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Facts
The assessee appealed against the CIT(A) upholding the AO's order which wrongly included deferred tax credit in the computation of book profit under Section 115JB. The AO incorrectly arrived at an excess book profit for both assessment years.
Held
The Tribunal found that the AO and CIT(A) erred by not appreciating the effect of deferred tax credit in the computation of book profit under Section 115JB. The Tribunal directed the AO to correctly compute the book profit after considering the deferred tax credit.
Key Issues
Incorrect computation of book profit under Section 115JB by not considering deferred tax credit.
Sections Cited
115JB, 143(1), 143(3)
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
2. The only issue raised by the assessee in the various grounds of appeal is against the order of ld. CIT (A) upholding the order passed by the AO wherein the AO failed to appreciate the effect of deferred tax credit of ₹ 23,26,863/- in the computation of book profit u/s 115JB of the Act resulting to excess book profit by ₹. 23 ,26,863/- .
The ld. CIT (A) also dismissed the appeal of the assessee.
After hearing the rival contentions and perusing the materials available on record, we find that the ld. AO while passing the order u/s 143(3) of the Act dated 14.12.2018, has wrongly taken the book profit at ₹1,38,52,920/- as against the correct book profit of ₹1,15,26,097/-. We note that the assessee has credited to the profit and loss account the deferred tax credit of ₹23,26,863/-, which was reduced to arrive at correct figure of the book profit u/s 115JB of the Act in terms of Section 115JB(1) Explanation 1(vii) of Act. Therefore, the order passed by the ld. AO is apparently wrong so far as the book profit is concerned and so is the appellate order by the ld. CIT (A). Consequently, we set aside the order of ld. CIT (A) and direct the ld. JAO to take the book profit at ₹1,15,26,057/-. The appeal of the assessee is allowed.
6. The issue raised in this appeal is similar to one as decided by us in (supra). Accordingly, our decision would, mutatis
In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on 17.02.2026.