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TMI Blog2020 (3) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... is also an expenditure like brokerage/commission connected with raising of share capital and partakes the character of share capital or the same can be treated as revenue expenditure. The appeal was admitted on 30.05.2011, on the following substantial questions of law: (i)Whether the finding of the appellate Authorities that the payment of interest on share application money is revenue expenditure when share application money was received by the assessee as a capital is perverse and arbitrary and contrary to law? (ii)Whether the Appellate Authorities were correct in dealing the addition made on account of prior period expenditure while computing book profits under Section 115JB of the Act, when the Book Profits has to be computed on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r period expenses changed to profit and loss appropriation account cannot be deducted from the profit of the year for the purpose of book profit. Being aggrieved, the assessee filed an appeal before Commissioner of Income Tax (Appeals). 4. The Commissioner of Income Tax (Appeals) by an order dated 16.04.2007 reversed the order of the Assessing Officer, and while relying on decision of the Income Tax Appellate Tribunal in 'DCIT VS. MANIPAL INDUSTRIES LIMITED', (1997) 61 ITD 49 held that interest on share application money could be allowed revenue expenditure. The Revenue filed an application before the Income Tax Appellate Tribunal. The Tribunal vide order dated 31.03.2010 dismissed the appeal preferred by the revenue. In the aforesaid fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis for levying tax on book profit and not the amount shown in printed balance sheet as the same is prepared for the benefit of share holders. It is also contended that next profit was to be computed on the basis of profit and loss account. In support of his submissions, reference has been made to decisions in 'BROOKE BOND INDIA LTD. VS. COMMISSIONER OF INCOME-TAX', (1997) 225 ITR 798 (SC), 'T.T.N.TEXTILES LT. VS. DEPUTY COMMISSIONER OF INCOME-TAX', (2010) 326 ITR 352 (KERALA) and 'HINDUSTAN LEVER LTD. VS. COMMISSIONER OF INCOME-TAX, BOMBAY',(2017) 88 TAXMANN.COM 534 (BOMBAY). 7. We have considered the submissions made on both sides and have perused the record. The Supreme Court in BROOKE BOND INDIA LTD., supra has held that all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that Section 115J (1A) of the Act empowers the authority under the Income Tax Act, 1961 to probe into the accounts accepted by the authorities under the companies Act. In the instant case, deletion as sought for by the assessee does not fall within the purview of Section 115 JB of the Act. Therefore, the Commissioner of Income Tax (Appeals) and the tribunal were not justified in deducting the addition made on account of prior period expenditure while computing book profits under Section 115 JB of the Act. The second substantial question of law is therefore, answered in the negative and in favour of the revenue. In view of proceeding analysis, the order passed by the Income Tax Appellate Tribunal and Commissioner of Income Tax (Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X
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