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2018 (10) TMI 1286 - AT - Income TaxMAT computation - computation of book profits made by the assessing officer under section 115JB - addition of expenditure on repairs and maintenance disallowed under normal provisions - assessee is a corporate entity and has drawn its accounts in accordance with the provisions of the Companies Act - Held that - Undisputed fact is that it has debited aforesaid expenditure in the Profit and Loss account and the adjustment of such a nature, while arriving at book profits, is not envisaged by Explanation 1 to Section 115JB, which as per settled legal position, is a separate and complete code in itself. Upon due consideration, we find that the facts of the present case are squarely covered by case of APOLLO TYRES LTD. VERSUS COMMISSIONER OF INCOME TAX 2002 (5) TMI 5 - SUPREME COURT as held Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to section 115J. The provisions of Section 115JB are on similar lines as the provisions of Section 115J. Therefore, drawing analogy from the ratio of the above cited decision of Hon ble Apex Court, we delete the impugned adjustment u/s 115JB - decided in favour of assessee
Issues:
Adjustment of book profits under section 115JB for Assessment Year 2011-12. Analysis: The appeal concerns the adjustment of book profits under section 115JB for the Assessment Year 2011-12. The Ld. Deputy Commissioner of Income Tax-1(2) framed the assessment for the impugned year, determining the income of the assessee at ?133.23 Lacs under normal provisions. The assessee, a resident corporate entity engaged as a reinsurance broker, filed a return showing income of ?130.34 Lacs. The book profits for Minimum Alternative Tax [MAT] calculation were computed at ?224.51 Lacs, differing from the assessee's computation of ?221.63 Lacs. During assessment, an amount of ?2,24,898/- debited under repairs and maintenance was disallowed for both normal income and book profits under section 115JB, leading to a higher tax liability under MAT provisions. The assessee contested the adjustment before the Ld. CIT(A) but was unsuccessful. The appeal before the Appellate Tribunal challenged the adjustment under section 115JB. The Authorized Representative for the assessee relied on the decision of the Hon’ble Apex Court in Apollo Tyres Ltd. Vs CIT to argue that the Assessing Officer cannot go beyond the net profit shown in the profit and loss account, except as provided in Section 115JB. The Senior DR supported the Ld. CIT(A)'s stand. After considering the arguments and relevant legal provisions, the Tribunal found that the adjustment made by the Assessing Officer while arriving at book profits was not envisaged by Explanation 1 to Section 115JB. Citing the judgment of the Hon’ble Apex Court in a similar context, the Tribunal held that the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account, except as provided in the Explanation to section 115JB. Drawing an analogy from the cited decision, the Tribunal deleted the impugned adjustment under section 115JB and allowed the ground raised in the appeal. As a result, the assessee's appeal was allowed, and the impugned adjustment under section 115JB was deleted. The order was pronounced in the open court on 7th September 2018.
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