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TMI Blog2024 (8) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... ing indexed cost of acquisition and the book profit is to be calculated in accordance with Part-II and Part- III of Schedule VI of Companies Act and subject to the adjustments provided under section 115JB of the Act and in absence of any specific clause under section 115JB of the Act, which could provide alleged benefit claimed by the assessee, we are inclined to hold against the assessee and confirm the view taken by the ld. CIT(Appeals). Appeal of the assessee is dismissed. - Shri Rajpal Yadav, Vice-President (KZ) And Dr. Manish Borad, Accountant Member For the Assessee : Shri Miraj D. Shah, A.R. For the Revenue : Shri B.K. Singh, Addl. CIT ORDER PER RAJPAL YADAV, VICE-PRESIDENT (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 26th May, 2023 passed for assessment year 2015-16. 2. The assessee has taken eight grounds of appeal, which are not in consonance of Rule 8 of Income Tax Appellate Tribunal Rules. In brief, its grievances revolve around a single issue namely, whether capital gain earned on sale of flats by the assessee be directed to be added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Part - I III of the Schedule- VI. If the Auditors have certified that the accounts have been properly maintained but subject to certain Notes on Accounts or Qualification on the accounts, then, the AO is duty bound to adjust the amount of profit shown in Profit Loss Account with the figures affecting profit, which reported in Notes on Accounts suggesting deviation from S. 211 - Schedule - VI, and Accounting Standard. In the case of Apollo Tyres, the question before the Apex court was whether an A.O. can, while assessing a company for income tax u/s. 115J of the I.T. Act, question the correctness of the P L Account prepared in accordance with requirement of part-II III of schedule VI of the Company s Act. From the question as same before the Apex court it is clear that the issue before the Hon ble Apex Court was with regard to the power of the A.O. to recast audited accounts prepared in accordance with part- II III of schedule VI of the Company s Act. Therefore, for applicability of the decision of the Apex court the prerequisite is that whether the accounts are prepared in accordance with part II and part III to schedule VI of the Companies Act. If however, the P L Account are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with the provision of part II and III of the Company s Act. The decision of Mumbai Tribunal in the case of Bombay Diamond and that of Bangalore Tribunal in the case of Syndicate Bank where also Tribunal, after considering the decision of Supreme Court in the case of Apollo Tyres and explaining the same, have permitted adjustment to the profit as per P L Account, so as to comply with schedule VI part-II III of the Company s Act which is a prerequisite for sec. 115JB. In this aspect the decision of the Hon ble High Court of Calcutta in the case of GKW Ltd. -vs-CIT vide order dtd. 13/07/2011 may be considered. In this case the question framed was whether the Tribunal was justified in law in holding that the profit on sale of fixed assets amounting to Rs. 6,29,01,024/- formed part of the Book Profit u/s. 115JA of the I.T. Act 1961. The Hon ble Court has held that it is absurd to suggest that the profit on sale of fixed assets amounting to Rs. 6,29,01,024/- did not form part of the Book Profit u/s. 115JA of the I.T. Act. 1961. It was held that Tribunal rightly decided the aforesaid points in favour of the revenue. Ld. ITAT, Mumbai Bench in the case of Summer Builders Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Kolkata. In his alternative contention, he submitted that if it is to be held that this gain ought to be routed through the Profit Loss Account and it requires adjustment in the computation of book profit, then benefit of indexation ought to be granted to the assessee while computing the book profit. For this purpose, the assessee relied upon the judgment of the Hon ble Karnataka High Court in the case of M/s. Best Trading And Agencies Limited -vs.- DCIT reported in 428 ITR 52 (Karnataka). 6. On the other hand, ld. D.R. relied upon the orders of the revenue authorities. 7. We have duly considered the rival contentions and gone through the record carefully. As far as the judgment of ITAT, Kolkata in the case of MBL A Capital Ltd. relied upon by the ld. Counsel for the assessee is concerned, in that case action of the ld. CIT taken under section 263 was challenged by the assessee before the Tribunal. In that case, the scrutiny assessment was selected for limited scrutiny relating to the examination of issue of expenses incurred for earning of exempt income. In that background, the Tribunal has held that no other issue ought to be entertained. The Tribunal has held that assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Part-II of Schedule-VI. Under that provision, there is no concept of granting benefit of indexation. Decision of the Hon ble Karnataka High Court has brought to our notice by the ld. Counsel for the assessee in the case of Best Trading and Agencies Limited (supra) in support of his contention that for the purpose of computing book profit, the assessee is eligible to first claim the indexed cost benefit and the resultant profit is only required to be added in the book profit. However, we fail to find any force in the submission of the ld. Counsel for the assessee and also find that the judgment of the Hon ble Karnataka High Court in the case of Best Trading and Agencies Limited (supra) is not applicable on the facts of the instant case. On perusal of the order of the Hon ble Court, we observe that Hon ble Court has held that there is no provision under the Act to prevent the assessee from claiming indexed cost of acquisition on the sale of asset, in case, where the assessee is subjected to section 115JB of the Act. Hon ble Court has thus held that if a Company is subjected to section 115JB of the Act, it is still not precluded from claiming the benefit of indexed cost of acquisit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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