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TMI Blog2022 (9) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the details pertaining to the long term capital gain along with supporting documents and proof and the assessee vide letter had furnished the computation, copy of purchase deed, communication from BMRCL and ledger abstract showing cost including stamp paper, registration charges etc. The assessee has also furnished the details of tax deducted along with reconciliation as per P L account and Form 26AS before the AO where the details of TDS done by BMRCL was furnished. The AO has verified these details and has passed the assessment order making a disallowance u/s. 14A of the Act r.w. Rule 8D. Though there is no mention specifically on the verification of capital gains by the AO, the same cannot be a reason for coming to the conclusion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed u/s. 263 and restore the assessment order. The issue is allowed in favour of the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 96 of RFCTLARR Act shall also not be taxable under the provisions of the Income Tax Act, 1961. 7) The Ld. Pr. CIT has also ignored the plea/request placed by the Appellant Company in the submission made on 17.12.2021 with respect to restoration of business losses and unabsorbed depreciation adjusted against capital gains on nontaxable income. 8) For these and such other grounds that may be adduced at the time of hearing, it is prayed that the order u/s 263 of the Act may kindly be set aside." 3. The assessee is a private limited company and is engaged in the business of sugar manufacturing. The assessee filed the return of income for AY 2017-18 on 16.11.2017 declaring NIL income after setting off the current year net loss of Rs.37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Exceptional items in the Statement of profit and loss for the year ended on 31.03.2016. The assessee also submitted that even though the amount of book profit on sale of property Rs.59.96 crores have been brought to tax under the provisions of Section 115JB of the Act, the tax effect would be nil in terms of CBDT Circular No. 36/2016 dated 25.08.2016. 6. The PCIT did not accept the contentions of the assessee by stating that the non-verification and non-inclusion of the gain from the disposal of property by the AO has affected the reduction in book profits resulting in short income of Rs.50,10,70,670/- u/s. 115JB of the Act with a consequent short levy of tax of Rs.7,21,35,215/- which is prejudicial to the interest of Revenue. The PCIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.48,62,27,549/- after deducting the indexed cost of acquisition at Rs.1,50,08,196/-. The assessee has set off the current year business loss and brought forward depreciation loss against the capital gains. The PCIT has revised the order of the AO for the reason that the AO has not examined the fact that the sale consideration has not been reflected in the books of account resulting in understatement of book profits and the resultant tax. To this extent the PCIT has treated the order u/s. 143(3) of the Act passed by the AO as prejudicial to the interest of the Revenue. 10. We will examine first whether the AO during the course of assessment has examined the details relating to the capital gains. We notice that the AO has called for the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the power of examining 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 Assessing Officer thereafter has the limited power of making increase and reductions as provided for in the Explanation to the said section. To put it differently, the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to section 115J." 11. The contention of the PCIT that the above decision is not applicable in assessee's case as the accounts are not prepared as per Companies Act has no merits, since the accounts are audited and certified by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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