Forever Diamonds (P.) Ltd. v. Dy. CIT

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The Tax Publishers2013 TaxPub(DT) 0723 (Mum-Trib) : (2013) 152 TTJ 0682 : (2013) 083 DTR 0411 INCOME TAX ACT, 1961 --MAT--Book profit under section 115JBTreatment of profit from sale of rights in immovable propertyAssessing officer noted that assessee had earned profit from sale of its rights in immovable property which had not been shown in Profit and Loss account but directly taken to balance sheet. He was of the opinion that it was mandatory for company to show profit/loss on sale of asset in Profit and Loss Account which had not been done. Assessing officer, therefore, reworked book profit in which addition on account of sale of investment was made and tax was computed accordingly. Commissioner (Appeals) upheld order of assessing officer. *Held:* Not rightly so. Accounts prepared under Companies Act and certified by authorities under said Act could not be tinkered with by assessing officer and have to be accepted for computation of book profit no adjustment was therefore, required to be made. Income Tax Act, 1961, Section 115JB INCOME TAX ACT, 1961 --Business expenditure--Disallowance under section 14A Applicability of rule 8D--AO observed that assessee had earned tax-free dividend income. Assessing officer, therefore, allocated expenses relating to exempt income on proportionate basis and disallowed certain amount. On appeal Commissioner (Appeals) directed assessing officer to recompute disallowance as per rule 8D of Income Tax Rules, 1962. *Held:* Not justified Rule 8D was prospectively in operation and for relevant year disallowance of expenses would be made on some reasonable basis. Income Tax Act, 1961, Section 14A IN THE ITAT, Mumbai C Bench Rajendra Singh, A.M. & Amit Shukla, J.M. Forever Diamonds (P.) Ltd. v. Dy. CIT ITA No. 5720/Mum/2011 A.Y. 2004-05 23 January, 2013 Income-tax Act, 1961, s. 11SJB In favour of: Assessee Appellant by : Dillip J. Thakkar & Rajesh P. Shah Respondent by : A.P. Singh ORDER SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0723 (Mum-Trib) : (2013) 152 TTJ 0682 : (2013) 083 DTR 0411

INCOME TAX ACT, 1961

--MAT--Book profit under section 115JBTreatment of profit from sale of rights in immovable propertyAssessing officer noted that assessee had earned profit from sale of its rights in immovable property which had not been shown in Profit and Loss account but directly taken to balance sheet. He was of the opinion that it was mandatory for company to show profit/loss on sale of asset in Profit and Loss Account which had not been done. Assessing officer, therefore, reworked book profit in which addition on account of sale of investment was made and tax was computed accordingly. Commissioner (Appeals) upheld order of assessing officer. Held: Not rightly so. Accounts prepared under Companies Act and certified by authorities under said Act could not be tinkered with by assessing officer and have to be accepted for computation of book profit no adjustment was therefore, required to be made.

Income Tax Act, 1961, Section 115JB

INCOME TAX ACT, 1961

--Business expenditure--Disallowance under section 14A Applicability of rule 8D--AO observed that assessee had earned tax-free dividend income. Assessing officer, therefore, allocated expenses relating to exempt income on proportionate basis and disallowed certain amount. On appeal Commissioner (Appeals) directed assessing officer to recompute disallowance as per rule 8D of Income Tax Rules, 1962. Held: Not justified Rule 8D was prospectively in operation and for relevant year disallowance of expenses would be made on some reasonable basis.

Income Tax Act, 1961, Section 14A

IN THE ITAT, Mumbai C Bench

Rajendra Singh, A.M. & Amit Shukla, J.M.

Forever Diamonds (P.) Ltd. v. Dy. CIT

ITA No. 5720/Mum/2011

A.Y. 2004-05

23 January, 2013

Income-tax Act, 1961, s. 11SJB In favour of: Assessee

Appellant by : Dillip J. Thakkar & Rajesh P. Shah

Respondent by : A.P. Singh

ORDER