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TMI Blog2015 (1) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... nies Act and is an assessee under the Income Tax Act, 1961 (for short the I.T. Act). For the purpose of its business, it borrowed quite large amount from the Bank. By 31.03.1996, the proposals for One Time Settlement (OTS) in respect of the amount due, were in existence, but the effort made by the respondent in that behalf did not materialise. Another proposal was mooted on 30.05.1996. It was only on 08.07.1996, that the proposal was accepted and the Bank has agreed to waive interest to the extent of Rs. 5.37 Crores. The respondent has been claiming deduction of the amount representing the interest on the loan, year after year and the same was permitted. In its returns for the assessment year 1996-97, the respondent has reflected the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k profit U/s. 115JA(6) of the I.T.Act? 2. Whether the Appellate Tribunal is justified in not holding that the benefit of waiver of interest as part of acceptance of OTS proposal by the financial institutions accrues to the assessee on acceptance and not on mere initiation and hence liable to be taken into account for determining book profit U/s.115JA(6) of the I.T.Act? 3. Whether the finding of the Tribunal in this behalf that income, on account of acceptance of waiver of interest granted by financial institutions, does not accrue in the year of acceptance is just and proper and is based on material on record? The same was allowed by the Tribunal. Sri S.R.Ashok, learned Senior Counsel for the appellant, submits that though the negotiati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Counsel submits that the very fact that the orders of assessment for the year 1996-97 as well as the order of rectification under Section 154 of the I.T. Act, in respect of the assessment year 1996-97, were passed on one and the same day, discloses the arbitrariness of exercise undertaken by the Assessing Officer. He further submits that the plea of the respondent that the sum of Rs. 5.37 Crores deserves to be treated as capital receipt was only in the context of the accounts maintained under the Companies Act, and it has nothing to do with the assessment to be made under the I.T. Act. Learned counsel submits that the view taken by the Tribunal accords with the judgment of the Honble Supreme Court in Apollo Tyres Ltd. v. Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of OTS was extended to it and a sum of Rs. 5.37 Crores representing the interest, was waived. Since the appellant has availed the benefit of deduction of the amount, over the years, it was under obligation to show that figure, as income. The question was as to whether it should be posted in the returns for the year 1996-97, or the subsequent year 1997-98. It is not as if the returns for both the assessment years, referred to above, were dealt with at one and the same point of time. For the assessment year 1996- 97, in which the amount of Rs. 5.37 Crores was reflected, the order of assessment was passed, on 30.03.1998. It is a different matter that, it is in the form of a prima facie adjustment under Section 143(1) (a) of the I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. Therefore, whenever the power under Section 154 of the I.T. Act is exercised, it should be done in such a way that no violence is done to the order of assessment passed in respect of different years. The manner in which the Assessing Officer has used such a power under Section 154 of the I.T. Act, in the instant case is evident from the fact that he has chosen that device, just to pick up the amount of Rs. 5.37 Crores from the previous assessment year, and to put it in the subsequent assessment year, without even recording any findings as to whether the process has gone wrong at all. The passing of orders of assessment for the year 1996-97 and the order of rectification for under Section 154 of the I.T. Act for the earlier assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The assessing officer thereafter has the limited power of making increases and reductions as provided for in the Explanation to the said section. To put it differently, the 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 Tribunal took note of the judgment of the Honble Supreme Court and held that accounts referable to Section 115J of the I.T. Act must be taken on their face value and once it becomes clear that the income of an assessee determined under the I.T. Act is less than 30% of the book pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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