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TMI Blog2012 (8) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... e directly credited to the Balance Sheet without crediting to the Profit Loss Account. 5. As per the Companies Act, 1956 the assessee company has to claim any loss arriving out of capital assets in the Profit Loss Account. Accordingly, loss on sale of asset (or) loss on assets discarded (or) theft on loss of an asset is written off in the P L account prepared in accordance with the provisions of Part-II and III of Schedule VI of the Companies Act, 1956 and accordingly any claim of insurance received on behalf of the asset also has to be credited as income in the P L A/c. whereas, the assessee-company has directly credited the insurance received in the Capital Reserve. Had the insurance claim been credited in the income side of the P L A/c, the Book Profit would have been increased by a like amount and accordingly, the tax payable could have been higher u/s 115JB of the Act. The non-crediting of insurance receipt in the P L Account is not in accordance with the provisions of the Companies Act. Hence, the amount of insurance of ₹ 1,54,93,244/- has to be credited in the book profit for tax u/s 115JB of the Act. Accordingly, the Assessing Officer has computed the income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 9. On being aggrieved, the Revenue carried the matter before the Tribunal. 10. The learned DR has submitted that when there is a loss of an asset, the same is to be routed through the Profit Loss Account. When the assessee has received the insurance claim, it has been directly credited to the capital account which is contrary to Part II and Part III of Schedule VI of the Companies Act. He strongly relied on the decision of the Tribunal in the case of DCIT v. Bombay Diamond Co. Ltd. (2010) 33 DTR (Mumbai) (Trib) 59 and in the case of M/s. Sumer Builders Pvt. Ltd. (2012-TIOL-183-ITAT-MUM) as also the decision of the Hon'ble Calcutta High Court in the case of GKW Ltd. v. CIT ((12011) 200 Taxman 396 (Cal). The learned DR further submitted that the learned CIT(Appeals) allowed the ground raised by the assessee by following the decision in the case of Apollo Tyres Ltd. (supra) which has no application to the facts of the case. According to section 115JB of the Act the Assessing Officer has every power to go beyond the book profit, if the accounts are not prepared in the manner provided by Part II Part III of Schedule IV of the Companies Act, 1956. 11. On the other hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Apollo Tyres Ltd. (supra) has held that for the purpose of book profits the only adjustments that are permitted are those prescribed in the provision. The Assessing Officer cannot travel beyond the provisions of the said Explanation. Therefore, the insurance claim directly credited to the capital reserve in the Balance Sheet without routing through the Profit Loss Account is outside the provisions of sec. 115JB(2) of the Act. The Assessing Officer was not justified in invoking the provisions of Explanation to sec. 115JB of the Act and adding the insurance claim of ₹ 1,54,93,244/- received to the book profit and allowed the ground raised by the assessee. 13. The only point for consideration before us is whether the insurance claim received by the assessee has to be routed through the Profit Loss Account or not. In the present case when the loss occurred, the same was routed through the Profit Loss Account. But when the insurance claim is received, it is directly credited to the capital reserve. When we specifically asked the learned counsel for the assessee why it is not routed through the Profit Loss Account, he has submitted that the amount was received only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the provisions of the Income Tax Act is of no relevant for the purpose of determining the extent of benefit under section 32AB(1) or (2) of the Act. The computation under the Income tax Act is relevant after the ascertainment of the amount of the deposit and the twenty per cent of the profits of the business calculated in accordance with sec. 32AB(3) and the amount to be allowed in the computation under the Income-tax Act is the lower of the two figures and the deduction is to be allowed in the manner provided in section 32AB(1). This decision has no application to the facts of the present case. 17. The Special Bench decision of the Tribunal in the case of Sutlej Cotton Mills v. ACIT (supra) by considering the provisions of section 115J decided the issue. In the present case the facts are entirely different and the Assessing Officer has invoked the provisions of section 115JB of the Act. Therefore, this decision is not applicable to the facts of the present case. 18. In the present case admittedly the accounts are not prepared in the manner provided in Part II and Part III of Schedule VI to the Companies Act, 1956. The assessee on account of the loss has received the insur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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