PVP Corporate Parks Pvt. Ltd. Vs DCIT (Madras High Court)
Madras High Court held that capital profit on the sale of the Fixed Assets of the Company cannot be taken directly to the Reserves & Surplus in the Balance Sheet and the same has to be routed through the Profit & Loss Account to arrive at the correct book profits u/s. 115JB of the Income Tax Act. Accordingly, the appeal stands dismissed.
Facts- The Appellant/Assessee, a Private Limited Company is engaged in the business of leasing and renting of amenities and buildings. The return of the assessee was selected for scrutiny and notice u/s. 143(2) was issued on 29.08.2011. On completion of enquiry, it was found that the Assessee Company had sold its fixed asset and derived a capital profit of Rs.32,11,24,002/-. However, the capital profit has been directly absorbed in its balance sheet without routing it through the Profit and Loss Account. Therefore, alleging that the book profit of the company has been under stated by direct absorption in the balance sheet and has not been routed through the Profit and Loss Account, the Assessing Officer passed an order on 29.03.2013, assessing the Income Tax, after completing the rework of the book profits u/s. 115JB of the Income Tax Act, 1961.
