2022 (6) TMI 631 - AT - Income Tax

MAT Computation - Addition of difference between income as per 26AS and as per books - Addition to the book profit while computing the same u/s.115JB of the Act - HELD THAT - It is not the case of the assessee that the income shown in Form No. 26AS was not the assessee's income or was not required to be shown by the assessee in the books of account while computing the profit and loss statement. In other words, the income which was now shown and offered by the assessee as income of the assessee was required to be duly shown by the assessee in the book profit while preparing the accounts, including the statement of the profit and loss account in accordance with the Companies Act, 2013. Once the error was committed by the assessee in preparation of Profit and loss statement by not adding the entire amount shown in 26AS as income of the assessee either on account of omission, inadvertent error or by way of fraud which was otherwise required to be included in the statement of the profit and loss account, then it cannot be said that the said amount which was wrongly or deliberately or otherwise left to be included in the book of accounts, cannot be added to the book profit for the purpose of section 115JB of the Act. In our considered opinion, no person can be permitted to gain from his own mistake either deliberately or intentionally or otherwise done. Giving a pedantic interpretation to the book profit as mentioned in the Explanation would be the antithesis to the purpose, for which it was enacted by the legislature and would result in absurdity and contradictions. Hence amount which was rightfully offered as income by the assessee during the assessment proceedings is also required to be added to the Book Profit for the purposes of section 115JB also - Assessee appeal dismissed.

Summary

Issues:
1. Addition of Rs.30,82,223/- to the book profit while computing u/s.115JB of the Act.

Analysis:
The appeal pertains to the assessment year 2013-14 challenging the addition of Rs.30,82,223/- to the book profit under section 115JB of the Income Tax Act. The assessee contended that the revenue wrongly included the interest amount while calculating the book profit, citing Explanation 1 to section 115JB. The authorized representative argued that only amounts mentioned in Explanation 1 could be added to the book profit, relying on the Supreme Court's decision in Apollo Tyres v. CIT. On the contrary, the Departmental Representative supported the lower authorities' decision, emphasizing a significant difference between income as per 26AS and books. The Commissioner upheld the addition, stating that the difference would affect the book results and thus, the Supreme Court's decision in Apollo Tyres would not apply.

During the assessment proceedings, the Assessing Officer requested the assessee to reconcile the income appearing in Form 26AS. The assessee offered the income of Rs.30,82,223/- under the normal computation of income, acknowledging the difference between income as per 26AS and books. This amount was added to the total income and the book profit of the assessee. The assessee argued that the amount from Form 26AS, once offered as income, should not be added to the book profit as per section 115JB. However, the Tribunal held that if an amount required to be included in the profit and loss statement was omitted due to error, fraud, or deliberate action, it must be added to the book profit. The Tribunal emphasized that gaining from one's mistake should not be allowed, and a strict interpretation of book profit would defeat the legislative purpose, leading to absurdity. Therefore, the Tribunal dismissed the appeal, upholding the addition of Rs.30,82,223/- to the book profit for section 115JB purposes.

In conclusion, the Tribunal dismissed the appeal filed by the assessee, upholding the addition of Rs.30,82,223/- to the book profit for the assessment year 2013-14 under section 115JB of the Income Tax Act. The decision was based on the principle that income offered by the assessee, even if mistakenly omitted from the profit and loss statement, must be included in the book profit calculation to prevent gaining from one's errors and to align with the legislative intent of section 115JB.