|CORAM:||B. C. Meena (AM), C. M. Garg (JM)|
|CATCH WORDS:||Book Profits, Depreciation, Land|
|DATE:||September 30, 2014 (Date of pronouncement)|
|DATE:||October 12, 2014 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 115JB: Cost of use of land amortized in books cannot be added back for computing book profits|
This is a land taken for use from the State government without transferring the title for relief and rehabilitation for land evacuees because of submerges and where construction of such alternative facility is a condition for setting up a project. The cost so incurred by the assessee company is amortized over useful life of the project. The above policies have been approved by the auditors of the company as well as the C&AG. The accounts of the assessee company are subject to audit not only by the statutory auditors but also by the C&AG also. Further the accounts so prepared has been approved and adopted by the company in the Annual General Meeting and filed with the Registrar of Companies.
8. The Supreme Court in the case of Apollo Tyres Ltd. (Supra) has held that the AO under the Income-tax Act has to accept the authenticity of the accounts with reference to the provisions of the Companies Act which obligates the company to maintain its account in a manner provided by the Companies Act and the same to be scrutinised and certified by the statutory auditors and will have to be approved by the company in its general meeting and thereafter to be filed before the Registrar of Companies who has a statutory obligation also to examine and satisfy that the accounts of the company are maintained in accordance with the requirements of the Companies Act. The Supreme Court has further held that the AO while computing the income under section 115J has only 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 increases and reductions as provided for in the Explanation to the said section (115J). The Supreme Court has further went on to hold “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”.