SU-RAJ DIAMOND INDUSTRIES LTD., MUMBAI V. D.C.I.T. CENTRAL CIRCLE - I, MUMBAI

ITA 2292/MUM/2012

• Counselvise Citation: 229219914 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 09-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 09-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DAYAL
• Assessee Lawyers: RAJESH P SHAH; D J THAKKAR
• Keywords: Depreciation; Deemed to accrue or arise in india; Question of law
• Section: 6; 143(3); 153A; 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI , BEFORE : SHRI R.C.SHARMA , A M AND SHRI VIVEK VARMA , J M ITA NO. 2292 / MUM/20 1 2 ( ASSESSMENT YEAR : 200 5 - 0 6 ) M/S SU - RAJ DIAMOND INDUSTRIES LTD., 73 - C, SURAJ HOUSE, CROSS ROAD, MIDC, MAROL, ANDHERI (E), MUMBAI - 400 093 VS. DCIT CC - I, MUMBAI PAN/GIR NO. : A AECS 7499 C ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI D.J. THAKKAR & RAJESH P. SHAH /REVENUE BY : SHRI GIRIJA DAYAL DATE OF HEARING : 9 TH JANUARY , 201 4 DAT E OF PRONOUNCEMENT : 21 ST MARCH , 201 4 O R D E R PER R.C.SHARMA ( A .M.) : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), DATED 16 - 2 - 2012 , FOR THE ASSESSMENT YEAR 200 5 - 0 6 , IN THE MATTER OF ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE I T. ACT., WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE : - 'ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF AO OF CONSIDERING THE PROF IT ON SALE OF CAPITAL WORK IN PROGRESS OF RS. 420.84 LACS FOR THE PURPOSE OF CALCULATING BOOK PROFIT U/S. 115JB WITHOUT APPRECIATING THAT SUCH PROFIT IS NOT TAXABLE UNDER THE PROVISION OF INCOME TAX ACT AND SAME NEEDS TO BE IGNORED FOR COMPUTING BOOK PROFIT U/S. 115JB. ' ITA NO. 2292 /20 1 2 2 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. DURING THE COURSE OF ASSESSMENT UNDER SECTION 143 READ WITH SECTION 153A, THE AO FOUND THAT DURING THE YEAR THE ASSESSEE COMPANY HAD SOLD ITS RIGHTS IN AN IMMOVABLE PROPERTY FOR CONST RUCTION AND HAS EARNED GROSS PROFIT OF RS .4 ,20,84,802/ - FROM THE SAID SALE TRANSACTION. THE AO OBSERVED THAT THIS INCOME HAS NOT BEEN PASSED THROUGH P & L ACCOUNT BUT HAS BEEN DIRECTLY TAKEN TO THE BALANCESHEET AND THE COMPUTATION OF INCOME. THE AO OBSERVE D THAT AS PER SUB - CLAUSE (XI)(A) OF CLAUSE (3) OF SCHEDULE VI OF THE COMPANIES ACT, 1956, A COMPANY IS REQUIRED TO SHOW THE AMOUNT OF INCOME EARNED FROM INVESTMENT, DISTINGUISHING TRADE INVESTMENT AND OTHER INVESTMENT. HE FURTHER OBSERVED THAT AMOUNT PAID BY THE ASSESSEE FOR ACQUIRING THE RIGHTS IN THE SAID IMMOVABLE PROPERTY WERE REFLECTED AS 'CAPITAL WORK - IN - PROGRESS' UNDER THE HEAD 'FIXED ASSETS' IN ITS BALANCE - SHEET. THUS, THE SAID AMOUNT WAS BEING TREATED AS INVESTMENT BY THE COMPANY IN ITS BUSINESS. T HEREFORE, IT WAS MANDATORY FOR THE COMPANY TO HAVE SHOWN ANY PROFIT OR LOSS ON THE SALE OF SAID ASSETS. THE AO OBSERVED THAT ASSESSEE COMPANY DID NOT CREDIT ITS P & L ACCOUNT WITH THE PROFIT EARNED FROM SALE OF ITS SALE INVESTMENT. THUS, THE ASSESSEE VIOLA TED THE PROVISIONS OF SUB - CLAUSE (XI)(A) OF CLAUSE (3) OF SCHEDULE VI OF THE COMPANIES ACT, 1956. THE AO FURTHER STATED THAT SIMILAR ISSUE HAD ARISEN IN THE CASE OF A GROUP CONCERN NAMELY M/ S BOMBAY DIAMONDS CO. P. LTD. FOR A.Y.2004 - 05. BEING AGGRIEVED, TH E ASSESSEE HAD PREFERRED AN APPEAL BEFORE THE LD. CIT( A) AGAINST THE ORDER OF THE A.O . THE LD. CIT(A) XXVII, MUMBAI ITA NO. 2292 /20 1 2 3 VIDE ORDER DTD. 29.09.2007 HAD ALLOWED THE RELIEF TO THE ASSESSEE ON THIS ISSUE. THE DEPARTMENT HAD FILED AN APPEAL BEFORE THE ITAT AGAINST THE DECISION OF THE CIT(A). THE HON'BLE ITAT 'B' BENCH, MUMBAI IN ITA NO. 7488/MUM/07 VIDE DTD. 30.11.2009 HAVE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORED THE ORDER OF THE ASSESSING OFFICER. WHILE GIVING THE DECISION THE HON'BLE ITAT HAVE OBSERVED AS U NDER : THE VARIOUS OTHER DECISIONS RELIED ON BY THE LD. CIT(A) IN HIS ORDER ARE ALSO NOT APPLICABLE. IN NONE OF THE CASE IT HAS BEEN HELD THAT EVEN WHERE, THE ACCOUNTS ARE NOT PREPARED IN THE MANNER P ROVIDED AS PER PART II AND PART III OF SCHEDULE VI OF THE COMPANIES ACT, 1956 THE ASSESSING OFFICER HAS NO POWER TO GO BEYOND THE BOOK PROFIT AS PER THE AUDITED ACCOUNTS. IN OUR OPINION THE ASSESSING OFFICER CANNOT GO BEYOND THE BOOK, PROFITS AS PER THE AUDITED ACCOUNTS PROVIDED THEY ARE PREPARED AS PER T HE M ANNER PROVIDED IN PART I I AND PART III OF SCHEDULE 'VI TO THE COMPANIES ACT, 1956 AND ARE ADOPTED IN THE AGM. HOWEVER, IN THE INSTANT CASE, ADMITTEDLY THE ACCOUNTS ARE NOT PREPARED IN THE MANNER PROVIDED IN PART II AND PART III OF SCHEDULE VI TO THE COMPAN IES ACT, 1956, SINCE THE PROFIT ON SALE OF INVE STMENTS AMOUNTING TO RS. 10,38,13, 765/ - WHICH IS A MATERIAL AMOUNT, HAS NOT BEEN ROUTED THROUGH THE 'PROFIT AND LOSS ACCOUNT. 'THEREFORE, THE ASSESSING OFFICER, IN OUR OPINION HAS THE POWER TO RE - WORK, THE BOOK PROFIT RECASTING THE ACCOUNTS IN THE MANNER PROVIDED AS PER PART I I AND PART I II OF SCHEDULE VI TO THE COMPANIES ACT , 1956. IN THIS VIEW OF THE MATTER, THE ORDER OF THE CI T(A) ON THIS ISSUE IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED'. TH E AO OBSERVED THAT THE FACTS IN THE INSTANT CASE ARE SIMILA R TO THE FACTS OF THE CASE OF M/ S BOMBAY DIAMONDS CO. P. LTD, WHEREIN THE HON'BLE ITAT HAVE DECIDED THE ISSUE IN FAVOUR OF THE DEPARTMENT VIEW OF THE ABOVE, AND WITH DUE RESPECT TO THE HON'BLE ITA T 'S DECISION ON THE ISSUE INVOLVED, PROFIT U/S 115 JB HAS BEEN WORKED OUT ACCORDINGLY IN THE INSTANT CASE, AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. THE A O FOLLOWED THE ORDER OF THE TRIBUNAL AND ADDED THE AMOUNT WHILE COMPUTING BUSINESS PROFIT UNDER SECT ION 115JB. ITA NO. 2292 /20 1 2 4 3. BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE ADDITION, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4 . AT THE OUTSET, LEARNED AR PLACED ON RECORD THE ORDER OF THE TRIBUNAL 'F' BENCH IN CASE OF ASSOCIATE CONCERN OF ASSESSE E M / S FOREVER DIAMONDS PVT. LTD., PASSED IN ITA NO.5720/M/2011 FOR THE ASSESSMENT YEAR 2004 - 05, ORDER DATED 23 - 1 - 2013, WHEREIN AFTER CONSIDERING THE DECISION OF THE TRIBUNAL IN THE CASE OF BOMBAY DIAMONDS CO. PVT. LTD., PASSED IN ITA NO.7488/M/2007, VIDE O RDER DATED 30 - 11 - 2009 , THE TRIBUNAL HELD AS UNDER : - '4.1 WE HAVE CAREFULLY CONSIDERED THE VARIOUS ASPECTS OF THE MATTER. WE FIND THAT THE ISSUE RAISED BEFORE US HAS ALREADY BEEN CONSIDERED AND DECIDED BY THE HON'BLE SUPREME COURT IN THE CASE OF APOLLO T YRES LTD. VS. CIT(255 ITR 273). IN THAT CASE, THE ASSESSEE HAD CLAIMED ARREARS OF DEPRECIATION IN THE P&L ACCOUNT PREPARED UNDER THE COMPANIES ACT. THE AO HELD THAT THE ACCOUNTS PREPARED WERE NOT IN ACCORDANCE WITH PART - II AND PART - III OF SCHEDULE - VI OF T HE COMPANIES ACT AND, THEREFORE, DISALLOWED THE ARREARS OF DEPRECIATION WHICH HAD BEEN UPHELD UP TO THE LEVEL OF THE HIGH COURT. THE HON'BLE SUPREME COURT OBSERVED THAT SECTION 115J PROVISIONS OF WHICH WERE SIMILAR TO THOSE OF 115 JB WAS INTRODUCED IN THE INCOME TAX ACT WITH A DEEMING PROVISION WHICH MADE COMPANIES LIABLE TO PAY TAX AT LEAST 30% OF BOOK PROFIT AS SHOWN IN ITS OWN ACCOUNTS. FOR THE SAID PURPOSE, THE SECTION 115J MADE INCOME REFLECTED IN THE COMPANY'S BOOKS OF ACCOUNT, THE DEEMED INCOME FOR T HE PURPOSE OF ASSESSING THE TAX. THE HON'BLE SUPREME COURT FURTHER OBSERVED THAT THE USE OF THE WORDS 'IN ACCORDANCE WITH THE PROVISIONS OF PART - II AND PART - III OF SCHEDULE - VI OF THE COMPANIES ACT' WAS MADE FOR THE LIMITED PURPOSE OF EMPOWERING THE ASSESS ING AUTHORITY TO RELY UPON THE AUTHENTIC STATEMENT OF ACCOUNTS OF THE COMPANY AND WHILE SO LOOKING INTO THE ACCOUNTS OF THE COMPANY, THE AO HAD TO ACCEPT THE AUTHENTICITY OF THE ACCOUNTS. IT WAS SO HELD BY THE HON'BLE SUPREME COURT THAT THE AO HAS ONLY THE POWER TO EXAMINE WHETHER BOOKS OF ACCOUNT ARE CERTIFIED BY AUTHORITIES UNDER THE COMPANIES ACT AS HAVING BEEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT. THE AO, THEREAFTER, HAS LIMITED POWER OF MAKING ADJUSTMENTS AS PROVID ED IN EXPLANATION TO SECTION 115J. THE RELEVANT PORTION OF THE ITA NO. 2292 /20 1 2 5 JUDGMENT OF THE HON'BLE SUPREME COURT IS REPRODUCED BELOW AS A READY REFERENCE. ' THE ASSESSING OFFICER, WHILE COMPUTING THE BOOK PROFITS OF A COMPANY UNDER SECTION 115J OF THE INCOME - TAX ACT, 1961, HAS ONLY THE POWER OF EXAMINING WHETHER THE BOOKS OF ACCOUNT ARE CERTIFIED BY THE AUTHORITIES UNDER THE COMPANIES ACT AS HAVING BEEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE COMPANIES ACT. THE ASSESSING OFFICER, THEREAFTER, HAS THE LIMITED POWER O F MAKING INCREASES AND REDUCTIONS AS PROVIDED FOR IN THE EXPLANATION TO SECTION 115J. THE ASSESSING OFFICER DOES NOT HAVE THE JURISDICTION TO GO BEHIND THE NET PROFITS SHOWN IN THE PROFIT AND LOSS ACCOUNT EXCEPT TO THE EXTENT PROVIDED IN THE EXPLANATION. T HE USE OF THE WORDS 'IN ACCORDANCE WITH THE PROVISION OF PARTS II AND III OF SCHEDULE VI TO THE COMPANIES ACT' IN SECTION 115J WAS MADE FOR THE LIMITED PURPOSE OF EMPOWERING THE ASSESSING OFFICER TO RELY UPON THE AUTHENTIC STATEMENT OF ACCOUNTS OF THE COMP ANY. WHILE SO LOOKING INTO THE ACCOUNTS OF THE COMPANY, THE ASSESSING OFFICER HAS TO ACCEPT THE AUTHENTICITY OF THE ACCOUNTS WITH REFERENCE TO THE PROVISIONS OF THE COMPANIES ACT, WHICH OBLIGATE THE COMPANY TO MAINTAIN ITS ACCOUNTS IN A MANNER PROVIDED BY THAT ACT AND THE SAME TO BE SCRUTINIZED AND CERTIFIED BY STATUTORY AUDITORS AND APPROVED BY THE COMPANY IN GENERAL MEETING AND THEREAFTER TO BE FILED BE FORE THE REGISTRAR OF COMPANIES WHO HAS A STATUTORY OBLIGATION A LSO TO EXAMINE AND BE SATISFIED THAT THE ACCOUNTS OF R13 COMPANY ARE MAINTAINED IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT. SUB - SECTION ( 1A) OF SECTION 115J DOES NOT EMPOWER THE ASSESSING OFFICER TO EMBARK UPON A FRESH ENQUIRY IN REGARD TO THE ENTRIES MADE IN THE BOOT. S OF ACCOUNT OF THE COMPANY. ' 4.2 THE REVENUE HAS RELIED ON THE JUDGMENT OF HON'BLE HIGH COURT OF B O MBAY IN THE CASE OF VEEKAYLAL INVESTMENT CO. P. LTD. (SUPRA), BUT THE SAID JUDGMENT HAD BE E N DELIVERED PRIOR TO THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. (SUPRA) AND, THEREFORE RELIANCE ON THE JUDGMENT OF HON'BLE HIGH COURT OF BOMBAY IS MISP L ACED . THE HON'BLE HIGH COURT OF BOMBAY, SUBSEQUENT TO THE JUDGMENT O F HON'BLE SUPREME COURT IN CASE OF APOLLO TYRES LTD. (SUPRA), I.SVE RECONSIDERED T HE ISSUE AND HAVE HELD IN CASE OF CIT VS. AKSHAY TEXTILES TRADING AND AGENCIES P. LTD. (SUPRA), THAT CAPITAL GAIN NOT SHOWN IN THE P&L ACCOUNT UNDER THE COMPANIES ACCOUNT CANNOT BE ADDED WHILE COMPUTING TO THE BOOK PROFIT. THE SAME POSITION WAS REITERATED BY THE HONBLE HIGH COURT IN CASE OF CIT VS. ABDHUT TRADING CO. P. LTD . (SUPRA) IN WHICH IT WAS HELD THAT ONCE ACCOUNTS INCLUDING THE P&L ACCOUNT HAD BEEN PREPARED AND CERTIFIED BY AUTHORITIES UNDER THE COMPANIES ACT, IT WAS NOT OPEN FOR THE AO TO STATE TH AT P&L ACCOUNT HAS NOT BEEN PREPARED IN ACCORDANCE WITH THE ITA NO. 2292 /20 1 2 6 PROVISIONS OF THE COMPANIES ACT. THE ID. DR POINTED OUT THAT THE TRIBUNAL IN CASE OF SUMER BUILDERS (P) LTD. (SUPRA) EVEN AFTER CONSIDERING THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN CASE OF CIT VS. AKSHAY TEXTILES TRADING AND AGENCIES P. LTD. (SUPRA), HAVE HELD THAT THE AO HAS POWER TO RE - CAST THE ACCOUNTS PREPARED UNDER THE COMPANIES ACT, IN CASE, THESE WERE NOT CORRECTLY PREPARED. ARGUMENTS ADVANCED BY THE REVENUE HAVE NO MERIT IN VIEW OF THE ISSUE HAVING BEEN ALREADY SETTLED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. (SUPRA), AS POINTED OUT EARLIER. MOREOVER, THE TRIBUNAL IN THE CASE OF SUMER BUILDERS (P) LTD. (SUPRA) HAD NO OCCASION TO CONSIDER THE LA TEST JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF ADBHUT TRADING CO. P. LTD. (SUPRA) IN WHICH THE HONBLE HIGH COURT FOLLOWING THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. (SUPRA) HAVE ALLOWED THE CLAIM OF THE ASSES SEE. IN THE CASE OF APOLLO TYRES LTD. (SUPRA), IT HAS BEEN CLEARLY HELD THAT THE AO HAS ONLY POWER OF EXAMINATION WHETHER BOOKS OF ACCOUNT PREPARED UNDER THE COMPANIES ACT HAVE BEEN CERTIFIED BY THE AUTHORITIES UNDER THE COMPANIES ACT AND, THEREFORE, HE CO ULD ONLY MAKE ADJUSTMENTS AS PROVIDED IN EXPLANATION TO SECTION 1 I5JB(2) OF THE ACT. IT IS THUS CLEAR THAT ONCE ACCOUNTS ARE PREPARED UNDER THE COMPANIES ACT AND HAVE BEEN CERTIFIED BY THE AUTHORITIES, THE AO CANNOT TINKER WITH THE ACCOUNTS AND MAKE ANY C HANGES WHILE COMPUTING BOOK PROFIT EXCEPT MAKING ADJUSTMENTS AS PROVIDED IN EXPLANATION TO SECTION 1 I5JB. THE ADDITION MADE BY AO AND CONFIRMED BY CIT(A) ON ACCOUNT OF PROFIT ON SALE OF ASSET NOT DISCLOSED IN THE P&L ACCOUNT PREPARED UNDER THE COMPANIES A CT CANNOT, THEREFORE, BE SUSTAINED. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND DELETE THE ADDITION MADE. 5 . AGAINST THE ABOVE ORDER OF CIT(A), THE REVENUE IS IN FURTHER APPEAL BEFORE US. 6 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS REFERRED BY THE TRIBUNAL IN ITS ORDER BY RELYING ON WHICH THE AO AND CIT(A) HAS DECIDED TH E ISSUE UNDER CONSIDERATION. FROM THE RECORD WE FOUND THAT THE AO HAS BROUGHT TO TAX CAPITAL GAIN UNDER SECTION 115JB WHEN SUCH PROFIT WAS NOT ROUTED THROUGH P & L ACCOUNT AND DIRECTLY TAKEN TO THE BALANCESHEET AND COMPUTATION OF ITA NO. 2292 /20 1 2 7 INCOME. WE FOUND THAT IN C ASE OF ASSOCIATE CONCERN OF THE ASSESSEE, M/S FOREVER DIAMONDS PVT. LTD. (SUPRA) , THE TRIBUNAL VIDE ITS ORDER DATED 23 - 1 - 2013 HAD DEALT WITH THE EXACTLY SIMILAR ISSUE AFTER CONSIDERING THE DECISION IN THE CASE OF BOMBAY DIAMONDS CO. PVT. LTD. (SUPRA) . IN T HIS CASE, THE TRIBUNAL HAS RELIED ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF AKSHAY TEXTILES TRADING AND AGENCIES PVT. LTD., 304 ITR 401 , WHEREIN EXACTLY SIMILAR ISSUE WAS BEFORE THE HONBLE HIGH COURT, WHICH READS AS UNDER : - C. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE TRIBUNAL WAS CORRECT IN UPHOLDING THE ORDER OF THE CIT(A) IN HOLDING THAT THE CAPITAL GAINS OF RS. 19,74,489/ - ARE NOT TO BE TAKEN INTO ACCOUNT WHILE COMPUTING THE PROFITS LIABLE TO B E TAXED UNDER S.115JA OF THE IT ACT, 1961 AND THAT THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. VEEKAYLAL INVESTMENT CO. (P) LTD., (2001) 166 CTR (BOM) 96: (2001) 249 ITR 597 (BOM), WAS NOT APPLICABLE? THE ABOVE ISSUE WAS DECIDED BY THE HONB LE JURISDICTIONAL HIGH COURT AS UNDER : - 2. INSOFAR AS QUESTION C, OUR ATTENTION IS INVITED TO THE JUDGMENT OF THE SUPREME COURT IN APOLLO TYRES LTD. VS. CIT (2002) 174 CTR (SC) 521 : (2002) 255 ITR 273 (SC). THE QUESTION FRAMED THEREIN WHICH IS SIMILAR TO THE QUESTION C HAS BEEN ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IN THE LIGHT OF THAT THE QUESTION OF LAW AS FRAMED WOULD NOT ARISE. THE HONBLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. VS. CIT (2002) 255 ITR 273 (SC) , OBSE RVED THAT THE USE OF WORDS IN ACCORDANCE WITH THE PROVISIONS OF PART - II AND PART - III SCHEDULE VI OF THE COMPANIES ACT WAS MADE FOR THE LIMITED PURPOSE OF EMPOWERING THE ASSESSING AUTHORITY TO RELY UPON THE AUTHENTIC STATEMENT OF ACCOUNTS OF THE COMPANY A ND WHILE SO LOOKING INTO THE ACCOUNTS OF THE COMPANY, ITA NO. 2292 /20 1 2 8 THE AO HAD TO ACCEPT THE AUTHENTICITY OF THE ACCOUNTS. THUS, IT WAS HELD BY THE HON'BLE SUPREME COURT THAT THE AO HAS ONLY THE POWER TO EXAMINE WHETHER BOOKS OF ACCOUNT ARE CERTIFIED BY AUTHORITIES UNDE R THE COMPANIES ACT AS HAVING BEEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT. THE AO, THEREAFTER, HAS LIMITED POWER OF MAKING ADJUSTMENTS AS PROVIDED IN EXPLANATION TO SECTION 115J. THE ADJUSTMENT MADE IN THE INSTANT CASE D OES NOT FALL UNDER THE EXPLANATION TO SECTION 115JA. THE TRIBUNAL IN THE CASE OF M/S FOREVER DIAMONDS PVT. LTD . (SUPRA) ALSO OBSERVED THAT JUDGMENT OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF VEEKAYLAL INVESTMENT CO. (P) LTD. (SUPRA) AS RELIED ON BY T HE REVENUE HAS BEEN DELIVERED PRIOR TO THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. (SUPRA) . THEREFORE, RELIANCE ON JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IS MISPLACED. IN THE CASE OF ADBHUT TRADING CO. PVT. LTD. 338 ITR 94 , THE HONBLE BOMBAY HIGH COURT HELD THAT ONCE THE ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT HAD BEEN PREPARED AND CERTIFIED BY THE AUTHORITIES UNDER THE COMPANIES ACT, IT WAS NOT OPEN FOR THE AO TO STATE THAT P&L ACCOUNT HAS NOT BEEN PREPARED IN ACCORDAN CE WITH THE PROVISIONS OF COMPANIES ACT. 7 . RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE CASE OF ASSOCIATE CONCERN OF THE ASSESSEE M/S FOREVER DIAMONDS PVT. LTD . (SUPRA) AS WELL AS THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN TH E CASE OF ADBHUT TRADING CO. PVT. LTD. (SUPRA) AND IN THE CASE OF AKSHAY TEXTILES TRADING AND AGENCIES PVT. LTD (SUPRA) , WE ITA NO. 2292 /20 1 2 9 DO NOT FIND ANY MERIT IN THE ACTION OF THE LOWER AUTHORITIES FOR MAKING ADDITION UNDER SECTION 115JB. 8 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST MARCH . 201 4 . 21 ST MARCH ,2014 SD/ - SD/ - ( ) ( VIVEK VARMA ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 21 / 03 /2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//