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TMI Blog2006 (9) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee worked out the book profits at Rs. 9,89,95,042. While computing this book profits, it started with the figure of net profit of Rs. 9,78,55,461 which was the profit before taxation, as shown in the P L a/c. This profit was arrived at after crediting Rs. 3.06 lakhs as write off/provision and after charging Rs. 109.96 lakhs as additional advisory fee for sale of investments. These two items were classified as extraordinary items in the P L a/c. The profit before extraordinary items amounted to Rs. 1,085.45 lakhs. The AO was of the view that the assessee should have taken Rs. 1,085.45 lakhs as the base figure for computation of book profits, i.e. according to him, the extraordinary items should have been ignored. The explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out that they were all items which were to be appropriated from the profits and hence, any item which was not an appropriation could not be adjusted. Besides relying on the judgment in the case of Apollo Tyres Ltd., the learned counsel relied on the decision of the Nagpur Bench of the Tribunal in the case of Bastar Wood Products Ltd. vs. Dy. CIT [1994] 78 Taxman 126 (Nag)(Mag). Reliance was also placed on the decision of the Hyderabad Bench of the Tribunal in the case of NCS Estates (P) Ltd. vs. Dy. CIT [2002] 125 Taxman 220 (Hyd)(Mag). 5. The learned Departmental Representative emphatically stated that just as the AO does not have the power to tinker with the profit shown in the P L a/c, the assessee also cannot do so. He referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny distinction between P L a/c and P L appropriation account. In fact the Schedule does not speak of the appropriation account at all. It is only as a matter of presentation that most of the companies segregate to reflect as to what has been appropriated where out of the profits earned by them. Otherwise, sub-cls. (a) and (b) of cl. (viii) of Note II in para 3 of Part II of Sch. VI specifically provide that the aggregate amounts set aside or proposed to be set aside to reserves should be distinctly shown in the P L a/c. Similarly, sub-cl. (b) and sub-cls. (a) and (b) of cls. (xii) and (xiii) respectively in Note II of Part II of Sch. VI provide that profits or losses in respect of transactions not usually undertaken or undertaken in excepti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be perceived. It does not say that they are not part of the P L a/c. Similarly, the Guidance Note issued by the ICAI also does not help the Revenue as it merely says that sometimes, appropriation account is included as a separate section of the P L a/c. But, as we have seen earlier, Parts II and III of Sch. VI to the Companies Act do not speak of appropriation account at all. In the light of this discussion, we are convinced that it was in accordance with law for the assessee to have taken Rs. 978.55 lakhs as the base figure to compute the book profits for the purposes of s. 115JB. 7. In the next ground, the assessee is aggrieved against the following three additions/disallowances: (a) Addition of Rs. 3,62,005 on account of delayed pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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