2023 (8) TMI 677 - AT - Income Tax

Book profit u/s 115JB - addition made towards other comprehensive income with the book profit - HELD THAT - As comprehensive income on account of revaluation of investments and by virtue of which the increase in value of investments taken by assessee as notional income is uncertain income and which cannot be made subject matter of book profit u/s. 115JB of the Act. We find that the CIT(A) has rightly deleted the addition and hence, we confirm the order of CIT(A). The appeal of the Revenue is dismissed.

Summary

Issues involved:
The judgment deals with the issue of whether the addition made by the Assessing Officer (AO) of comprehensive income while computing book profit u/s. 115JB of the Income Tax Act should be deleted or upheld.

Comprehensive details of the judgment:

Issue 1: Addition of comprehensive income to book profit u/s. 115JB

The Revenue appealed against the CIT(A)'s deletion of the addition of Rs. 4,67,02,000 towards other comprehensive income to the book profit. The Revenue contended that the starting point of income for book profit calculation should include comprehensive income as per section 115JB(2A)(a) of the Act. The CIT(A) deleted the addition, citing that comprehensive income, being notional income, should not be added to the book profit. The Tribunal upheld the CIT(A)'s decision, stating that the increase in value of investments leading to notional income is uncertain and cannot be included in book profit u/s. 115JB. The Tribunal referred to relevant CBDT circulars and Indian Accounting Standards to support its decision.

In conclusion, the Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s decision to delete the addition of comprehensive income to the book profit u/s. 115JB of the Income Tax Act.