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TMI Blog2021 (6) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of Excise duty in the relevant year in as much as the Excise Department had gone up in appeal to the Supreme Court and questioned the correctness of the decision of the High Court. As view has been taken in the various decisions relied on by the ld. Counsel that prior period expenses/liabilities are to be adjusted in computing the net profit u/s 115JB of the IT Act. Since the assessee in the instant case has prepared its Profit Loss Account after providing for liability of Excise Department, administrative charges on molasses, as per the directions of the Hon ble Supreme Court, therefore, we are of the considered opinion that there is no mistake in the accounts of the assessee and the lower authorities are not justified in rejecting the book profit as per the accounts maintained in terms of Part II and III of Schedule VI of the Companies Act, 1956 as certified by the Accountant and, thereby, recomputing the book profit in terms of section 115JB.- Decided in favour of assessee. - ITA No.4980/Del/2016 - - - Dated:- 18-6-2021 - Shri R.K. Panda, Accountant Member And Shri Sudhanshu Srivastava, Judicial Member For the Assessee : Shri Akhilesh Kumar, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come at ₹ 1,24,33,055/-. However, the book profit u/s 115JB was declared at ₹ 3,30,05,823/- after providing for liability of excise department, administrative charges on molasses of ₹ 1,39,18,374/- which is part of rates taxes out of which a sum of ₹ 1,03,42,904/- is related to earlier F.Y. 2007-08 to F.Y. 2008-09. 5. On being questioned by the AO, it was submitted that it has made the provision after the order of 18.10.2011 of Hon ble Supreme Court. It has prepared the accounts as per the Companies Act, 1956. The assessee relied upon the decision of Hon ble Supreme Court in the case of Apollo Tyres 255 ITR 273 by stating that the A.O. has powers only to examine whether the books of account have been maintained in accordance with the Companies Act. However the A.O. was of the opinion that he was empowered to examine whether the Book Profit has been computed by preparing P L a/c in accordance with Part-II and Part -III of Schedule-VI of the Companies Act, 1956. Further the A.O. noted that the assessee has been following accrual method of accounting. Rejecting the various explanations given by the assessee and in view of detailed discussion as made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges in respect of supply of molasses transferred from its own sugar mills to its own distillery and the same directions were issued again on 02.08.2007. Further vide order dated 27.5.2009 the Hon,ble Allahabad High Court has directed that no administrative charges shall be realized from the sugar mill till the next date of hearing and the petitioner i.e. Sugar Mill shall however maintain an account of the molasses transferred to their own distillery and sugar mill shall pay within 30 days from the date of decision of the writ petition along with interest in case the petition fails. Subsequently the Hon ble Allahabad High Court vide its order dated 20.5.2011 has observed that such imposition of administrative charges was altogether illegal. The Excise department has filed an SLP before the Hon ble Supreme Court against the order of the Hon ble Allahabad High Court. 8. The ld. CIT(A) observed that the Hon ble Allahabad High Court has directed the petitioner to maintain the account of molasses transferred by the appellant to their own distillery and has only restrained the Excise Department from making recovery of Administrative charges. Further, the Hon ble Allahabad High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uditor s report statement of profit loss a/c comply with the accounting standards in terms of S. 211(3C) of said Act and the same give true fair view of book profit which are prepared as per schedule VI of the said Act. Referring to page 51 of the paper book, he submitted that ultimately the Apex Court decided in favour of assessee vide order dt. 18.10.11. Referring to paper book pages 68,73 and 74, he submitted that the assessee has transferred the amount to income as per note 18 to P L A/c for AY 14-15 which is accepted u/s 143(3). 11. Relying on the following decisions, he submitted that Book profit as per accounts maintained in terms of part II III of Schedule VI of Companies Act, 1956 as certified by accountant is binding on AO who can t recompute book profit in terms of S.115JB: 1. Malayala Manorama Co. Ltd. v/s CIT 300 1TR 251 (SC) affirming Apollo Tyres Ltd. v/s CIT (2002) 255 ITR 273 ( SC) 2. CIT v Hindustan Pipe Udyog Ltd. (2014) 360 ITR 437 31 taxmann.com 351 (All.) 3. CIT V ACC Ltd. (2020) 113 taxmann.com 168(SC) 12. Relying on the following decisions, he submitted that prior period expenses/liabilities are to be adjusted in computing the net profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is the submission of the ld. Counsel for the assessee that the Excise Department had filed SLP before the Hon ble Supreme Court and the Hon ble Supreme Court, vide its order dated 30th September, 2011, directed the sugar mill to file an undertaking within four weeks stating that the sugar mills shall continue to maintain the complete account for molasses transfer to their own distilleries for captive consumption and shall file an affidavit before it undertaking to make payment of the entire amount as may be due to the State in case they fail in the petition, within 30 days from the final decision of the Petition. Accordingly, the assessee made necessary provision in its books of account in respect of the administrative charges of ₹ 1,39,18,373.70 which includes ₹ 35,75,467.50 for A.Y. 2012-13. It is the submission of the ld. Counsel that before the directions for furnishing an undertaking, the assessee was not admitting any liability and no provision was being made though the account of each year was kept as per the direction of the Hon ble Allahabad High Court and it is only on the direction of the Hon ble Supreme Court the provision was made being the liability as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of provision made for payment of Excise duty in the relevant year in as much as the Excise Department had gone up in appeal to the Supreme Court and questioned the correctness of the decision of the High Court. 16.1 The facts of the present case are identical and parallel to the case mentioned above from all the four corners and thus in view of the above decision the P L account prepared are in accordance with provision of part II III of Schedule VI of Companies Act. Similar view has been taken by the Hon ble Gujarat High Court in the case of CIT Vs. Gandhi Silk Mill Ltd.(2005) 274 ITR(Guj). The only difference is that in this case Bank Guarantee was furnished and in the present case the undertaking was given. 16.2 The Hon ble Supreme Court in the case of Apollo Tyres vs. CIT, 255 ITR 373, has held that while computing the book profit u/s 115JA of the Companies Act, the jurisdiction of the assessing officer is limited to examine whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The AO, thereafter has limited powers of making increases and reductions as provided fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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