THE ACIT, - 4(1), INDORE vs. M/S. YASH TECHNOLOGIES PVT. LTD., INDORE

PER MANISH BORAD.

The above captioned appeal filed at the instance of revenue

pertaining to Assessment Year 2014-15 is directed against the

orders of Ld. Commissioner of Income Tax (Appeals)-II (in short

‘Ld.CIT(A)’], Indore dated 06.04.2018 which is arising out of the

order u/s 143(3) of the Act dated 30.12.2017 framed by ACIT-4(1),

Indore.

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 2. Brief facts of the case are that the assessee is a company

engaged in the business of providing software development services.

Return of income for the Assessment Year 2014-15 was filed on

21.11.2014 declaring income u/s 28 to 44D of the Act at Rs.

15,30,51,500/- and book profit u/s 115JB at Rs.76,65,48,837/-.

Assessment was completed u/s 143(3) of the Act by Ld. A.O

assessing total income u/s 28 to 44D at Rs.19,17,06,073/- and u/s

115JB at Rs.80,52,03,407/- making additions of gain from foreign

currency at Rs.1,52,82,274/-, addition due to attribution of staff

salary to SEZ units at Rs.2,07,68,143/- and disallowance u/s

40(a)(ia) at Rs.26,04,156/-. Aggrieved assessee preferred appeal

before Ld. CIT(A) and succeeded.

following grounds of appeal;

On the facts and in the circumstances of the case the Ld. CIT(A):-

1.Whether on the facts and in circumstances of the case the Ld. CIT(A) has erred in summarily deleting the addition of gain from foreign currency made at Rs. 1,52,82,274/- holding, in a summary manner that the same is business income, without giving any factual finding regarding the details and nature of receipt of foreign income fluctuation.

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 2. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in deleting the proportionate addition of Rs. 2,07,68,143/- made on account of attribution of common salary of staff to the SEZ Units, without giving any factual finding, despite the fact that neither the assessee has disallowed such expenses in the return of income nor filed the details of such expenses disallowable, despite sufficient opportunities given by the AO

CIT(A) deleting the addition of treating gain from foreign exchange

fluctuation as income from other sources at Rs.1,52,82,274/-. Brief

facts relating to this issue are that during the course of assessment

proceedings Ld. A.O observed that there was a net gain of foreign

currency of Rs.1,52,82,274/- during the year from the two Special

Economic Zone units foreign remittance. Ld. A.O treated the alleged

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 gain as “income from other sources” which cannot be claimed exempt

u/s 10AA of the Act. However Ld. Cit(A) held that the alleged gain is

a part of the business receipts revenue in nature and therefore is

eligible for exemption u/s 10AA of the Act.

supporting order of Ld. A.O.

following written submissions placed on record:-

3.0 Ground No.1 raised by the AO relates to deletion of addition on made of gain from foreign currency fluctuation of Rs.1,52,82,274/-..

3.1 This ground was made by the AO in spite of the fact that the assessee itself has added this amount in its income.

3.2 Further the AO's addition is based on finding that "income of the nature booked as "income from other sources" cannot be claimed as except u/s 10AA.

3.3 This observation of the AO is factually incorrect. The assessee has offered this income as business income in

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 computation as well as in the Balance Sheet. Perhaps he got confused with the fact that this amount is shown as other income in P&L A/c. There is huge difference between other income and income from other sources.

3.4 That this income was rightly been shown as business income as the gain/loss from foreign currency fluctuation was arising during the course of business and was incidental to business. It was not the case that the assessee was involved in foreign currency transaction separately. Rather the gain in foreign currency fluctuation was outcome of business activity.

Hon'ble Supreme Court in the case of Sutlej Cotton Mills Ltd vs. CIT

reported in 116 ITR 1 and relying on this judgment, learned CIT(A)

has rightly held that this item partake the character of business

income and prayed for allowing the claim.

before us. Grievance of the revenue is against the deletion of

addition of foreign exchange fluctuation ain of Rs.1,52,82,274/-. Ld.

A.O treated it as “income from other source” not eligible for

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 exemption u/s 10AA of the Act as not directly related to the business

of the assessee.

“5.0 This ground of appeal is with regard to addition of Rs. 1,52,82,274/- on account of gain from foreign currency.

5.1 The appellant has stated his submission that while computing total income, the figure of 1,52,82,274/- has already been included hence there can be no further addition of the same amount.

5.2 The appellant has further stated that even the finding given by the A.O. by adjudication of nature of this income as income from other sources is wrong. For this, reliance was placed on the decision of Honourable apex court in the case of Sutlej Cotton Mill Ltd v / s CIT West Bengal reported in 116 ITR 1.

5.3 I have verified from the audited accounts of the appellant as well as from computation of income that this amount of Rs.1,52,82,274/has already been offered by the appellant in its income. Therefore, there was no justification in adding this income again. Further, the contention of the appellant that this income is income from business and not income from other sources seems correct in view of decision of apcx court referred above.

5.4 In view of the above facts the addition so made by the A.O. of Rs. 1,52,82,274/- is deleted. As a result, this ground of appeal is allowed.”

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 12. In the finding of Ld. CIT(A) reliance has been placed on the

judgment of Hon’ble Supreme Court in the case of Sutlej Cotton Mills

Ltd wherein the Hon’ble Apex Court held as under;

"The law may, therefore, now be taken to be well settled that where profit or loss arises to an assessee on account of appreciation or depreciation in the value of foreign currency held by it, on conversion into another currency, such profit or loss would ordinarily be a trading profit or loss if the foreign currency is held by the assessee on revenue account or as a trading asset or as a part of circulating capital embarked in the business. But, if on the other hand, the foreign currency is held as a capital asset or as fixed capital, such profit or loss would be of capital nature."

whether the alleged gain is on account of revenue proceeds received

from the Special Economic Zone. We find that there is no dispute to

this fact that the alleged amount is the net of gain/loss of the foreign

currency received during the year from the revenue operations

carried out by the assessee in the Special Economic Zone units

running at Hyderabad and Pune. Therefore the issue is squarely

covered by the judgment of Hon’ble Supreme Court in the case of

Sutlej Cotton Mills Ltd (supra) and the Ld. CIT(A) has rightly deleted

the addition treating the amount as part of relief eligible for

exemption u/s 10AA of the Act. Even otherwise the assessee is 7

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 required to pay tax on the book profit u/s 115JB of the Act and the

alleged amount has already been added in the book profit and thus

subjected to tax. This fact has also been highlighted in the finding of

Ld. CIT(A). We therefore in the facts and circumstances of the case

and respectfully following the judgment of Hon’ble Supreme Court,

find no reason to interfere in the finding of Ld. CIT(A). Accordingly

Ground No.1 of the revenue stands dismissed.

issue relates to disallowance of salary expenditure of Rs.

2,07,68,143/- alleged to have been wrongly claimed by the assessee as

part of Non SEZ units. Brief facts relating to this ground are that the Ld.

A.O observed that a sum of Rs.. 71,74,65,462/- is debited as salary and

wages in the Profit & Loss Account of non SEZ units while the

corresponding figures in the Hyderabad SEZ and Pune SEZ are

Rs.88,28,94,436/- and Rs.16,25,90,059/-. After examination of the details

Ld. A.O further observed that salary to 8 employees, who are at the helm of

affairs working on the post of Vice President, Managing Director, Chief

Operating Officer and Senior Management was paid at Rs.3,46,13,572/-.

As per the Ld. A.O this amount was debited to the Profit & Loss Account of

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 the non SEZ unit. He accordingly calculated the proportionate amount out

of the salary at Rs.3,46,13,572/- on the basis of total turnover of the non

SEZ units vis-a-vis the turnover of SEZ units and disallowed the exemption

u/s 10AA of the Act claimed on the salary of Rs.2,07,68,143/- treating

them to be the part of the expenditure of SEZ units. When the matter came

up the Ld. CIT(A) deleted the impugned addition.

orders of Ld. A.O.

submissions;

(a) (i) That the AO has acted beyond his power under the Income Tax Act, 1961 and added Non SEZ unit expenses to SEZ unit expenses which was clearly a specified domestic transaction and subject matter of transfer pricing.

(ii) The A.O. violated the income tax provisions and made addition which were not in his power. Adjustment in salary between Non SEZ and SEZ is a specified domestic transaction u/s 92BA clause (v) of the Income Tax Act, 1961, and a subject matter of transfer pricing assessment, hence A.O. does not have power to make such adjustment. So according to section 92CA and Para 3.7 of CBDT Instruction No. 3 of 2016 on 10thMarch 2016

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 for implementation of transfer pricing (TP) provisions, A.O. has to refer such transaction to the Transfer Pricing Officer.

(iii) Section 10AA(9) (Corresponding Section 80IA(10)), Clause (v) of Section 92BA, of the Income Tax Act, 1961, para 3.7 of CBDT Instruction No. 3 of 2016 are furnished below for your ready reference.

Para 3.7 of CBDT Instructions No 3 of 2016

"For administrating the transfer pricing regime in an efficient manner, it is clarified that though A.O power under section 92C to determine the ALP of international transactions or specified domestic transactions, determination of ALP should not be carried out at all by the AO in a case where reference is not made to TPO. However, in such cases, the AO must record in the body of the assessment order that due to the Board's instruction on this matter, the transfer pricing issue has not been examined at all."

(iv) That as per provisions of Section 92BA domestic transfer pricing applies where aggregate of such transactions entered into by the assessee in the previous year exceeds a sum of Rs. 5 Crores. In case of the assessee, according to the AO the specified domestic transfer pricing figure is Rs.3,46,13,572/- which is less than 5 Crores hence the provisions of Specified Domestic Transaction as per Section 92BA does not apply.

(b )(i) That even otherwise the AO was factually incorrect in mentioning that 8 employees mentioned are in Non SEZ whereas out of 8 employees, 5 employees' salary is debited in SEZ. The salary debited to SEZ unit comes to Rs. 2,12,90,074/- whereas even according to the AO, the attributable salary comes to Rs. 2,07,68,143/- only. The assessee has, therefore, attributed more salary to SEZ as calculated by the AO.

(ii) The addition made of Rs. 2,07,68,143/- is illegal and wrong for the 10

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 following reasons:-

(a) That the AO has no power to decide the matter regarding specified domestic pricing. ~refer the matter to TPO.

(b) That if the value of Specified domestic pricing does not exceed Rs.5 Crores, the provisions of Section 92BA are not applicable. Here the value is below Rs.5 Crores.

(c) That even otherwise, the AO was factually incorrect in his findings. If correct findings are replaced, there will be no addition.

(iii) On factual matrix also, even if the theory of AO is applied there remains no disallowance.

before us. Through Ground No. 2 & 3 revenue has challenged the

addition of proportionate disallowance of Rs.2,07,68,143/- made by

the Ld. A.O on account of attribution of salary of staff to the SEZ

units. We find that Ld. CIT(A) deleted the impugned addition

observing as follows;

“7.0 This ground of appeal is with regard to making additions of Rs.2.07.68.143/- on account of attribution of staff salary to non SEZ Units. I nave carefully gone through the assessment order as wcll as submission of the appellant in this regard.

7.1 The appellant has stated that the A.O. has acted beyond his power of a transaction which is clearly a specified domestic transaction and subject matter of transfer pricing. In support of its 11

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 contention CBDT instruction No. 3 of 2016 was referred which speaks of determination of ALP in specified domestic transaction.

7.2 The appellant further stated that even otherwise the AO was factually incorrect that the salaries of eight employees mentioned by him are debited in non SEZ. The fact is that out of eight employees mentioned by the AO, salary of five employees has been debited m SEZ unit. On this count also, the addition is not sustainable.

7.3 I have verified from the records submitted by the appellant that the contention of the appellant regarding addition made by the AO on wrong appreciation of facts is correct. The addition of Rs. 2,07,68,143/- made on wrong hypothesis is therefore deleted. As a result, this ground of appeal is allowed”.

the records placed in the paper book we find force in the contention

of Ld. Counsel for the assessee that the Ld. A.O grossly erred in

giving the correct finding in its assessment order by treating the

salary paid to 5 out of 8 employees being debited to non SEZ units.

The correct fact is that out of the 8 employees mentioned by the Ld.

A.O, salary of 5 employees already stands debited to the SEZ units

and the exemption has been claimed on the profits arrived after

deducting the expenses of salary of the 5 employees to whom the

total amount of Rs.2,12,90,074/- was paid. Further the Ld. A.O has

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 made the impugned disallowance without bringing any detail on

record so as to prove that the alleged salary was payable in the non

SEZ units. The assessee’s books of accounts are duly audited and it

has bifurcated the salary expenses correctly under non SEZ units

and SEZ units.

in specified domestic transactions reference could have been made to

the TPO but certainly the Ld. A.O has no power to make such

disallowance. As per the provision of Section 92BA of the Act for the

year under appeal the domestic pricing transfer provisions could

apply if the aggregate of such transactions entered into by the

assessee in the previous year exceeds a sum of Rs.5 crores. But in

the instant case the specified domestic pricing figure is

Rs.3,46,13,572/- which is less than Rs.5 crores hence the provision

of Section 92BA of the Act does not apply.

facts and circumstances of the case wherein the Ld. A.O adopted

wrong facts treating the salary debited to SEZ units at Rs.

2,12,90,094/- as salary debited to non SEZ units which makes the 13

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 very basis of alleged disallowance incorrect. Thus the Ld. CIT(A) has

rightly appreciated the facts and deleted the proportionate

disallowance of salary expenditure of Rs.2,07,68,143/-. We thus

find no infirmity in the finding of Ld. CIT(A). Ground No. 2 & 3 of the

revenue’s appeal stands dismissed.

Ld. CIT(A) holding the calculation of book profit made by the Ld. A.O

as incorrect. Brief facts relating to the issue are that the Ld. A.O after

making addition for proportionate disallowance of salary, fluctuation

in foreign exchange as income from other sources and disallowance

u/s 40a(ia) of the Act, added these amount to the book profits of the

assessee and recomputed the book profit. Ld. CIT(A) deleted this

addition to the book profits. Now the revenue is in appeal before the

Tribunal.

the orders of Ld. A.O.

“5.2 That the AO made similar addition in Book profit U/S 115 JB which were made while computing income u/s 28 to 44D. That the purpose of 14

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 insertion of Section 115JB is very specific and for that as exhaustive set of addition and deletion clause has been given. The AO is not entitled to go beyond these specific clauses. However, as done throughout the assessment, the AO did not bother to restrict himself to the provisions of the Act and tried to do something which according to the Act, he was not empowered to do.

5.3 That as per explanation 1 to sub section 2 of section 115JB, only additions described in clauses a to k and reductions described in clauses (i) to (viii) only can be made. There are specific addition and reductions in book profits which are allowed in calculation of book profit.

5.4 The addition made by AO in above book profit are not in the list of additions and reductions in that particular Section. The book profit should be profit derived from profit & loss account prepared in accordance with the companies Act and AO cannot make any adjustment apart from whatever specifically mentioned in Section 115JB itself.

5.5 Very Interestingly, the AO has added Rs.3,86,54,573/- while passing order u/s 28 to 44D & 115JB both, but now he is coming in appeal before your honour with one addition only i.e. disallowance of salary expenses.

5.6 Now the AO has come out before Hon'ble Tribunal with the issue of salary only. The addition made by the of Rs.1,52,82,274/- of foreign exchange fluctuation has been left by him. This shows how confused the AO was while passing the order and while filing the appeal before your honour.

5.7 Now coming to section 115JB(f) referred by the AO, this clause fhas been introduced to add any amount of expenditure relatable to Section 10, Section 11 & 12. Correspondingly clause (ii) has been introduced to reduce the income relatable to Section 10, Section 11 & 12. Hence both

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 there clauses are inserted in section 115JB to give exemption from MAT provisions related to Section 10, Section 11 & Section 12. It is worthwhile to note that section 10AA is not included here.

5.8 That MAT is already applicable on assessee and MAT has already been considered on whole amount.

5.9 Clause F is not the Clause which permits the AO to make any addition and to add under this clause. The ground raised by the AO is therefore patently wrong.

(i) Apollo Tyres Ltd. vs. Commissioner of Income Tax reported in 255 ITR 273.

(ii) Commissioner of Income Tax vs. Binani Cement Ltd. reported in 95 CCH 0186.

(iii) Commissioner of Income Tax vs. HCL Comnet Systems & Services Ltd. reported in 76 CCH 1111 ISCC

(iv) Commissioner of Income Tax vs. Adbhut Trading Co. (P) Ltd. reported in 79 CCH 0553 MumHC

(v) Malayala Manorama Co. Ltd. vs. Commissioner of Income Tax reported in 76 CCH 0536 ISCC

(vi) Tata Realty & Infrastructure Ltd. vs. Principal Commissioner of Income Tax reported in ITA No. 7135, 7136 /Mum/2017 & 7137/Mum/2018.

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 26. We have heard rival contention and perused the records placed

before us. Revenue has challenged the deletion of addition made to

the book profits made by the Ld. A.O. Ld. CIT(A) decided the issue in

favour of the assessee and the book profit shown by the assessee u/s

115JB of the Act was considered correct observing as follows;

“8.0 This ground of appeal is with regard to making similar addition in returned book profit U/s 115JB which were made in section 28 to 44D. I have carefully gone through assessment order and submission of the appellant this regard.

8.1 The appellant has stated that section 115JB is regarding special provision for payment of tax. As per explanation 1 to section 115JB, only item given in (a) to (k) can be added. No other addit.ion other than given in (a) to (k) of explanation 1 can be made. For computing section 28 to 44D income, the provisions are different. The AO confused himself and added the same amount as he added in section 28 to 44D.'

8.2 The contention of the appellant is correct and no addition u/s 115JB can be made in returned income other than specified in explanation 1 of section 115JB. The entire additions made under section 115JB is directed to be deleted. As a result, this ground of appeal is allowed”.

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 (i) Hon'ble Supreme Court of India in the case of Apollo Tyres Ltd. vs. Commissioner of Income Tax reported in 255 ITR 273 SC held as under:-

Therefore, we are of the opinion, the assessing officer while commuting the income under Section 115-J has only the power of examining whether the books of account are certifies 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 ana 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 115-J."

(ii) Hon'ble High Court of Calcutta in the case of Commissioner of Income Tax vs. Binani Cement Ltd. reported in 95 CCH 0186 KolHC held as under :-

"Disclosure made in financial statements which is not to be construed as any qualification indicating any inaccuracy in the accounts. There was, thus no mistake on the part of the assessee in debiting the loss to the profit and loss account. Apex Court in Apollo Tyres (supra) held that Assessing Officer while computing the income under 115-J has only

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 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. 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 115-J."

(iii) Hon'ble Supreme Court India in the case of Commissioner of Income Tax vs. HCL Comnet Systems & Services Ltd. reported in 76 CCH 1111 ISCC held as under:-

"For the purposes of s. 115JA, the AO can increase the net profit determined as per the P&L a/c prepared as per Parts 11 and III of Sch. VI to the Companies Act only to the extent permissible under the Explanation thereto. The said Explanation has provided six items, i.e., item Nos. (a) to (f) which if debited to the P&L a/c can be added back to the net profit for computing the book profit. The provision for bad and doubtful debt can be added back to the net profit only if item (c) stands attracted. item (c) deals with amount(s) set aside as provision made for meeting liabilities, other than ascertained liabilities. The assessee's case would, therefore, fall within the ambit of item (c) only if 19

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 the amount is set aside as provision; the provision is made for meeting a liability; and the provision should be for other than ascertained liability, i.e., it should be for an unascertained liability. In other words, all the ingredients should be satisfied to attract item (c) of the Explanation to s. 115JA. item (c) is however not attracted in this case. The provision for bad and doubtful debt is made to cover up the probable diminution in the value of asset, i.e., debt which is an amount receivable by the assessee. Therefore, such a provision cannot be said to be a provision for liability, because even if a debt is not recoverable, no liability could be fastened upon the assessee. In the present case, the debt is the amount receivable by the assessee and not any liability payable by the assessee and, therefore, any provision made towards irrecoverability of the debt cannot be said to be a provision for liability. Therefore, item ( c) of the Explanation is not attracted to the facts of the present case. In the circumstances, the AO was not justified in adding back the provision for doubtful debts under cl. (c) of the Explanation to s. 115JA.-CIT vs. HCL Comnet Systems & Services Ltd. (2008) 219 CTR (Del) 226 affirmed."

(iv) Hon'ble High Court of Bombay in the case of Commissioner of Income Tax vs. Adbhut Trading Co. (P) Ltd. reported in 79 CCH 0553 MumHC held as under:-

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 "Once tile accounts including the P&L a/c are certified by the authorities under the Companies Act it is not open to the AO to contend that the P&L a/c has not been prepared in accordance with the provisions of the Companies Act, 1956 and make addition towards book profits under s. 115JB."

(v) Hon'ble Supreme Court of India in the case of Malayala Manorama Co. Ltd. vs. Commissioner of Income Tax reported in 76 CCH 0536 ISCC held as under:-

"We have heard tile learned counsel for the parties at length and carefully perused the written submissions filed by them. In our considered opinion, the controversy involved in this case is no longer res integra. A three Judge Bench of this Court in Apollo Tyres (supra) has clearly interpreted s. 115J of the 1961 Act. There is no scope for any further discussion."

(vi) Hon'ble ITAT Mumbai Bench in the case of Tata Realty & Infrastructure Ltd. vs. Principal Commissioner of Income Tax reported in ITA No. 7135, 7136 / Mum / 2017 & 7137 / Mum / 2018 held as under :-

"Moreover the Id. CIT(A)'s opinion that the book profit needs to be reworked and the impugned amount added to book profit is not sustainable. In this regard we note on this very issue, the Hon'ble Apex Court has given a decision in Apollo Tyres Ltd. supra), In this case, it was held as under: 21

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 It has been submitted that in this decision, at page 280, it has been held that "we are of the opinion that the Assessing Officer 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 h 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 1151." In this regard, it observed that the aforesaid judgment is not applicable in the case of the assessee as it has been discussed in the preceding paragraphs (para 5) that the accounts of the assessee has not been prepared In accordance with provisions of Part 11 to Schedule VI to the Companies Act. From the above, it is amply evident that the Hon'ble Apex Court has expounded that once the accounts have been certified by the auditors and adopted in the annual general meeting, the A.O. has only the power of examining whether the books of account are certified by the authorities under the Act as having been properly maintained in accordance with the companies act. The A.O. thereafter has a limited power to make adjustments as provided for in the explanation of the said

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 section. From the above exposition, it is amply clear that the Hon'ble Apex Court has duly held that the A.O. does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extend provided in the Explanation to section 1151. We find that the exposition by the Hon'ble Apex Court is the law of the land and if the A.O. had duly followed the same, he did not need to declare so in his assessment order. In fact, what the Id. CIT(A) has done is not at all sustainable in law. He has distinguished the above Hon'ble Apex Court decision on the premise that the accounts have not Been prepared as per Part II of Schedule VI of the Companies Act. It is not the case of the Id. CIT(A) that the accounts are not certified by the authorities under the Companies Act. In this view of the matter, the distinction brought on record by the Id. CIT (A) is totally unsustainable in law."

computing the book profit u/s 115JB of the Act limited scope is

available with Ld. A.O to just refer to explanation No.1 of Section

115JB of the Act and make the adjustments of items mentioned

therein if not made by the assessee. In the instant case Ld. A.O

seems to have acted beyond the provisions laid down in Section

115JB of the Act and has made the adjustment to the book profits

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 computed as per Companies Act, of the items not appearing in the

explanation 1 of Section 115JB of the Act.

referred above and on examining the facts of the instant appeal, find

that the Ld. A.O grossly erred in making the additions to the book

profits without properly applying the provisions of section 115JB of

the Act. Thus no addition of the alleged amounts ought to have been

made to the book profits for the purpose of computing tax liability

u/s 115JB of the Act. No interference is thus called for in the

finding of Ld. CIT(A). Ground No.4 of the revenue stands dismissed.

adjudication.

The order pronounced in the open Court on 31.10.2019.

Sd/- Sd/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER �दनांक /Dated : 31 October, 2019 /Dev

Yash Technologies Pvt. Ltd ITA No.616/Ind/2018 Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file.

By Order, Asstt.Registrar, I.T.A.T., Indore