M/S. BIJNI DOOARS TEA COMPANY LIMITED,KOLKATA vs. ACIT, CIRCLE 4(1),, KOLKATA

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ITA 2865/KOL/2025Status: DisposedITAT Kolkata17 February 2026AY 2016-20173 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that in both AYs 2016-17 and 2017-18, the Assessing Officer (AO) and the Commissioner of Income-tax (Appeals) had erred in their computation of book profit under Section 115JB of the Income-tax Act, 1961. For AY 2016-17, the Tribunal found that the AO had wrongly taken the book profit at ₹1,38,52,920/- instead of the correct figure of ₹1,15,26,057/-. The Tribunal noted that the assessee had credited deferred tax of ₹23,26,863/- to the profit and loss account, which should have been considered to arrive at the correct book profit as per Section 115JB(1) Explanation 1(vii). Similarly, for AY 2017-18, the Tribunal observed that the deferred tax credit of ₹11,27,426/- was not taken into account, leading to an incorrect book profit. The Tribunal reasoned that the exclusion of deferred tax credit from the book profit calculation was contrary to the provisions of the Act. Consequently, the Tribunal set aside the orders of the CIT(A) and directed the AO to recompute the book profit at the correct figures of ₹1,15,26,057/- for AY 2016-17 and ₹82,28,375/- for AY 2017-18. The ratio decidendi is that deferred tax credit, when credited to the profit and loss account, must be considered for the computation of book profit under Section 115JB of the Act.

What were the facts?

The assessee, M/s Bijni Dooars Tea Company Limited, filed appeals against the orders of the Commissioner of Income-tax (Appeals)-10, Mumbai, for Assessment Years (AYs) 2016-17 and 2017-18. The appeals challenged the upholding of the Assessing Officer's (AO) orders. In AY 2016-17, the AO, in a scrutiny assessment under Section 143(3), increased the book profit by ₹23,26,863/- by failing to appreciate the effect of deferred tax credit. The AO's order resulted in a deemed total income under Section 115JB of ₹1,38,52,920/-, against the assessee's declared book profit of ₹1,15,26,057/-. The CIT(A) dismissed the assessee's appeal. In AY 2017-18, a similar issue arose concerning a deferred tax credit of ₹11,27,426/-, which was not accounted for by the AO/CPC under Section 143(1) and subsequently repeated in the scrutiny assessment under Section 143(3). The CIT(A) also dismissed the appeal in this case.

What were the issues?

1. Whether the Assessing Officer and the CIT(A) erred in not appreciating the effect of deferred tax credit in the computation of book profit under Section 115JB of the Income-tax Act, 1961, leading to an excess book profit for AY 2016-17. Assessee's contention: The assessee argued that the deferred tax credit of ₹23,26,863/- should have been considered in the computation of book profit under Section 115JB, as per Explanation 1(vii) to Section 115JB(1), and its exclusion resulted in an incorrect higher book profit. Revenue's contention: The judgment records no specific contention from the revenue regarding this issue. 2. Whether the Assessing Officer and the CIT(A) erred in not appreciating the effect of deferred tax credit in the computation of book profit under Section 115JB of the Income-tax Act, 1961, leading to an excess book profit for AY 2017-18. Assessee's contention: The assessee argued that the deferred tax credit of ₹11,27,426/- should have been considered in the computation of book profit under Section 115JB, and its exclusion resulted in an incorrect higher book profit. Revenue's contention: The judgment records no specific contention from the revenue regarding this issue.

Which sections of the Income-tax Act were involved?

Section 115JB,Section 115JB(1),Section 143(1),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

For Appellant: Shri S.K. Tulsiyan &, Ms. Mita Rizvi, ARs
For Respondent: Shri Dheeraj, DR
Hearing: 10.02.2026Pronounced: 17.02.2026

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/- .

4.

The ld. CIT (A) also dismissed the appeal of the assessee.

5.

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

7.

In the result, both the appeals of the assessee are allowed.

Order pronounced in the open court on 17.02.2026.

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