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TMI Blog2015 (2) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 32AB of the Act for Rs. 1,96,117/- which, as per the A.O. pertained to previous year, was not allowed. 3. There were also other aspects on the admissibility of the deduction, but as the same is not the subject matter relating to the question of law formulated, we need not discuss the same. It appears that against the assessment order, the matter was carried in appeal before the Commissioner of Income Tax and vide order dated 31.3.1994, the appeal was partly allowed, but the relevant aspect is that, in the appeal, the contention of the assessee for admissibility of deduction under section 32AB for the amount of Rs. 1,96,117/- was accepted. The matter was further carried in appeal before the Tribunal and the Tribunal vide order dated 8.9.1999 did not interfere with the said part of the decision in appeal. Under the circumstances, the present appeal before this Court under section 260-A of the Act. It may be recorded that the appellant had preferred appeal on two grounds formulated as the questions of law. However, when the appeal came to be admitted by this Court, following question was formulated by this Court. "Whether the Appellate Tribunal is right in law and on facts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a ship or aircraft which before the date of acquisition by the assessee was used by any other person, if it was not at any time previous to the date of such acquisition owned by any person resident in India; (iii) "new machinery or plant" includes machinery or plant which before its installation by the assessee was used outside India by any other person, if the following conditions are fulfilled, namely :- (a) such machinery or plant was not, at any time previous to the date of such installation by the assessee, used in India; (b) such machinery or plant is imported into India from any country outside India; and (c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee; (iv) "Tea Board" means the Tea Board established under section 4 of the Tea Act, 1953 (29 of 1953). (3) The profits of business or profession of an assessee for the purposes of sub-section (1) shall be an amount arrived at after deducting an amount equal to the depreciation computed in accordance with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this sub-section if such assessee gets the accounts of such business or profession audited under such law and furnishes the report of the audit as required under such other law and a further report in the form prescribed under this sub-section. (5A) Any amount standing to the credit of the assessee in the deposit account shall not be allowed to be withdrawn before the expiry of a period of five years from the date of deposit except for the purposes specified in the scheme or in the circumstances specified below :- (a) closure of business; (b) death of an assessee; (c) partition of a Hindu undivided family; (d) dissolution of a firm; (e) liquidation of a company. Explanation.-For the removal of doubts, it is hereby declared that nothing contained in this subsection shall affect the operation of the provisions of sub-section (5AA) or sub-section (6) in relation to any withdrawals made from the deposit account either before or after the expiry of a period of five years from the date of deposit. (5AA) Where any amount, standing to the credit of the assessee in the depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 of the Companies Act, 1956 (1 of 1956); or (ii) where the sale or transfer of the asset is made in connection with the succession of a firm by a company in the business or profession carried on by the firm as a result of which the firm sells or otherwise transfers to the company any asset and the scheme continues to apply to the company in the manner applicable to the firm. Explanation.-The provisions of clause (ii) of the proviso shall apply only where- (i) all the properties of the firm relating to the business or profession immediately before the succession become the properties of the company; (ii) all the liabilities of the firm relating to the business or profession immediately before the succession become the liabilities of the company; and (iii) all the shareholders of the company were partners of the firm immediately before the succession. (8) The Central Government may, if it considers it necessary or expedient so to do, by notification in the Official Gazette, omit any article or thing from the list of articles or things specified in the Eleventh Schedule. (9) The Central Government may, after making such inquiry as it may think fit, direct, by notification in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme of section 32AB, the profit of business or profession in respect of any company is to be computed in accordance with Part II and III of the Schedule VI of the Companies Act, 1956 and such accounts are required to be audited and the auditor's report is to be produced, and as observed earlier, after such reports are produced, as per sub section (3), the amount relating to item No.1 (i) to (vii) is to be given separate treatment and thereafter, the figure is to be arrived at for the purpose of claiming benefit under section 32AB. In our view, generally, it can be said that when the profit and gain as per the Books of Account of the company prepared and duly audited by the auditor are certified, the figure arrived at of the profit of such company is to be accepted save and except the different treatment to be provided to certain items as identified in clause (i) to (vii) of section 32AB of the Act and the AO will have no power to sit in appeal or to further scrutinize the admissibility of any item as if the income earned for the revenue expenditure or any other business expenditure, because it can be said that the AO has to go by the Books of Account duly certified by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion newly set up, or a source of income newly coming into existence, in the said financial year, the previous year shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending with the said financial year." 10. On conjoint reading of the aforesaid provision of sections 3, 4 read with the definition of the assessment year, it can be said that for earning of profit from business or profession, the relatable period would be the respective period of assessment year. If any profit on business or profession is earned by any company during the period of respective assessment year on the basis of which the return has been filed based on the Books of Account duly certified by the auditor after audit, the AO has to consider the said figure and except for the items provided under sub section (3), different treatment cannot be given to any other items which are forming part of income earned or business expenditure or any other expenditure which may be relevant for the purpose of accounting in the Books of Account of the company. However, if, for any profit which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the Apex Court, as per the above referred decision, has ruled that save and except the circumstances as mentioned in the explanation to sub section (1A) of section 115J, the AO has no power to act behind the entry of Books of Account or to alter the figure of profit from any business or profession. He therefore, submitted that the AO will have no jurisdiction to examine as to whether profit earned out of any transaction for the preceding year, if accounted, can be considered for assessment year in respect of which return has been filed. 14. There cannot be any different view than the view taken by the Apex Court in the above referred decision for the applicability and the scope and ambit of section 115J of the Act, but the relevant aspect is that the facts of the said case cannot be equated with the facts of the present case, inasmuch as it was not a matter where any entry in the Books of Account for showing profit related to the profit earned in the preceding year than the assessment year or to say in other words rather beyond the time span of the assessment year. Hence, the said decision is of no help to the respondent. 15. In view of the aforesaid, we find that w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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