9911796707
TMI Blog2012 (3) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... t is bad in law, void ab initio. The assessment order passed u/s. 143(3) dated 05.11.2008 is neither erroneous nor prejudicial to the interest of revenue. (2) On the facts and in the circumstances of the case, the ld. CIT did not appreciate that the impugned loss of ₹ 919.52 lacs debited to the Profit Loss Account of the company is not covered and not required to be added to the book profit under explanation 1 or other applicable provisions of sec. 115JB of the I.T. Act. (3) On the fact and in the circumstances of the case, the ld. CIT did not consider the applicability of the various judgments cited before him wherein it was clearly held that unless it is specifically provided in the explanation(s) to sec. 115JB of the I.T. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss arising out of transfer of investment division was not required to be added back to the book profits as such an adjustment was not contemplated under the scheme of Section 115JB. It was pointed out that the adjustments contemplated under section 115JB are set out in the Explanation 1 to section 115JB. It was also explained that upon transferring the investments worth ₹ 2,316.64 lakhs, the assessee has received equity share capital of ₹ 1,396.64 lakhs, and thus the balancing figure, being loss on transfer of investments, has been debited to the Profit Loss Account. It was also explained that the above was pursuant to the scheme of arrangement between the assessee and it s investment company, namely Daisy Commercials Pvt. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by DCPL from shareholders. On allotment of the shares by DCPL, 13,66,434 equity shares of ₹ 10 each held by such shareholders were cancelled and the paid up share capital of the company was reduced to ₹ 20,310.13 lakh divided into 20,31,01,274 equity shares of ₹ 10 each fully paid up. The difference of ₹ 919.52 lakh has been adjusted against the balance in P L A/c. as per terms of the Scheme. The gist of contentions of the assessee- company in the written submission is as under :- (1) Adequate factual disclosures were made which the AO dealt with while framing the assessment u/s. 143(3)/115JB. (2) What is disallowable under normal provisions are not disallowable in computation of book profit u/s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se decisions relied upon by the assessee are not relevant/ applicable since the issues in those cases before the Court/ ITAT s were totally different. (4) The issue is required to be decided after examining whether the accounts were pared as per Part-II III of Schedule-VI of the Companies Act and the case decision as referred to in (2) above. The basic issue is whether the condition stipulated in sub-section (2) of sec/ 115JB that the accounts have to be prepared as per Part- II III of Schedule-VI of the Companies Act is satisfied or not. From the facts stated above it is apparent that the loss booked in the P/L A/c. is for share capital reduction. There is no scope for such accounting as per Part-II III of Schedule-VI of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also the applicable legal position. 6. We find that irrespective of whether or loss such a loss is deductible in computation of taxable income or not, what we have to really decide is whether or not the Assessing Officer could have made adjustment in respect of this loss, as booked in the profit and loss account, in computation of book profits u/s. 115JB. It is, therefore, not material whether the loss in question was allowable deduction in nature. Learned CIT s reliance on Hon ble Delhi High Court s judgment in the case of Hari Machines Ltd. (supra), which deals with penalty in respect of quantitative disallowance in computation of income is thus wholly misplaced. We are also of the considered view that the loss in question is a los ..... X X X X Extracts X X X X X X X X Extracts X X X X
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