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TMI Blog2010 (8) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... and sub-section (1A) was introduced from assessment year 1990-91 as per which accounts for the purpose of book profit has to be prepared as per Part II and Part III of the Schedule VI of the Companies Act. - stand taken by the assessee upheld. Levy of penalty u/s 271(1)(c) - the book profit had been rightly computed by the assessee with respect to profit and loss account prepared as per Part II and Part III of the Schedule VI of the Companies Act and on that basis there is no income assessable on the basis of book profit. In view of this decision the penalty levied by the Assessing Officer cannot survive and the same had been rightly deleted by the CIT(A). - Decided in favor of assessee. - 1801 & 1802 (MUM.) OF 2005 - - - Dated:- 13-8-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of depreciation on the accounts prepared for the purpose of AGM. The assessee therefore did not pay any tax even on the basis of book profit. The Assessing Officer however in the assessment order dated22-2-1991 computed the total income on the basis of profit and loss account prepared by the assessee for the purpose of approval of the AGM. In the said profit and loss account the net profit before taxation had been shown as Rs. 58,05,481. Assessing Officer therefore computed total income based on the profit shown in the said account and after making certain additions and disallowance under the provisions of the Act at Rs. 51,71,256. He also computed the book profit on the basis of profit declared in the said account and 30 per cent which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income under the normal provisions of the Act was finally determined. The Assessing Officer however in the order dated 3-10-1997 giving effect to the order of Tribunal ignored the above findings and computed the book profit on the same basis as done in the original assessment. The assessee had also filed appeal against the order of CIT(A) dated 23-1-1995 and the Tribunal in the order dated 6-8-2001 in ITA No. 2032/AHD/95 held that the Assessing Officer had not considered the revised profit and loss account without giving any reasons. The Tribunal therefore restore the matter to CIT(A) with a direction to compute the total income under the provisions of section 115J after giving opportunities to both the parties. 3. The assessee dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule VI of the Companies Act. Further it was also submitted that there were no provisions in section 115J for computing depreciation on the same basis on which the depreciation had been computed in the accounts prepared for the AGM. The Learned AR further argued that the provisions for calculating depreciation on the same basis as the one adopted in the calculation of depreciation for the purpose of preparing profit and loss account laid before the Company at AGM was incorporated only from 1-4-1997 in the section 115JA introduced from that date. Prior to the said period, there was no requirement that the depreciation would be on the same basis as in the account prepared for the AGM. The Learned AR referred to the decision of Ahmedabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the relevant assessment year i.e. assessment year 1988-89 there was no provision in section 115J to compute the book profit as per the account prepared in a particular manner. Therefore in our view it was open to the assessee to compute the book profit either on the basis of profit and loss account prepared under the provisions of Part II and Part III of Schedule VI of the Companies Act or as per the annual accounts placed before the AGM. Subsequently amendment was made and sub-section (1A) was introduced from assessment year 1990-91 as per which accounts for the purpose of book profit has to be prepared as per Part II and Part III of the Schedule VI of the Companies Act. The subsequent amendment also supports the stands taken by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total income at Rs. 17,41,644 and also initiated penalty proceedings under section 271(1)( c ). The Assessing Officer after hearing the detailed submissions of the assessee observed that the additions in the regular assessment had been made only on estimate and therefore no penalty was required to be levied in relation to the additions made in the regular assessment. However the Assessing Officer also observed that the assessee had deliberately computed the book profit at nil on the basis of accounts prepared under the Companies Act with a view to evade tax. He therefore levied penalty at the rate of 150 per cent of tax sought to be evaded amounting to Rs. 13,71,412 in relation to total income determined based on book profit. In appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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