The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai directed Assessing Officer to grant deduction adjustment made by CA in revised form No.29B while computing revised book profits u/s.115JB is in order.
The issues in assessee’s, M/s. Sheth Developers Private Limited, appeal is as to whether the assessee is entitled for reduction of Rs.5,51,89,912/- towards an item which is mentioned as an audit qualification in the statutory audit report, while computing book profits u/s.115JB of the Act.
M. Balaganesh, Accountant Member and Rahul Chaudhary, Judicial Member said “We find that assessee had filed its original computation of book profits u/s.115JB of the Act at Rs.14,12,86,867/- together with audit report in form No.29B dated 28/11/2015. Subsequently it had filed its revised book profits at Rs.8,60,96,955/- by filing revising form No.29B dated 30/11/2015 wherein the assessee had reduced an amount of Rs.5,51,89,912/- under the head ‘provision’. This sum represents the reduction as per accounting policy and audit qualification issued by the statutory auditor. This sum represents provision made for expenditure with respect to property tax demand raised by the GMMC with respect to assessee’s fixed assets.
During the F.Y.2014-15, the assessee had incurred expenses in the capital assets and accordingly, the provision made for this property tax demand also was capitalised by the assessee, however, the auditor was of the view that such expenses towards provision for property tax demand would be revenue in nature and hence, the same ought to have been debited in the profit and loss account. This is the ultimate essence of the audit qualification made by the statutory auditor in the statutory audit report.”
The Tribunal observed that “Section 115JB mandates that the accounts of the assessee company should be prepared as per the mandate provided in Section 211 of the Companies Act. Hence, we hold that audit report together with the audit qualification and notes on accounts should be read together with the balance sheet and profit and loss account for the purpose of determination of book profits u/s.115JB of the Act.
Hence, the adjustment made by the statutory auditor in the revised form No.29B while computing revised book profits u/s.115JB of the Act is in order. Accordingly, we direct the ld. AO to grant deduction of Rs.5,51,89,912/- while computing book profits u/s.115JB of the Act. Accordingly, the grounds raised by the assessee are allowed.”
Subscribe Taxscan Premium to view the JudgmentBuy books of essential tax practice with exciting offers at shopscan.in
