2009 (4) TMI 24 - HC - Income Tax

The profit and loss account which was prepared subsequently was in accordance with Parts II & III of Schedule VI, but was different from the profit and loss account approved at the Annual General Meeting - whether such an exercise was permissible? - Applying the ratio of the SC decision, only requirement of Sec.115J is that the accounts has to be prepared in accordance with Schedule VI of the Companies Act and certified by the Chartered Accountants revised accounts are acceptable

Summary

Issues:
1. Discrepancy in the profit and loss account approved at the Annual General Meeting and the one prepared subsequently.
2. Claim of interest payable on disputed excise duty.

Analysis:

Issue 1:
The case involved a discrepancy in the profit and loss account approved at the Annual General Meeting and the one prepared subsequently for the Assessment Year 1989-90. The Assessing Officer contended that only the figure of book profit approved at the Annual General Meeting should be considered for the computation of book profit under section 115J of the Income Tax Act, 1961. The Appellate Tribunal, however, allowed the claim of the assessee, stating that the revised accounts submitted with the revised return of income were prepared in accordance with Parts II & III of Schedule VI of the Companies Act and were audited. The Tribunal held that the Assessing Officer had no jurisdiction to ignore accounts prepared as per statutory requirements, except to the extent provided in the Explanation to section 115J of the Act. The High Court upheld the Tribunal's decision, emphasizing the need for accounts to be prepared in accordance with statutory provisions and certified by Chartered Accountants.

Issue 2:
Regarding the claim of interest payable on disputed excise duty, the Appellate Tribunal relied on a previous judgment in the case of Dinesh Mills, which had been upheld by the High Court. The Tribunal's decision in the current case was consistent with the precedent set by the High Court's judgment in the Dinesh Mills case. Therefore, the issue stood concluded against the Revenue. The High Court dismissed the appeal in favor of the assessee, citing the previous judgment and the consistency in legal interpretation.

In conclusion, the High Court ruled in favor of the assessee on both issues, highlighting the importance of adherence to statutory requirements in preparing financial accounts and the significance of legal precedents in determining tax liabilities.