J. K. Lakshmi Cement Ltd. (Taxpayer) Vs ACIT (ITAT Kolkata)- In computing the book profit for the assessment years 2006-07 and 2007-08, the assessee was entitled to deduction in terms of clause (iii) of the Explanation to section 115JB(2) of the Act the adjustment of debit balance in the Profit and Loss Account with share Premium Account and Revaluation Reserve made on September 30, 2000, which is required to be excluded from consideration and accordingly, AO is required to determine amount of loss brought forward or un absorbed depreciation for each of years without taking said adjustment into consideration and allow deduction in respect of lesser of two amounts.
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA
I.T.A No. 1275/Kol/2010
Assessment Year: 2007- 08
J. K. Lakshmi Cement Ltd. Vs. Assistant Commissioner of Income Tax
&
I.T.A No. 1417/Kol/2010
Assessment Year: 2007-08
Deputy Commissioner of Income-tax Vs. J. K. Lakshmi Cement Ltd.
&
I.T.A No. 1470/Kol/2009
Assessment Year: 2006-07
Assistant Commissioner of Income-tax Vs. J. K. Lakshmi Cement Ltd.
&
C.O. No.69/Kol/2009
In I.T.A No.1470/Kol/2009
Assessment Year: 2006-07
J. K. Lakshmi Cement Ltd. Vs. Assistant Commissioner of Income-tax
ORDER
Per Mahavir Singh, JM
Out of above, cross appeals being ITA No1275/K/2010 and ITA No1417/K/2010 are arising out of order of CIT(A), Central-1, Kolkata in appeal No.70/CIT(A)C-1/CC-VI/09-10 dated 7.4.2010 for the Assessment Year 2007-08 and appeal being ITA No. 1470/K/2009 filed by revenue and CO 69/Kol/2009 by assessee are arising out of order of CIT(A), Central-1, Kolkata in appeal N.314/CC-VI/CIT(A),C-1/08-09 dated 10.6.2009 for the Assessment Year 2006-07. Assessments were framed by ACIT, CC-VI, Kolkata for Assessment Year 2007-08 u/s. 143(3) of the Income Tax Act, 1961(hereinafter referred to as “the Act”) vide his order dated 19.11.2009 and for Assessment Year 2006-07 u/s. 143(3) r.w.s.115JB of the Act vide his order dated 5.12.2008. For the sake of brevity and clarity, we dispose of both these appeals and cross objections by this consolidated order as issues are common.
2. The first common issue in revenue’s appeal in ITA No 1470/K/2009 for Assessment Year 2006- 07 and assessee’s appeal in ITA No. 1275/K/2010 for Assessment Year 2007-08 is as regards to computation of income u/s. 1 15JB of the Act for both years. For this, assessee as well as revenue have raised following grounds:
“Grounds in Assessee ’s appeal in ITA No 1275/K/2010:
1.0. Confirming the action of Assessing Officer in determining the Book Profit u/s. 115JB of the Act for the year under appeal at Rs. 1823380456 as against Rs. ‘Nil’ declared in the return on the alleged ground that there was no Brought Forward Business loss & Depreciation as per books of account available for reducing from the net profit as shown in the profit and loss account under clause (iii) of Explanation 1 to Sec. 115JB(1).
1.1. Holding that the adjustment of Rs. 381.55 cr. being the loss incurred by the appellant company in the earlier years, against the Share Premium account/Revaluation Reserve, pursuant to scheme sanctioned by the High Courts is not in contravention to the provisions of Companies Act.
1.2. Not appreciating that set off of Brought Forward loss amounting to Rs. 1823380456 was available this being part of Rs. 2465335924 determined in order u/s. 143(3) for the Asst. Year 2005 -06.”
Grounds in Revenue’s appeal in ITA No 1470/K/2009:
1. That Ld. CIT(A) has erred in deleting addition made u/s. 40A(9) of the Act of Rs. 11,92,645/- on account of expenditure incurred for running School and other facilities.
2. i) That, the Ld. CIT(A), Central-1, Kol has erred in allowing the assessee ’s appeal against assessment of Book profit of Rs. 56,24,31,715/- by the A.O. as per provision of Section 115JB of the Act and as per the decision of the Hon ’ble Supreme Court in the case of Apollo Tyres 255 ITR 273.
ii) That, in doing so, Ld. CIT(A) has erred in holding that the A. O. cannot revise Auditor certificate for reversal of the loss ‘incorrectly’ removed/ adjusted in F. Y. 1999- 2000 in Revaluation Reserve and share premium A/c, to implement H.C’s order, and has also erred in observing that if the ratio of Apollo Tyres is to be followed, the Auditor’s view should prevail and should not be challenge-able by the A. O.
