Case Law Details
Pricol Limited Vs DCIT (ITAT Chennai)
ITAT Chennai held that as capital profit are to be excluded while computing book profit u/s 115JB, similarly, the adjustment of loss could also not be allowed u/s 115JB. Hence, loss on sale of investment could not be reduced from Book Profits u/s 115JB of the Income Tax Act.
Facts- The sole issue that arises for consideration in the present case is determination of Book-Profits u/s 115JB vis-à-vis loss suffered by the assessee on loss on investments.
Conclusion- Held that capital profits, which do not have component of income, are to be excluded while computing Book Profits u/s 115JB. On similar logic, the adjustment of loss could also not be allowed u/s 115JB. In other words, loss on sale of investment could not be reduced from Book Profits u/s 115JB. The Hon’ble High Court of Madras in CIT V/s Metal and Chromium Plater (P.) Ltd. clearly held that in terms of provisions of sub-section (5) of Sec.115JB, the assessment was open for application of all other provisions contained in the Income tax Act except if specifically barred by that section itself. Therefore, when gains on sale of investments were to be excluded being capital receipts, naturally, the book profits are to be increased by similar losses incurred on sale of investments. Accordingly, we confirm the view taken by lower authorities, in this regard and dismiss the grounds raised by the assessee.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
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