COMMISSIONER OF INCOME TAX - III vs. THE RIDDHI SIDDHI GLUCO BOILS LIMITED

TAXAP/1940/2010HC GujaratGJHC24027732201028 June 2012Author: HONOURABLE MR. JUSTICE VIJAY MANOHAR SAHAI,HONOURABLE MR. JUSTICE N.V.ANJARIA4 pages
AI SummaryDismissed

What were the facts?

The Revenue has filed this appeal against the order of the Income Tax Appellate Tribunal (ITAT). The Assessing Officer (AO) had included pre-operative interest expenses of Rs. 2,19,92,647 and pre-period expenses while computing the book profit under Section 115JB for the assessment year under consideration. The Commissioner of Income Tax (Appeals) allowed the assessee's appeal, deleting these amounts for the purpose of computing book profit. The ITAT confirmed the order of the CIT(A). The High Court is considering whether the ITAT was correct in directing the AO not to include pre-operative interest expenses while recomputing book profit under Section 115JB.

What did the High Court hold?

The High Court held that no substantial question of law arises in this Tax Appeal. It relied on the decision of a Division Bench of the same court in Tax Appeal No. 109 of 2010, decided on 13.12.2011. This earlier decision, citing the Supreme Court judgments in Apollo Tyres Ltd. vs. Commissioner of Income-Tax and Commissioner of Income-Tax vs. HCL Comnet Systems and Services Ltd., held that the Assessing Officer could not vary the Profit and Loss Account of a company that was duly audited and prepared in terms of the Companies Act. Therefore, the AO was not justified in including pre-operative interest expenses in the book profit computation. The Tribunal's order was upheld, directing the AO not to include these expenses.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer not to include pre-operative interest expenses while recomputing the book profit under Section 115JB of the Income Tax Act, 1961? Assessee's Contentions: The assessee argued that the AO cannot go behind the net profit shown in the Profit and Loss Account prepared by the company and certified by statutory auditors, except to the extent provided in the Explanation to Section 115J (now Section 115JB). They relied on the Supreme Court decision in Apollo Tyres Limited vs. CIT (255 ITR 273) and the Gujarat High Court decision in CIT vs. Rubamin P. Ltd., which held that only specified adjustments can be made from book profits. Revenue's Contentions: The Revenue contended that pre-operative interest expenses should be included in the computation of book profit under Section 115JB. The judgment does not explicitly record arguments made by the Revenue beyond the proposed question.

Which sections of the Income-tax Act were involved?

Section 115JB,Section 115J

AI-generated summary — verify with the full judgment below

TAXAP/1940/2010 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 1940 of 2010 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment? No 2 To be referred to the Reporter or not? No 3 Whether their Lordships wish  to see the  fair copy of the judgment? No 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder? No 5 Whether it is to be circulated to the civil judge? No ========================================================= COMMISSIONER OF INCOME TAX - III - Appellant(s)

Versus THE RIDDHI SIDDHI GLUCO BOILS LIMITED - Opponent(s) ========================================================= Appearance : MRS MAUNA M BHATT for Appellant(s) : 1, MRS SWATI SOPARKAR for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 28/06/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE V. M.

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 115JB

All 5,465 judgments and leading authorities on Section 115JB →

Recent GST High Court judgments

Search GST case law →