Even capital profits have to be added to “book profits” for S.115JB

The assessee earned a capital profit of Rs. 10.38 crores on sale of rights to immovable property. The said profit was directly credited to the capital reserves in the balance sheet instead of being routed through the Profit & loss account. The accounts of the assessee company were duly certified by the auditors and were also adopted in the AGM. The audited accounts were filed with ROC. In the computation of “book profits” for s. 115JB, the said capital profits were not included. The AO took the view that by not crediting the capital profit to the P&L A/c, the assessee had contraven...