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TMI Blog2008 (4) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... nder sec. 115J is to be increased by the T.D.S. Of Rs. 5,73,451/- in spite of the fact that the same is not debited to Profit and Loss Account in accordance with the provisions of parts II and III of Schedule VI of the Companies Act? 2. The Assessment Year is 1988-89, the relevant account period being Financial Year ended on 31.3.1988. The assessee a limited company filed return of income on 6.2.1989 declaring taxable income of Rs. 2,35,379/- under sec.115J of the Act. The Assessing Officer did not accept the book profit worked out by the assessee under sec. 115J of the Act and added the sum of Rs. 5,73,451/- to the book profit declared by the assessee. According to the Assessing Officer, the tax deducted at source (T.D.S.) on dividend received from various companies had wrongly been excluded while showing the income from dividend. 3. The assessee carried the matter in the appeal before the Commissioner (Appeals) who confirmed the action of the Assessing Officer vide order dated 9.7.1991. The assessee carried the matter in second appeal before the Tribunal who also confirmed the orders of Assessing Officer and Commissioner (Appeals) vide impugned order dated 17.9.1996. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax, reported in (2002) 255 ITR 273. Following decisions of various High courts were also cited in support of the submissions made: (1) Kinetic Motor Co. Ltd. vs. Deputy Commissioner of Income Tax. (2003) 262 ITR 330 (Bombay) (2) Raj. Spinning And Weaving Mills vs. Deputy Commissioner of Income-Tax. (2006) 281 ITR 177 (Raj) (3) Commissioner of Income-Tax vs. Koval Maruthi Paper And Board P. Ltd. (2007) 294 ITR 57 (Madras) (4) Commissioner of Income-tax, Ludhiana vs. Sona Woollen Mills (P.) Ltd. (2007) 160 Taxman 22 (P H) (5) Amines And Plasticizers Ltd. vs. Deputy Commissioner of Income-Tax. (2008) 296 ITR 727 (Gauhati) (6) The judgment rendered by Supreme Court on 10.4.2008 in Civil Appeals Nos. 5420 to 5423 of 2002 in the case of Malayala Manorama Co. Ltd. vs. Commissioner of Income Tax, Trivandrum . - Since reported in (2008) 300 ITR 251 (S.C.) 6. On behalf of the respondent - Revenue, learned Senior Standing Counsel Mr. M.R. Bhatt supported the order of the Tribunal by pointing out that dividend was income within the meaning of Sec. 2(24)(ii) of the Act and the said amount has to be taken as the gross amount as provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the budget speech of the then Finance Minister, has observed as under: "The above speech shows that the income-tax authorities were unable to bring certain companies within the net of income-tax because these companies were adjusting their account s in such a manner as to attract no tax or very little tax. It is with a view to bring such of these companies within the tax net that section 115J was introduced in the Income-tax Act with a deeming provision which makes the company liable to pay tax on at least 30 percent of its book profits as shown in its own account. For the said purpose, section 115J makes the income reflected in the company's books of account the deemed income for the purpose of assessing the tax. If we examine the said provision in the above background, we notice that the use of the words 'in accordance with the provisions of Parts II and II of Schedule VI to 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. While so looking into the accounts of the company, an Assessing Officer under the Income-tax Act has to accept the authenticity of the accounts with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the Tribunal is correct and the High court erred in reversing the said view of the Tribunal." 9. It has further been stated that the Assessing Officer while computing the income under sec. 115J of the Act, has only the power of examining whether the books of accounts are certified by the authority under the Companies Act as having been properly maintained in accordance with the Companies Act. In the present case, as already noted, the Tribunal has in no uncertain terms stated "Having regard to the provisions of part II III of Schedule VI of the Companies Act, we are of the opinion that the assessee has prepared its book profit correctly as per the said provisions." The next stage thereafter would be to make increases or reductions as provided in the Explanation to sec. 115J of the Act. The Apex Court has stated in the aforesaid judgment that the Assessing Officer has the limited power of making increases or reductions as provided for in the Explanation and does not have 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 of the Act. 10. Section 115J of the Act, more particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aragraph No.3 (xi) ( c ) of Part-II of Schedule-VI of the Companies Act, which permits crediting of net income to the profit and loss account without providing for corresponding debit in the profit and loss account. It is for the Legislature to make appropriate amendment, either in the Companies Act or in the Income Tax Act in its wisdom, and the Court cannot take over role of the Legislature. 13. The reference to the Accounting Standards and other provisions of the Income Tax Act cannot carry the case of revenue any further. In so far as the Accounting Standards are concerned, paragraph No-36 of AS-13 itself states that the effective date for this Accounting Standard to come into effect is in relation to financial statements covering the period commencing on or after 1.4.1995. Therefore, the said Accounting Standard cannot have any role to play in interpreting the provisions of the Act as it stood for the accounting period under consideration, namely financial year ended on 31.3.1988. Similarly, reference to other provisions of the Act also cannot be of any assistance in light of non-obstante clause with which section-115J of the Act opens. 14. In the aforesaid fact situa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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