9911796707
TMI Blog2004 (9) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... Act were computed at Rs. 66,98,857 and the income was declared at 30 per cent, of the book profits at Rs. 20,09,658. During the course of assessment proceedings, the assessee was called upon to show as to why the amount of Rs. 2,54,09,727 transferred from the revaluation reserve be not added to the figure of net profit for the computation of book profits under section 115J of the Act. The assessee explained that its factory building, plant and machinery were revalued in the year under consideration and the amount of enhancement in valuation was worked out at Rs. 8,97,35,695. Accordingly, a notional reserve to this extent was created to balance both sides of the balance-sheet. Depreciation on the figure of enhancement was claimed at Rs. 2,54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the year under consideration had not been increased by the said reserve which had admittedly been created during the year itself. Mr. Y.K. Kapoor, the advocate, appearing on behalf of the appellant-assessee, contended that since the revaluation reserve created by the assessee did not represent the real income, it had to be excluded from the book profits. He further placed reliance on the judgment of the Supreme Court in Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273, to contend that the Assessing Officer had no power to scrutinise the profit and loss account of the company prepared in accordance with Schedule VI of the Companies Act, 1956. There is no merit in the contention raised by counsel for the appellant. The issue involved in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awn from the reserve and credited to the profit and loss account is to be deducted from the net profit for the computation of book profit. However, the proviso makes it clear that the amount withdrawn from any reserve created during any previous year relevant to the assessment year commencing on or after April 1,1988, cannot be reduced from the book profits unless it is shown that the book profits of the year in which the said reserve (out of which the said amount was withdrawn) had been increased by those reserves. In the present case, the undisputed facts are that the reserve had been created in the previous year relevant to the assessment year 1990-91 which had commenced after April 1, 1988. It is also not disputed that the book profits ..... X X X X Extracts X X X X X X X X Extracts X X X X
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