Assessee in its Profit and loss account provided for arrears of depreciation. Assessing officer while determining the book profit of the assessee for the purposes of section 115J of the Act excluded the provision for depreciation arrears and held that the Profit and loss account prepared by the assessee was not in accordance with Parts II and III of Schedule VI to the Companies Act, 1956.<\/p>\n
\u00a0<\/p>\n
Can the Assessing Officer while determining the book profits chargeable under section 115J of the Act question the correctness of the profit and loss account prepared by the assessee in accordance with the requirements of the Companies Act and certified by statutoryauditors of the company?<\/p>\n
\u00a0<\/p>\n
Section 115J(1A) mandates every company to prepare its profit and loss account\u00a0\u00a0\u00a0 in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956. Explanation <\/em>to section 115J defines the term \u2018book profit\u2019\u00a0\u00a0\u00a0\u00a0 to mean net profit asshown in the profit and loss account prepared under section 115J(1A). The said Explanation provides for certain items to be added to\u00a0\u00a0\u00a0 or to be reduced from the net profit as shown in the profit and loss account.<\/p>\n \u00a0<\/p>\n Supreme Court held that the Assessing Officer while computing the income under section 115J can only examine whether the books of accounts are certified\u00a0 by the authorities under the\u00a0 Companies Act\u00a0 to\u00a0 have been properly maintained in accordance with the Companies Act. The Assessing Officer cannot question the net profit shown in the profit and loss account. The limited power with the Assessing Officer is to make additions and reductions as provided for in the<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Explanation to section 115J. (AY.\u00a0 1988-89) (CA Nos. 6100 of 1998 and 2518 to19\u00a0\u00a0\u00a0 of 1999 dt. 2-5-2002)<\/p>\n Editorial: <\/em><\/strong>Decision of the Kerala High Court in CIT v. Apollo Tyres\u00a0 Ltd. [1999]\u00a0 237 ITR 706 <\/em><\/strong>affirmed on this point.<\/p>\n \u201cOne must become as humble as the dust before he can discover truth.\u201d<\/em><\/p>\n – Mahatma Gandhi<\/p>\n","protected":false},"excerpt":{"rendered":" S. 115J : Book profit \u2013 Net profits in profit and loss account prepared in accordance with Parts II and III of Schedule VI to Companies Act \u2013 Accounts scrutinised and certified by statutory auditors \u2013 Assessing Officer has no power to scrutinise except as provided in Explanation. [ Companies Act , 1956 , Parts II and III of Schedule VI ]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-13399","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3u7","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13399","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=13399"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13399\/revisions"}],"predecessor-version":[{"id":13400,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13399\/revisions\/13400"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=13399"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=13399"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=13399"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Held<\/h3>\n