AO made several disallowances totaling to Rs. 17,07,94,505, including disallowances for repairs, maintenance charges, community development expenses, and others. The CIT(A) found that the expenses disallowed would not stand the test of appeal and deleted most additions except for loss on sale of fixed assets. The revenue challenged the CIT(A)'s decision.

Adjustments in Computation of Total Income:
The AO made adjustments to the computation of total income, leading to wrong computation of total income and book profits under section 115JB. The CIT(A) observed that section 115JB is a self-contained code, and no additions or deletions are possible beyond its provisions. The CIT(A) directed the restoration of income as per section 115JB. The revenue raised grounds of appeal against the CIT(A)'s order.

Levy of Interest and Book Profits Determination:
The AO wrongly levied interest under sections 234C and 115WJ, leading to excess interest being charged. The CIT(A) held that the AO erred in not following proper procedures and remanded the matter back for examination. The revenue's appeal was treated as allowed for statistical purposes, and the assessee's cross-objections were dismissed as infructuous.

This judgment highlights the importance of proper assessment procedures, adherence to section 115JB provisions, and the need for thorough examination of expenses and additions before making adjustments to income computation.