9911796707
TMI Blog2015 (1) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... ee as per provisions of law after giving the assessee a reasonable opportunity of hearing. - Decided partly in favour of assessee for statistical purposes. Calculation u/s. 115JB - ITAT confirmed the order of CIT(A) in deleting the addition of ₹ 1.98 crores made by the Assessing Officer while computing the book profit under section 115JB - when the assessee has submitted audit report in Form No. 29B certifying that the profit and loss account has been prepared as per Parts II & III of Schedule VI of the Companies Act then, whether the Assessing Officer has power to contend that the profit and loss account has not been prepared in accordance with the Provisions of Companies Act, 1956? - Held that:- The question been clearly answered in the decision in the case of Adbhut Trading Co. (P). Ltd. (011 (7) TMI 716 - Bombay High Court ), wherein it has been held that in such a situation, it is not open to the Assessing Officer to contend that the profit and loss account has not been prepared in accordance with the provisions of Companies Act, 1956. Therefore we reverse the order of learned CIT(A) in respect of ground No. 2 for A.Y. 2007-08 and allow this ground of appeal of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income tax Act and CIT(A) in confirming the same. 2.2 It is submitted that as the accounts are prepared as per Schedule VI of The Companies Act 1956 read with the Accounting Standards as referred to in section 11 5JB no addition/reduction except as provided in the explanation to subsection 2 to section 11 5JB can be made. Hence, the addition made be deleted. 2.3 It is submitted that the judgment/order referred to by CIT(A) in para 4.3 has no bearing to the facts of this case. 3. Grounds of appeal for A.Y. 2008-09 are read as under :- 1.1 The assessing officer erred in considering following income as Income from other sources instead of Business Income as treated by the appellant and CIT(A) in confirming the same: Rupees (i) Interest Income 44,27,035 (ii) Miscellaneous Income 1,03,226 45,30.261 1.2 It is submitted that classification under heads of income is only for computation of income and not to determine character of income as the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rongly refers to addition made u/s. 14A whereas the issue is relating to depreciation on building. 3.4 Without prejudice to above it is stated that the assessing officer has erred in not reducing the unabsorbed depreciation or business loss whichever is less to arrive at Book Profit. The CIT(A) has not adjudicated on this issue. 4. The appellant craves leave to add, alter, amend or delete any or all the above grounds of appeal, if so advised. 4. As it can be seen from the grounds of appeal for both years are on similar issues except issue relating to the disallowance made u/s.14A in A.Y. 2008-09. During the course of hearing learned Authorised Representative did not press ground No. 2 for A.Y. 2008-09, which is regarding disallowance made u/s. 14A due to smallness of the amount. Therefore ground No. 2 in its entirety is dismissed being not pressed by learned Authorised Representative for the reason of smallness of the disallowance. 5. Rest of the grounds in both the appeals are relating to similar issues. Ground No. 1 relates to the income earned by the assessee by way of interest on FDRs and miscellaneous income, which have been treated to be as income from other sources? by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as income from other sources. He required the assessee to explain as to why this income should not be treated as income from other sources. The reply of the assessee as been reproduced in the assessment order in para 6.3 which reads as under:- Interest income is earned on Bank Fixed Deposits. To keep amounts in the fixed deposits is the normal phenomena of the assessee s business. It is not once in a while surplus fund which is invested. Hence, the nature of its income is business income. 9. The Assessing Officer did not accept such submission of the assessee on the ground that the assessee is not a financial company and earning of interest income is not the business of the assessee. The assessee is engaged in providing facilities to the unit holders and managing building. The surplus funds have been deposited in the bank and interest has been earned on the same. Accordingly he treated the interest income as well as miscellaneous income under the head income from other sources?. Treatment given by the Assessing Officer was challenged in an appeal filed before learned CIT(A). The submissions of the assessee have been recorded by learned CIT(A) in para 3.1 of his order where he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above submissions, it is the contention of the assessee that certain obligations regarding municipal taxes are to be discharged on quarterly basis whereas the assessee collected from the unit holders once in a year. Secondly, Municipal Corporation had increased rateable value of the building on account of which additional demands were raised which were disputed by the appellant and in regard to additional demand the assessee hold various deposits from the unit holders which were parked in FDRs and on this ground the assessee claimed that it is business income? by the assessee. However, learned CIT(A) has turned down this plea of the assessee on the ground that the Assessing Officer has rightly treated this income as income from other sources. Only to the extent of unabsorbed depreciation of ₹ 3,50,181/-, he has accepted the claim of the assessee regarding set off of the same against brought forward business loss. 11. Now before us it is the contention of the learned Authorised Representative that firstly learned CIT(A) has erred in upholding the action of the Assessing Officer regarding taxability of the interest income and miscellaneous income under the head income fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer. He submitted that to the extent of depreciation learned CIT(A) has already accepted the claim of the assessee and as per provisions of section 72 benefit of set off of brought forward business losses against income from other sources? cannot be granted to the assessee. 15. We have heard both the parties and their contentions have carefully been considered. The assessee did not submit details to show that what was the nature of funds, which were parked in the fixed deposits. Before the Assessing Officer also no details were submitted. It was only before learned CIT(A) some written submissions were made, according to which, funds parked in FDRs were relating to the annual collection made by the assessee from its customers, which were to be paid by the assessee quarterly and some funds collected by the assessee from unit holders representing Municipal taxes on account of increase in the municipal rental value which was disputed by the assessee in the writ petition filed before Hon'ble Bombay High Court. In any case, the assessee has parked these funds in FDRs just for the purpose of earning interest income therefrom. Therefore nature of income is just interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y where required) is stated as under :- Loss ₹ 51,44,353/- Add Fringe benefit Tax ₹ 5,750/- Deferred Tax ₹ 8,39,954/- ₹ 42,98,694/- 17. However, the Assessing Officer during the course of assessment proceedings, while computing book profit, came to know that the assessee claimed depreciation in respect of previous 40 years amounting to ₹ 68,41,555/- on the building and the same was debited to the profit and loss account. He noted that Schedule (G) in the Annual Accounts have the following remarks of the Auditor During the year depreciation on building is being provided since 01/06/1968 aggregate depreciation provided is ₹ 68,41,555/- consisting of ₹ 67,53,088/- for earlier years and ₹ 88,467/- for the current years . According to the Assessing Officer assessee was not entitled to claim depreciation and even in respect of computation of book profit u/s. 115JB, the assessee was required to add back the aforementioned amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is necessary that the expenditure claimed in the profit and loss account should have character of expenditure related to the impugned year and as in the present case depreciation does not relate to year under consideration, action of the Assessing Officer was to be upheld. The assessee is aggrieved, hence has filed ground No. 2. 19. It was submitted by ld. AR that the Assessing Officer has wrongly rejected the claim of the assessee on the ground that provisions considered in the decision of Hon'ble Supreme Court in the case of Malayala Manorama Co. Ltd. (supra) were of section 115J and said decision cannot be applied to the provisions of section 115JB. He submitted that relying upon the decision of Hon'ble Supreme Court in the case of Apollo Tyres Ltd. Vs. CIT (255 ITR 273), it was held by Hon'ble Bombay High Court that once accounts are prepared as per Parts II III of Schedule VI of the Companies Act, then the Assessing Officer has no power to contend that the profit and loss account has not been prepared in accordance with the provisions of Companies Act, 1956. He submitted that this position of law has been confirmed in the case of Adbhut Trading Co. (P) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een prepared in accordance with the provisions of Parts II III of Schedule VI of the Companies Act, 1956, and amounts which are to be added as per Explanations of Sub-section (2) are also duly stated in the audit report and finally a loss has been computed at ₹ 42,98,649/-. To this amount, the Assessing Officer has further added a sum of ₹ 68,41,555/-. The question in the present appeal is that when the assessee has submitted audit report in Form No. 29B certifying that the profit and loss account has been prepared as per Parts II III of Schedule VI of the Companies Act then, whether the Assessing Officer has power to contend that the profit and loss account has not been prepared in accordance with the Provisions of Companies Act, 1956. In our opinion this has been clearly answered by Hon'ble Bombay High Court in the aforementioned decision in the case of Adbhut Trading Co. (P). Ltd. (supra), wherein it has been held that in such a situation, it is not open to the Assessing Officer to contend that the profit and loss account has not been prepared in accordance with the provisions of Companies Act, 1956. Therefore we reverse the order of learned CIT(A) in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
