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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI RAJENDRA & SHRI C.N. PRASADShri Nitesh Joshi
(A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd O R D E R PER C.N. PRASAD (JM) 1. These two appeals are filed by the assessee against the orders of the Commissioner of Income-Tax (Appeals)-9, Mumbai dated 10.06.2010 and 16.05.2012 for the Assessment Years 2006-07 and 2009-10 respectively.
(A.Y: 2006-07): 2. At the outset the Learned Counsel for the assessee submits that issue in Ground No.2 and 3 relating to assessing income under the head income from other sources as against the assessee’s claim for assessing such income under the head profits and gains of business or profession has been decided by ITAT wherein it was set aside by the Tribunal for the Assessment Year 2005-06 to the file of the Assessing Officer for denovo adjudication in ITA.No.1145/Mum/10 dated 04.07.2012. Copy of the order is placed on record. Learned Counsel for the assessee submits that relevant findings of the Tribunal are in Paras 9 to 9.2.
We have perused the order of the Coordinate Bench. We find that in respect of the interest income received by the assessee, a non-banking finance company on lending advances as business of the assessee the Tribunal restored the matter to the file of the Assessing Officer for fresh adjudication in accordance with law with the following observations: -
“9. We have heard rival submissions of the parties and also perused the relevant contents of the paper book as referred to herein above. Admittedly, the assessee is a NBFC. Its certificate of registration available at Page-6 of paper book, reads as under:-
(A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd “In exercise of the powers conferred on the Reserve Bank of India by Section 45 IA of the Reserve Bank of India Act, 1934 BHUPATI INVESTMENTS & FINANCE PVTLTD (formerly known as Bhupati Investments & Finance Ltd) Is hereby granted Certificate of Registration to carry on the business of non-banking financial institution without accepting public deposits subject to the conditions given on the reverse." Its objects also include money lending with or without security (as available at paper book at page-2), which reads as under:- "11. To lend money with or without security and to make advances upon, hold in trust, issue, buy, sell or otherwise, acquire or dispose of on commission or otherwise any of the securities or investments of the kinds before mentioned, or to act as agent for any of the above or the like purposes." 9.1. it is therefore, clear that being a NBFC, earning of interest by way of lending advances is the assessee's business. Further, it is also noticed from the record of the case that since Assessment Year 2000-01 till Assessment Year 2004-05, assessee's similar interest amounts have been treated as business income. We deem it appropriate to reproduce the said page, (which has not been controverted by Revenue) as under:- "Interest Income Particulars Assessment Years Interest on 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 Debentures 654213 724784 657744 638402 643046 630000 & bond On ICD and 2332754 3806569 3207406 4093152 3415887 3854926 others Note: 1) Financing Activity has been accepted as the business of the company in A.Y. 2000-01 to 2004-05 2) Interest income has been returned and assessed as business income as follows: (a) A.Y. 2000-01 – Under section 143(1) (b) A.Y. 2001-02 – Under Section 143(3) Part Interest disallowed by A.O under section 14A – confirmed by CIT(A) – However, ITAT has sent back the matter to the A.O to decide the same afresh (A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd (c) A.Y. 2002-03 - Under Section 143(1) (d) A.Y. 2003-04 - Under Section 143(1) interest allowed (e) A.Y. 2004-05 - Under Section 143(1) (f) A.Y. 2005-06 - Under Section 143(3) CIT(A) treated as Income from Other Sources for the first time.” Therefore, it is further evident that in Assessment year 2003-04, Assessment Order was passed under section. 143(3), similar amount had been treated as business income. At the same time, we are also unable to lose sight of the fact that regarding A.Y. 2001- 02, the Tribunal has remitted the case back to Assessing Officer for fresh decision on the same issue. 9.2. Accordingly, in light of aforesaid circumstances, in this A.Y. as well, we deem it a fit case to remit the ground back to Assessing Officer to decide the same in accordance with law and after affording opportunity of hearing to assessee.
4. Respectfully following the said decision, we restore this issue to the file of the Assessing Officer for denovo adjudication in accordance with law in the light of the observations of the Tribunal for the Assessment Year 2005-06 as reproduced above. These grounds are allowed for statistical purpose.
Ground No.4 and 5 of the grounds of appeal are related to disallowance made by the Assessing Officer u/s 14A r/w Rule 8D. The Learned Counsel for the assessee submits that the provisions of Rule 8D have no application to the present Assessment Year is concerned and he further submits that, for the Assessment Year 2005-06 the Tribunal has estimated the disallowance at 2% of the exempt income and the same may be followed. The Ld. AR has no serious objection.
6. We find that the Coordinate Bench while disposing off this issue for the Assessment Year 2005-06 held that provisions of Rule 8D have no (A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd application for the Assessment Year 2005-06 in view of the decision of the Godrej & Boyce Mfg Co Ltd. Even for the Assessment Year 2006-07 Rule 8D is not applicable. However, a reasonable disallowance should be made as the assessee might have incurred some expenditure for earning exempt income. The ITAT for the immediately preceding Assessment Year directed the Assessing Officer to recompute the disallowance at 2% of the exempt income. Following the said order, we direct the Assessing Officer to restrict the disallowance to 2% of the exempt income for the Assessment Year under consideration i.e. 2006-07.
Coming to the Ground No.6 of the grounds of appeal the assessee is challenging the order of the Ld.CIT(A) in sustaining the disallowance u/s 14A to the extent of ₹ 12,19,043/- while computing the book profits u/s 115JB of the Act. Further Ld.CIT(A) also sustained the action of the Assessing Officer in increasing the book profits by the capital gains of ₹ 6,92,439/- directly credited to the capital reserve account.
8. In so far as the disallowance u/s 14A while computing the book profits is concerned the issue is now squarely covered by the Delhi Special Bench of the Tribunal in the case of ACIT v. Vereet Investment Private Limited [82 taxmann.com 415]. The Special Bench held that the computation under Clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A r/w Rule 8D of Income tax Rules 1962. Respectfully following the said decision, we hold that no disallowance is warranted under section 14A while computing the book profits u/s 115JB of the Act. Thus we direct the Assessing Officer to delete the disallowance made u/s 14A while computing book profits u/s 115JB of the Act. This ground is allowed.
(A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd
Coming to the addition made to the book profits in respect of the portion of capital gains which was not exempt u/s 10(38) of the Act, the Learned Counsel for the assessee submits that the Ld.CIT(A) directed the Assessing Officer to increase the book profits by the amount of capital gains not exempt to the extent of ₹ 6,92,439/- which was not rooted through profit and loss account but was directly credited to capital reserves placing reliance on the decision of the Mumbai bench in the case of Bombay Diamonds Company Private Limited in ITA.No. 7488/Mum/2007. The Learned Counsel for the assessee submits that the Ld.CIT(A) is not justified in directing the Assessing Officer to increase the book profits by the capital gains which was not exempt and carried to capital reserves for the reason that there is no qualification by the auditors that the action of taking the capital gains directly to the capital reserves without rooting to the profit and loss account is not in accordance with Parts II and III of the Schedule VI of the Companies Act. In the circumstances the book profits shown by the assessee cannot be tinkered with in view of the decision of the Hon’ble Supreme court in the case of Apollo Tyres Ltd v. CIT 255 ITR 273. The Learned Counsel for the assessee also placing reliance on the following decisions including the decision of the Jurisdictional High Court submits that the capital gains taken to the capital reserve account cannot be added to book profits. 1) CIT v. Abhut Trading Co Pvt Ltd (2001) 338 ITR 94 (Bom) 2) CIT v. Akshay Textiles Trading (2008) 214 CTR Bom 316 3) CIT v. Forever Diamonds Pvt. Ltd. – ITA.No.1609 of 2013 (Bom) 4) Forever Diamonds Pvt. Ltd v. DCIT – ITAT Mumbai 5) CIT v. Bisleri Sales Ltd – ITA.No.1436 of 2013 (Bom) 10. The Ld. DR vehemently supported the orders of the CIT(A).
(A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd 11. We have heard the rival submissions perused the orders of the authorities below and the decisions relied upon. We find that issue has been elaborately considered by the Coordinate Bench of this Tribunal in the case of Forever Diamonds Private Limited v. DCIT in ITA.No. 5720/Mum/2011 dated 23.01.2013 wherein the Coordinate Bench taking note of various decisions of the Jurisdictional High Court including the decision in the case of CIT v. Akshay Textile Trading (supra) wherein it was held that capital gains not shown in the profit and loss account under the company account cannot be added while computing the book profits. The Coordinate Bench following the said decision deleted the addition made by the Assessing Officer while doing so the Coordinate Bench observed as under:- “2. We first take up the dispute relating to adjustment made by AO in computation of book profit under section 115JB. Under the provisions of section 1I5JB, in case, total income computed under normal provisions of the Act is less than certain percentage of book profit, the book profit is deemed to be total income of the assessee on which tax is payable on a specified rate. The book profit under the said provisions is computed on the basis of profit shown in the P&L Account prepared in accordance with provisions of Part-II and Part—III of Schedule-VI of Companies Act to which certain adjustments as provided in the Explanation-1 to Section I 15JB(2) are required to be made. In the present case, the AO noted that the assessee had earned gross profit of Rs. 1,68,95,500/- from sale of its rights in the immovable property which had not been shown in the P&L Account but had been taken directly to the balance sheet. He referred to the sub- clause (xi) of clause-3 of Part-II of Schedule- VI as per which the assessee is required to show the amount of income earned from investment in the P/L Account, distinguishing between trade investments and other investments. It was thus mandatory for the company to show profit/loss on sale of assets in the P&L Account which had not been done. The AO thus concluded that the P/L account had not been prepared in accordance with Part- II and Part- III of Schedule-VI of the Companies Act. He referred to the decision of the Tribunal in the case of M/s. Bombay Diamonds (A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd Co. P. Ltd. in order dated 30.11.2009 in which in an identical situation, the assessee had not shown the profit on sale of investments in P&L Account and AO had re-worked the profit for the purpose of Section 115JB. The Tribunal held that the AO had power to re-work the book profit by re-casting the P&L account in the manner provided in Part-11 and Part-Ill of Schedule-VI of the Companies Act. The AO, therefore, re-worked the book profit in which addition on account of sale of investment was made and tax computed accordingly. In appeal, CIT(A) confirmed the adjustment made by AO to the book profit aggrieved by which the assessee is in appeal before the Tribunal.
3. Before us, the Id. AR for the assessee submitted that the issue was covered in favour of the assessee by the judgment of Hon'ble Supreme Court in the case of Apollo Tyres Ltd. vs. CIT (255 ITR 273) in which it was held that once accounts prepared as per Companies Act are verified by the authorities under Companies Act, it is not open to the AO to make changes in the accounts so prepared for the computation of book profit. The Id. AR also referred to the judgment of Hon’ble High Court of Bombay in case of CIT vs. Akshay Textiles Trading And Agencies P. Ltd. (304 ITR 401) and the judgment of same High court in case of CIT vs. Adhhut Trading Co. P. Ltd. (338 ITR 94) in which the Hon'ble High Court following the judgment of Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (supra), held that the accounts prepared under the Companies Act and certified by the authorities under the said Act have to be accepted. It was accordingly urged that the adjustment made by the AO on account of profit from sale of investment was not justified. 3.1 The Id. DR on the other hand submitted that the specific issue as to whether capital gain not routed by the assessee through P&L Account prepared under the Companies Act can be added to the book profit had been considered by the Hon’ble High Court of Bombay in the case of CIT vs. Veekaylal Investment Co. P. Ltd. (249 ITR 597) and it was held that the adjustment by the AO was correct. It was argued that it was within the power of AO to go into the accounts prepared by the assessee under the Companies Act and re-cast the accounts in case the same was not prepared correctly. He placed reliance on the decision of the Tribunal in the case of Sumer Builders (P) Ltd. (50 SOT 198) in which the Tribunal after considering the judgment of the Hon'ble Supreme Court in case of (A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd Apollo Tyres (supra) and the judgment of Hon’ble High Court of Bombay in case of CIT vs. Akshay Textiles Trading And Agencies P. Ltd. (supra), had upheld the adjustment made by the AO on account of profit from sale of investments. He also referred to the decision of the Mumbai Bench of the Tribunal in the case of Kopran Pharmaceuticals Ltd. Vs. DCIT (119 lTD 355) in which the Tribunal after referring to the judgment of Hon’ble Supreme Court in the case of Apollo Tyres (supra), held that the Hon'ble Supreme Court in the said case had laid down the general proposition of law whereas the judgment of the Hon'ble High Court of Bombay in case of Veekaylal Investment Co. P. Ltd. (supra) was specific on the issue of capital gain and, therefore, the judgment of Hon’ble High Court would prevail on the issue. 3.2 In reply, the id. AR stated that none of the decisions of the Tribunal cited by the id. AR had considered the later judgment of Hon’ble High Court of Bombay in the case of CIT vs. Adbhut Trading Co. P. Ltd. (supra), in which following the judgment of Hon’ble Supreme Court in the case of Apollo Tyres Ltd. (supra), it was held that once the P&L account prepared under the Companies Act had been certified by the authorities under the said Act, it was not open for the AO to say that P&L Account had not been prepared in accordance with the provisions of Companies Act. It was accordingly argued that the issue being clearly covered by the judgment of Hon’ble Supreme Court and the Hon’ble Jurisdictional High Court, adjustment made by AO on account of profit on sale of investment has to be deleted.
We have perused the records and considered the rival contentions carefully. The dispute raised in this appeal is regarding adjustment made by AO to the book profit computed under the provisions of section 115JB. Under the said provisions, in case, the total income computed under the normal provisions of the Act is less than specified percentage of book profit, the book profit is deemed to be the total income on which tax is required to be levied at a specified rate. The book profit under section 115JB is required to be computed on the basis of P&L Account prepared in accordance with the provision of Part II and Part-Ill of Schedule VI of the Companies Act and, to such profit, certain adjustments as provided in the Explanation-I to Section 115JB(2) is required to be made. The issue is whether the AO has power to re-cast the accounts prepared and (A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd certified by the authorities under the Companies Act. The case of the revenue is that, in case, accounts are not prepared in accordance with the provisions of Part-II and Part-Ill of Schedule VI of the Companies Act, the AO has the power to go into accounts and re-cast the same as per requirement of the Companies Act. The assessee on the other hand has argued that the accounts prepared under the Companies Act and certified by the authorities under the said Act cannot be tinkered with by the AO and have to be accepted for computation of the book profit. 4.1 We have carefully considered the various aspects of the matter. We find that the issue raised before us has already been considered and decided by the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. vs. CIT(255 ITR 273). In that case, the assessee had claimed arrears of depreciation in the P&L Account prepared under the Companies Act. The AO held that the accounts prepared were not in accordance with Part-II and Part-III of Schedule-VI of the Companies Act and, therefore, disallowed the arrears of depreciation which had been upheld up to the level of the High Court. The Hon’ble Supreme Court observed that Section 115J provisions of which were similar to those of 115 JB was introduced in the Income tax Act with a deeming provision which made Companies liable to pay tax at least 30% of book profit as shown in its own accounts. For the said purpose, the section 115J made income reflected in the compan's books of account, the deemed income for the purpose of assessing the tax. The Hon’ble Supreme Court further observed that the use of the words "in accordance with the provisions of part-II and Part-III of Schedule-VI of the Companies Act" was made for the limited purpose of empowering the assessing authority to rely upon the authentic statement of accounts of the company and while so looking into the accounts of the company, the AO had to accept the authenticity of the accounts. It was so held by the Hon'ble Supreme Court that the AO has only the power to examine whether books of account are certified by authorities under the Companies Act as having been properly maintained in accordance with the provisions of the Companies Act. The AO, thereafter, has limited power of making adjustments as provided in Explanation to section 115J. The relevant portion of the judgment of the Hon’ble Supreme Court is reproduced below as a ready reference.
(A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd "The Assessing Officer, while computing the book profits of a company under section 115J of the income-tax Act, 1961, 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, has the limited power of making increases and reductions as provided for in the Explanation to section 115J. The Assessing Officer does not have the jurisdiction to go behind the net profits shown in the profit and loss account except to the extent provided in the Explanation. The use of the words "in accordance with the provision of Parts Ii and Iii of Schedule Vito the Companies Act" in section 115J was made for the limited purpose of empowering the Assessing Officer to rely upon the authentic statement of accounts of the company. While so looking into the accounts of the company, the Assessing Officer has to accept the authenticity of the accounts with reference to the provisions of the Companies Act, which obligate the company to maintain its accounts in a manner provided by that Act and the same to be scrutinized and certified by statutory auditors and approved by the company in general meeting and thereafter to be filed before the Registrar of Companies who has a statutory obligation also to examine and be satisfied that the accounts of the company are maintained in accordance with the requirements of the Companies Act. Sub-section (1A) of section 115J does not empower the Assessing Officer to embark upon a fresh enquiry in regard to the entries made in the books of account of the company." 4.2 The revenue has relied on the judgment of Hon’ble High Court of Bombay in the case of Veekaylal Investment Co. P. Ltd. (supra), but the said judgment had been delivered prior to the judgment of Hon’ble Supreme Court in the case of Apollo Tyres Ltd. (supra) and, therefore reliance on the judgment of Hon’ble High Court of Bombay is misplaced. The Hon’ble High Court of Bombay, subsequent to the judgment of Hon’ble Supreme Court in case of Apollo Tyres Ltd. (supra), have reconsidered the issue and have held in case of CIT vs. Akshay Textiles Trading And Agencies P.Ltd. (supra), that capital gain not shown in the P&L Account under the Companies Account cannot be added while computing to the book profit. The same position was reiterated by the Hon'ble High Court in case of CIT vs. Adbhut Trading Co. P. Ltd. (supra) in which it was held that once accounts including the P&L Account had been prepared and (A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd certified by authorities under the Companies Act, it was not open for the AO to state that P&L Account has not been prepared in accordance with the provisions of the Companies Act. The id. DR pointed out that the Tribunal in case of Sumer Builders (P) Ltd. (supra) even after considering the judgment of the Hon’ble High Court of Bombay in case of CIT vs. Akshay Textiles Trading And Agencies P. Ltd. (supra), have held that the AO has power to re- cast the accounts prepared under the Companies Act, in case, these were not correctly prepared. Arguments advanced by the revenue have no merit in view of the issue having been already settled by the judgment of the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (supra), as pointed out earlier. Moreover, the Tribunal in the case of Sumer Builders (P) Ltd. (supra) had no occasion to consider the latest judgment of the Hon'ble High Court of Bombay in the case of Adbhut Trading Co. P. Ltd. (supra) in which the Hon'ble High Court following the judgment of Hon’ble Supreme Court in the case of Apollo Tyres Ltd. (supra) have allowed the claim of the assessee. In the case of Appolo Tyres Ltd. (supra), it has been clearly held that the AO has only power of examination whether books of account prepared under the Companies Act have been certified by the authorities under the Companies Act and, therefore, he could only make adjustments as provided in Explanation to Section 1 15JB(2) of the Act. It is thus clear that once accounts are prepared under the Companies Act and have been certified by the authorities, the AO cannot tinker with the accounts and make any changes while computing book profit except making adjustments as provided in Explanation to Section 1 15JB. The addition made by AO and confirmed by CIT(A) on account of profit on sale of asset not disclosed in the P&L Account prepared under the Companies Act cannot, therefore, be sustained. We, therefore, set aside the order of CIT(A) and delete the addition made.
Respectfully following the said decision we delete the addition, directed to be made u/s 115JB in respect of the capital gains of ₹ 6,92,439/- . This ground is allowed.
(A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd (A.Y: 2009-10):
Now we take up the appeal for the Assessment Year 2009-10. The first issue in the appeal of the assessee is regarding the disallowance u/s 14A r.w. Rule 8D of the Act.
Briefly stated the facts are that the Assessing Officer while completing the assessment disallowed ₹ 22,71,635/- u/s 14A r.w. Rule 8D observing that the dividend income is to be considered for the purpose of section 14A in view of the decision of the Bombay High Court in the case of Godrej and Boyce Manufacturing Company Limited v. DCIT. He also observed that the Hon’ble High Court stated even though assessee contends that tax-free investments have been made out of own funds, this does not mean that there is no expenditure incurred for earning tax-free income thus the Assessing Officer invoked the provisions of section u/s 14A r.w. Rule 8D of the Act and disallowed direct expenditure of ₹ 31,264/- , interest of ₹ 3,62,629/- and 0.5% of average investments at ₹ 18,72,219/- put together at ₹ 22,71,635/-. On appeal the Ld.CIT(A) confirmed the disallowance keeping in view the special bench in the case of Daga Capital Management reported in (2008) 26 SOT 603 (Mum).
Learned Counsel for the assessee before us submits that the investments made by the assessee are all strategic investments in group concerns. He further submits that there are certain investments in growth funds and the returns earned on such growth funds are liable for tax. Therefore, these investments should be excluded while computing the disallowance u/s 14A. All these aspects have not been considered by the Assessing Officer and the Ld.CIT(A) simply affirmed the order of the Assessing Officer. Learned Counsel for the assessee further submits that (A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd there is no satisfaction recorded by the Assessing Officer as to the correctness of the disallowance made by the assessee in the computation of income. He submits that assessee sumoto disallowed ₹ 31,264/- as direct expenditure incurred for earning exempt income. The Learned Counsel for the assessee further submits that if the growth funds and strategic investments are excluded the disallowance would works out to ₹ 5,88,180/- and therefore there is no justification in disallowing ₹ 22,71,634/-. The Ld. DR vehemently supported the orders of the authorities below.
On hearing the rival submissions, we are of the view that these submissions were not made before the Assessing Officer. Therefore, the issue is to be considered afresh in view of what is submitted before us by the assessee. Therefore, we restore this issue to the file of the Assessing Officer who shall decide the issue in accordance with law and the assessee is free to raise his contentions before him. Thus we restore this issue to the file of the Assessing Officer for denovo consideration.
Coming to Ground No.2 i.e. disallowance of provision for Fringe Benefit Tax, the Learned Counsel for the assessee fairly concedes that this should go against the assessee in view of provisions of section 40(a)(ic) of the Act. In view of this submissions this ground is dismissed.
Coming to the computation of book profits u/s 115JB, the Assessing Officer increased the book profits with the capital gains derived by the assessee which was directly credited to capital account to the extent of ₹ 7,25,581/- and computed the book profits accordingly. On appeal the Ld.CIT(A) sustained the said computation. This aspect of the matter has been already dealt by us in preceding paragraphs while disposing off the (A.Y: 2006-07) ITA.No.5174/Mum/2012 (A.Y. 2009-10) Bhupati Investments & Finances Pvt Ltd appeal for the Assessment Year 2006-07 and for the reasons explained therein the decision taken therein applies Mutatis-Mutandis to this year as the facts are similar. Thus following the said decision for the Assessment Year 2006-07 we hold that the gain on investments which were directly taken to the balance sheet should not be added while computing book profits. Thus we direct the Assessing Officer to exclude the gain on sale of assets and re-compute the book profits accordingly.
In the result both the appeals of the assessee are partly allowed.
Order pronounced in the open court on the 04th August, 2017.