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TMI Blog2019 (1) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... d upholding the impugned order of the CIT(Appeals) deleting the addition/adjustment made by the Assessing Officer on account of Capital Reserve while computing the book profit of the assessee under section 115JB. Disallowance of employees contribution to Provident Fund/Employees State Insurance (ESI) paid by the assessee beyond the due dates prescribed in the respective statute - Held that:- Both the sides have agreed that this issue is squarely covered in favour of the assessee, inter alia, by the decision in the case of Vijay Shree Limited (2011 (9) TMI 30 - CALCUTTA HIGH COURT), wherein following the decision in the case of Alom Extrusion Limited [2009 (11) TMI 27 - SUPREME COURT] that the amount paid on account of employees contribution before the due date of filing the return of income for the relevant year could not be disallowed as per the amendment made to section 43B by the Finance Act, 2003. Respectfully following the said binding precedent, we uphold the impugned order of the CIT(Appeals) deleting the addition made by the Assessing Officer by way of disallowance of belated payment of employees contribution to P.F/ESI. - I.T.A. No. 1517/KOL/2015, C.O. No. 123/KOL/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redited an amount of ₹ 6,05,23,24,263/- directly to Capital Reserve under the head Reserves Surplus in the balance sheet. In this regard, he noted that the following Notes to the Accounts have been disclosed by the assessee-company in the Annual Accounts:- Business Restructuring: The company has restructured its business during the year by way of sale of its Wholesale and Retail businesses to TPG Wholesale Private Limited and Airplaza Retail Holdings Pvt. Ltd. (referred to as Acquiring Companies) respectively. The Master Restructuring Agreement and other settlement agreements were entered into by the Company with the Acquiring Companies and its Lenders to effect the said restructuring and COR proposal of the Company. As a result of the said agreement the liabilities to the extent of ₹ 823.20 crores and assets of ₹ 393.78 crores wee taken over by the acquiring companies against a consideration of ₹ 70 crores. The Slump Sale transaction resulted in a Capital Reserve of ₹ 499.42 crores. As a part of the said restructuring some unsecured lenders of the company also waived off their claims to the extent of ₹ 105.81 crores which has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words 'in accordance with the provisions of Part-II and Part-III of Schedule VI of the Companies Act' was made for the limited purpose of empowering the assessing authority to rely upon the authentic statement of accounts of the company and while so looking into the accounts of the company, the Assessing Officer had to accept the authenticity of the accounts. It was so held by the Supreme Court that the Assessing Officer has only the power to examine whether books of account are certified by authorities under the Companies Act as having been properly maintained in accordance with the provisions of the Companies Act. The Assessing Officer, thereafter, has limited power of making adjustments as provided in Explanation to section 115J. It is, thus clear that once accounts are prepared under the Companies Act and have been certified by the authorities. The Assessing Officer cannot tinker with the accounts and make any changes while computing book profit except making adjustments as provided in Explanation to section 115JB. The addition made by the Assessing Officer and confirmed by Commissioner (Appeals) on account of profit on sale of asset not disclosed in the prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee to Capital Reserve was permissible as per Clause (b) of Explanation (1) to Section 115JB. He has contended that the ld. CIT(Appeals), however, has completely ignored the said provision and deleted the adjustment made by the Assessing Officer by following blindly the decision of the Hon ble Supreme Court in the case of Apollo Tyres (supra). However, as rightly pointed out by the ld. Counsel for the assessee, the adjustment on account of the amounts carried to any reserves, by whatever name called is permissible as per Clause (b) of Explanation (1) to Section 115JB only if such amounts are debited to the Profit Loss Account as clearly provided in Explanation (1) to Section 115JB and since the amount in question transferred to the Capital Reserves directly by the assessee-company was not debited to the Profit Loss Account as clearly mentioned by the Assessing Officer himself in the assessment order, we find merit in the contention of the ld. Counsel for the assessee that the adjustment made by the Assessing Officer while computing the book profit under section 115JB was not permissible even as per Clause (b) of Explanation (1) to section 115JB. Even the ld. D.R. h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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