Birla Group Holding Private Limited Vs ACIT (ITAT Mumbai)
The share of loss from a partnership firm, debited to the Profit and Loss Account, cannot be added back while computing book profits under section 115JB of the Act as expenditure relatable to exempt income- ITAT Mumbai
It is settled law that adjustments to the net profit for computing book profit under section 115JB are to be strictly made in accordance with the clauses specified in the Explanation to the section. There is no express provision under Explanation 1 permitting addition of the share of loss from a partnership firm, unless it is in the nature of expenditure relatable to exempt income or any other specified item which in the present case, it is not. Accordingly, we hold that the action of the Ld. AO in adding back the assessee’s share of loss from the partnership firm to the book profits under section 115JB of the Act is not in accordance with law. The Ld. CIT(A) erred in upholding the same.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Instant appeal of the assesse was filed against the order of the Learned Commissioner of Income-tax (Appeals)-52, Mumbai [in short, ‘Ld.CIT(A)] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), date of order 21/02/2025. The impugned order emanated from the order of the Learned Assistant Commissioner of Income-tax -2(1), Ujjain (in shot, ‘the Ld.AO’), passed under section 143(3) read with section 263 of the Act, 1961 (in short, ‘the Act’), date of order 21/12/2018.
