M/s. Sujana Universal Industries Ltd., Hyd, Hyderabad V. DCIT, Circle-3(2), Hyderabad

ITA 877/HYD/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8964 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 01-06-2012
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Rejection of books of accounts; Difference of opinion; Assessment record; Change of opinion; Revenue expenditure
• Section: 43B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 877/HYD/2012 ASSESSMENT YEAR: 2006-07 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., HYDERABAD [PAN: AACCS8630H] VS DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P. MURALI MOHAN RAO , AR FOR REVENUE : S HRI D.SUDHAKAR RAO , DR DATE OF HEARING : 06 - 0 1 - 201 5 DATE OF PRONOUNCEMENT : 11 - 03 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE FILED AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX-III, HYDERABAD DATED 29- 03-2012 U/S.263 OF THE INCOME TAX ACT (ACT). ASSESSEE HAS RAISED V ARIOUS GROUNDS RUNNING TO 15 IN NUMBER CONTESTING NOT ONLY THE JUR ISDICTION TO INITIATE PROCEEDINGS U/S.263 BUT ALSO VARIOUS PROPOSED ADDIT IONS/DIRECTIONS GIVE BY THE CIT IN THE ORDER. ASSESSEE ALSO FILED PRECI SE GROUNDS OF APPEAL WHICH ARE AS UNDER: '1. THE COMMISSIONER OF INCOME TAX ERRED WHILE PROP OSING THE ADDITION OF LIQUIDATE DAMAGES RS.194.63 LACS AS A PRIOR PERIOD ITEM BY WAY OF CREDITING TO P&L A/C U/S.41(1) UNDE R NORMAL PROVISION OF THE INCOME TAX ACT, 1961. ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 2 -: 2. THE COMMISSIONER OF INCOME TAX ERRED WHILE PROP OSING THE ADDITION OF PRIOR PERIOD ITEMS RS.2,828.32 LACS TO BOOK PROFIT U/S.115JB OF THE INCOME TAX ACT, 1961. 3. THE COMMISSIONER OF INCOME TAX ERRED WHILE PROP OSING THE ADDITION OF OUTSTANDING INTEREST PAYABLE TO IDBI R S.584.80 LACS AND IFCI RS.985.39 LACS UNDER SECTION. 43B OF THE INCO ME TAX ACT, 1961. 4. THE ASSESSEE MAY ADD, ALTER, OR MODIFY OR SUBST ITUTE ANY OTHER POINTS TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL'. 2. BRIEFLY STATED, ASSESSEE-COMPANY FILED ITS RETUR N OF INCOME ADMITTING INCOME AT RS.1,79,90,895/- (BEFORE SET-OF F OF LOSS) UNDER THE NORMAL PROVISIONS OF INCOME TAX ACT, 1961 AND INCOM E OF RS.17,05,76,352/- UNDER THE PROVISIONS OF SECTION 1 15JB OF THE ACT. ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S.143( 3) ON 15-07-2009 DETERMINING INCOME AT NIL AFTER SET-OFF OF BROUGHT FORWARD LOSSES AND ACCEPTING THE INCOME RETURNED UNDER THE PROVISIONS OF SECTION 115JB. AS SEEN FROM THE ASSESSMENT ORDER, THE ASSESSMENT H AS BEEN COMPLETED AFTER DIRECTING ASSESSEE TO GET ITS ACCOUNTS AUDITE D AS PER THE PROVISIONS OF SECTION 142(2A). ASSESSING OFFICER ALSO ASKED F OR VARIOUS DETAILS AND ASSESSING OFFICER COMPLETED ASSESSMENT AFTER MAKING DISALLOWANCES OF ROC FEES, GDR ISSUE EXPENSES AND DISALLOWANCE U/S.4 0(A). 3. LD.CIT AFTER EXAMINING THE ASSESSMENT RECORD HA S COME TO A CONCLUSION THAT ORDER PASSED BY ASSESSING OFFICER I S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS ASSESSING OFFICER HAD NOT VERIFIED THE CREDIT OF PRIOR PERIOD EXPENDITURE WHI CH SHOULD HAVE BEEN CONSIDERED UNDER THE PROVISIONS OF SECTION 41(1) AN D ALSO UNDER THE PROVISIONS OF SECTION 115JB. HE ALSO NOTICED THAT CERTAIN INTEREST TO FINANCIAL INSTITUTIONS CLAIMED BY ASSESSEE SHOULD H AVE BEEN DISALLOWED U/S.43B OF THE ACT. ACCORDINGLY, HE ISSUED A NOTIC E ASKING ASSESSEE TO ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 3 -: FILE ITS OBJECTIONS IF ANY. ASSESSEE FILED DETAILE D WRITTEN SUBMISSIONS AGAINST THE PROPOSED REVISION, POINT-WISE TO SUBMIT THAT ASSESSING OFFICER HAS ASKED FOR DETAILS OF THE PRIOR PERIOD A DJUSTMENTS AND ALSO THE FINANCIAL INTEREST CLAIMS MADE AND THERE IS NO OMIS SION FROM ASSESSEE. FURTHER, IT WAS SUBMITTED THAT SPECIAL AUDIT ALSO H AD EXAMINED ISSUES IN DETAIL AND HAD NOT PROPOSED ANY DISALLOWANCE OR ADD ITIONS UNDER THE ABOVE TWO HEADS. ASSESSEE RELIED ON THE DECISION O F THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL COM PANY LTD., VS. CIT [243 ITR 83] FOR THE PROPOSITION THAT ASSESSEE HAVI NG SUBMITTED THE REQUIRED DETAILS ASKED FOR AND ACCORDINGLY ASSESSME NT ORDER HAS BEEN PASSED, CIT DOES NOT ACQUIRE JURISDICTION BY MERE C HANGING OF OPINION. IT WAS CONTENDED THAT THE ORDER CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE V IEW TAKEN BY THE ASSESSING OFFICER IS UN-SUSTAINABLE IN LAW. 4. LD.CIT HOWEVER DID NOT ACCEPT THE SAME. AS FAR AS JURISDICTION IS CONCERNED, HE HAS REJECTED THE SAME ON THE BASIS OF THE DECISION OF FULL BENCH OF THE GAUHATI HIGH COURT IN THE CASE OF CIT VS. SHRI JAWAHAR BHATTACHARJEE IN ITA NO.02/2008 DT. 07-02-2012 [ 20 12 (4) TMI 222 (GAU.) (HC)] VIDE PARA 7 & 8 OF THE ORDER OF LD.CIT DISCUSSED TH AT ASSESSEE DID NOT ADDUCE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CONTENTIONS AND THEREFORE HE HELD THAT THE OBJECTIO NS OF ASSESSEE AGAINST ASSUMPTION OF JURISDICTION ARE DEVOID OF MERIT. 5. COMING TO THE ISSUES TAKEN UP BY LD.CIT, ON THE ISSUE OF TAXABILITY OF PRIOR PERIOD INCOME OF RS.28,28,29,474/- AND U/S .41(1), THE CIT DIRECTED THAT AN AMOUNT OF RS.194.63 LAKHS REPRESEN TING LIQUIDATED DAMAGES SHOULD BE BROUGHT TO TAX UNDER THE NORMAL P ROVISIONS OF THE IT ACT. HOWEVER, THE CIT GAVE DIRECTION TO INCLUDE TH E ENTIRE AMOUNT OF PRIOR PERIOD INCOME FOR THE PURPOSE OF SECTION 115J B COMPUTATION AND ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 4 -: DIRECTED THE ASSESSING OFFICER TO ADOPT THE BASE FI GURE OF RS.37,78,82,427/- AS AGAINST BASE FIGURE OF RS.17,0 5,86,352/- ADOPTED BY ASSESSEE IN ITS COMPUTATION. 6. COMING TO THE ISSUE OF DISALLOWANCE U/S.43B, ASS ESSEE'S CLAIM OF DEEMED PAYMENT OF RS.5,84,80,000/- PAYABLE TO IDBI WHICH WAS CONVERTED INTO EQUITY AND SIMILAR AMOUNT OF RS.985. 39 LAKHS PAYABLE TO IFCI WHICH WAS ALSO CONVERTED INTO EQUITY WAS NOT A LLOWED AND DIRECTED ASSESSING OFFICER TO DISALLOW THE ABOVE AMOUNTS U/S .43B, RELYING ON THE CDBT CIRCULAR NO.7/2006 DT.17-07-2006. ASSESSEE IS IN APPEAL AGAINST THE DIRECTIONS GIVEN BY CIT BOTH UNDER NORMAL COMP UTATION AS WELL AS UNDER THE PROVISIONS OF SECTION 115JB. 7. LD.COUNSEL REFERRING TO THE PAPER BOOK FILED IN THIS REGARD STATED THAT COMPANY'S BOOKS OF ACCOUNTS WERE AUDITED UNDER THE COMPANIES ACT. FURTHER ASSESSING OFFICER HAS DIRECTED A SPECI AL AUDIT UNDER THE PROVISIONS OF I.T. ACT AND ALSO ISSUED SHOW CAUSE N OTICES AND ASSESSEE CLARIFIED THE AMOUNTS CREDITED TO P&L A/C AS PRIOR PERIOD EXPENDITURE. IT WAS EXPLAINED THAT THE SAME IS NOT AN INCOME UNDER THE PROVISIONS OF SECTION 41(1) AS ASSESSEE HAS NOT CLAIMED ANY INTER EST AS DEDUCTION IN EARLIER YEARS, AS THE SAME WAS GOVERNED BY THE PROV ISIONS OF SECTION 43B. THEREFORE, DIRECTION OF THE LD.CIT IN ADDING THE AMOUNT OF RS.194.63 LAKHS IS NOT CORRECT ON THE FACTS OF THE CASE. 8. COMING TO THE ISSUE OF DISALLOWANCES U/S.43B OF THE PAYMENTS DEEMED TO HAVE BEEN PAID ON CONVERSION OF EQUITY, L D.COUNSEL POINTED OUT THAT THE BOARD CIRCULAR REFERRED TO BY THE CIT IS APPLICABLE ONLY WHEN THE AMOUNTS PAYABLE ARE CONVERTED TO LOANS OR BORRO WINGS AND NOT INTO EQUITY. IT WAS SUBMITTED THAT THE BANKS HAVE CONVE RTED THE AMOUNTS INTO EQUITY AND SINCE THE SAME WERE ALLOTTED TO THE SAID BANKS, THE ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 5 -: INTEREST TO THAT EXTENT HAS TO BE CONSIDERED AS 'AC TUAL PAYMENT' UNDER THE PROVISIONS OF SECTION 43B. IT WAS SUBMITTED TH AT THIS ISSUE WAS ALSO EXAMINED BY THE ASSESSING OFFICER AND THEREFORE, CI T HAS NO JURISDICTION TO DIRECT THE SAME FOR DISALLOWANCES. 9. LD.COUNSEL FURTHER SUBMITTED THAT AS FAR AS THE APPLICABILITY OF PRIOR PERIOD INCOME OF RS.28,28,29,474/-UNDER THE P ROVISIONS OF SECTION 115JB, THE DIRECTION OF THE CIT IS NOT TENABLE AS S UB-SECTION 2 OF 115JB DOES NOT SPECIFY THE ADDITION OF PRIOR PERIOD INCOM E. ASSESSEE'S COMPUTATION BEING THAT YEAR'S PROFIT IS ACCORDING T O THE PROVISIONS OF THE ACT. FURTHER, IT WAS SUBMITTED THAT ASSESSEE DID NO T MAKE ANY CLAIM OR GOT ANY BENEFIT IN EARLIER YEARS AS MOST OF THE AMO UNTS WERE TREATED AS 'DEFERRED REVENUE EXPENDITURE' AND THERE IS NO IMPA CT ON COMPUTATION OF 115JB IN EARLIER YEARS. CONSEQUENTLY, THE TREAT MENT OF THE ABOVE AMOUNT AS PRIOR PERIOD INCOME DURING THE YEAR SHOUL D NOT AFFECT THE COMPUTATION OF 115JB. 10. AT OUR INSTANCE, LD.COUNSEL ALSO PLACED ON RECO RD THE COMPUTATIONS, ANNUAL REPORTS OF EARLIER THREE YEAR S SO AS TO EXAMINE THE CLAIMS OF NOT CLAIMING THE AMOUNTS TREATED AS PRIOR PERIOD INCOME DURING THE YEAR. 11. LD.DR HOWEVER, DEFENDED THE ORDER OF THE CIT BO TH ON THE FACTS AND ON LAW. 12. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE PAPER BOOK PLACED ON RECORD. AS FAR AS THE ISSUE OF EXP ENDITURE OF INTEREST IS CONCERNED, THE ASSESSING OFFICER HAS ENQUIRED VIDE HIS LETTER DT.03-07- 2009 AND ASSESSEE REPLIED VIDE LETTER DT.09-07-2009 INCLUDING THE ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 6 -: DETAILED NOTE ON THE CLAIM OF INTEREST U/S.43B. SU BMISSIONS OF ASSESSEE ARE AS UNDER: ' THE CLAIM OF INTEREST RS.584 LACS PAID TO IDBI FOR THE ASST. YEAR 2006-07 PREVIOUS YEAR 2005-06. THE COMPANY HAD DEBITED AN AMOUNT OF RS.27,63,75,1 74/- TO PROFIT & LOSS ACCOUNT DURING THE PREVIOUS YEAR 2004-05 FO R ASSESSMENT YEAR 2005-06 TOWARDS INTEREST AND OTHER FINANCIAL CHARGES INCLUDING INTEREST ON TERM LOANS AND NOT CLAIMED IN INCOME T AX RETURN UNDER SEC.43B DUE TO NON PAYMENT OF THE SAME. IDBI ON TERM LOAN 15,13,41,984 IDBI ON WORKING CAPITAL 5,23,16,720 IFCI 7,27,16,470 --------------------- 27,63,75,174 --------------------- THE COMPANY HAD MADE REPRESENTATIONS TO FINANCIAL I NSTITUTIONS FOR THE RESTRUCTURE OF TERM LIABILITIES OF PRINCIPAL A ND OVERDUE INTERESTS UP TO 31.3.2005 KEEPING IN VIEW OF THE DIFFICULT F INANCIAL POSITION. IDBI HAS RESTRUCTURED THE TERM LIABILITIES OF THE COMPANY UP TO A CUT OFF DATE I.E., 31 ST MARCH, 2005 WITH REDUCED RATE OF INTEREST @ 8%. ACCORDINGLY, THE OVER DUE INTEREST UP TO 31 ST MARCH, 2005 WAS CONVERTED INTO EQUITY AND CRP SHARES OF THE COMPAN Y. ACCORDINGLY AS PER THE RESTRUCTURING PACKAGES OF I DBI, THE INTEREST FOR THE FINANCIAL YEAR 1.4.04 TO 31.3.05 (AY 05-06 ) HAS BEEN WORKED OUT TO RS.5,84,80,000 LACS @ 8% P.A AS AGAINST 151 3.42 LACS AND THE SAME HAS BEEN CONVERTED INTO EQUITY CAPITAL OF THE COMPANY BY IDBI AND THE EXCESS OF INTEREST OVER 8% WAS WAIVED . A COPY OF THE SANCTION OF RESTRUCTURING OF LIABILI TIES VIDE LETTER DT.28.05.2005 AND 29.10.2005 IS ENCLOSED HEREWITH FOR YOUR INFORMATION. AS SUCH DURING THE ASSESSMENT YEAR 06-07, THE INTE REST PAID TO IDBI TO RS.584.80 LAC PERTAINING TO 05-06 HAS BEEN CLAI MED AS DEDUCTION UNDER SEC.43B AS THE SAME HAS BEEN RESTRUCTURED. FOR THE ASSESSMENT YEAR 2006-07 DURING THE ASSESSMENT YEAR 2006-07 THE COMPANY HAD DEBITED AN AMOUNT OF RS.24,56,24.260 TO PROFIT & LOSS ACCOUNT AS FOLLOWS: ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 7 -: TERM LOANS IDBI 584.80 IFCI 985.39 UCO BANK 2.84 BANK OF INDIA 2.42 SUB TOTAL 1575.45 INTEREST ON WORKING CAPITAL & OTHER FINANCIAL CHARGES 880.79 TOTAL INTEREST DEBITED OUT OF THE ABOVE IDBI HAD CONVERTED THE INTEREST O F RS.584.80 INTO CRPS/EQUITY OF THE COMPANY. REGARDING PAYMENT OF INTEREST TO IFCI LIMITED OF R S.985.39, IFCI WHILE RESTRUCTURING THE TERM LIABILITIES VIDE THEI R LETTER NO.HRO.E.129/2006/2006-688 DT. 21.07.2006, THE INT EREST OUT STANDING UP TO THE CUT OFF DATE I.E., FEBRUARY, 2 006 WAS REDUCED TO RS.1200 LACS AND THE SAME BE CONVERTED INTO OPT IONAL FULLY CONVERTIBLE DEBENTURES (OFCD) WHICH ARE SUBSEQUENT LY BE CONVERTED INTO EQUITY SHARES OF THE COMPANY. ACCORDINGLY THE INTEREST LIABILITY AS FOLLOWS: INTEREST FOR THE ASST. YR.2005-06 7,27,16,470 INTEREST FOR THE ASST. YR.2006-07 9,85,39,389 TOTAL INTEREST PAYABLE 17,12,55,859 IFCI AGREED INTEREST DUES 12,00,00,000 INTEREST CLAIMED AS EXPENDITURE IN ASST. YEAR 2006-07 9,85,39,859 TO BE CLAIMED 2,14,60,141 13. THUS, AS CAN BE SEEN FROM THE REPLIES GIVEN BY ASSESSEE DURING THE COURSE OF SCRUTINY, THE CLAIM OF ALLOWANCE U/S.43B OF THE ABOVE AMOUNTS STATED TO HAVE BEEN CONVERTED TO EQUITY WAS EXAMINE D BY THE ASSESSING OFFICER AND ALLOWED. THE RELIANCE OF LD.CIT ON TH E BOARD CIRCULAR IS NOT CORRECT AS THE BOARD CIRCULAR REFERS TO CONVERSION OF OUTSTANDING INTEREST PAYABLE INTO LOANS OR BORROWINGS, BUT NOT TO EQUITY . THE EXPLANATION 3C TO SECTION 43B ALSO REFERS CONVERSION TO LOANS AND BORROWINGS BUT NOT TO EQUITY. IN VIEW OF THIS, THE CIT'S RELIANCE ON THE BOARD CIRCULAR SO AS TO ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 8 -: REJECT ASSESSEE'S CLAIMS OF CONSTRUCTIVE PAYMENT OF ABOVE AMOUNTS CANNOT BE APPROVED. SINCE THIS ISSUE WAS ALSO EXAM INED BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCE EDINGS AND HAVING ACCEPTED AS A CONSTRUCTIVE PAYMENT, THE OPINION OF THE CIT CAN ONLY BE CONSIDERED AS CHANGE OF OPINION. THEREFORE, TO THA T EXTENT OF DIRECTION OF THE CIT GIVEN TO ASSESSING OFFICER FOR DISALLOWING THE ABOVE AMOUNTS VIDE PARA 11 & 12 OF RS.5,84,80,000/- ON AMOUNT OF INTER EST PAYABLE TO IDBI AND ON RS.985.39 LAKHS ON AMOUNTS PAYABLE TO IFCI, WHICH WERE INDEED CONVERTED INTO EQUITY CANNOT BE APPROVED. TO THAT EXTENT, THE DIRECTIONS IN PARA 11 & 12 OF LD.CIT ARE SET ASIDE. 14. COMING TO THE ISSUE OF ADDITION OF LIQUIDATED D AMAGES, LD.CIT GAVE A FINDING THAT AN AMOUNT OF RS.194.63 LAKHS REPRESE NTING LIQUIDATED DAMAGES WERE ALLOWED IN EARLIER YEARS AS A DEDUCTIO N AND HENCE PROVISIONS OF SECTION 41(1) APPLIES TO THE ABOVE AM OUNT. IT WAS THE CONTENTION OF ASSESSEE THAT THIS AMOUNT HAS NEVER B EEN CLAIMED AS DEDUCTION. IT WAS FURTHER SUBMITTED THAT INTEREST AND LIQUIDATED DAMAGES WERE LEVIED BY THE BANK TOGETHER AND THOSE AMOUNTS WERE CHARGED TO P&L A/C. SINCE NO AMOUNT WAS ALLOWABLE U /S.43B, AS THERE WAS NO PAYMENT, ASSESSEE HAS NOT CLAIMED ANY DEDUCT ION. WE HAVE VERIFIED THE STATEMENT OF DUES AND INTERESTS ON THE LOANS OBTAINED BY ASSESSEE DURING THE PERIOD AND THE STATEMENT GIVEN BY ASSESSEE IS AS UNDER: ( IN RS LAKHS ) PARTICU LARS AMOUNT OF LOAN DUES JUNE QTR TOTAL DUES RESTRICTED WAIVER OF TOTAL MARCH 01 2001- 02 2002-03 2003- 04 2004- 05 UPTO @8% INT LD WAIVERS 31.3. 03 2003 -04 2003 -04 1 2 3 4 5 6 7 8 9 6- (7+8+ 9) (1+2 +3) CORPOR ATE LOAN-I 75.00 0.23 18.45 17.78 16.51 4.75 57.72 36.4 6 6.00 1.50 13.76 2.0 8 15.84 ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 9 -: EFS 0.00 0.21 0.04 0.02 0.00 0 0.27 0.27 0.00 0.00 0.00 0.0 1 0.01 PFS- BDE 485.00 19.54 85.98 108.13 100.14 29.25 343.0 4 213. 65 38.8 0 9.67 80.92 12. 36 93.28 PFS- ADE 2500.00 108.22 361.41 480.16 454.42 128.0 4 1532. 24 949. 78 200. 00 49.8 6 332.6 0 55. 22 387.82 STL- WCL 2000.00 30.95 143.10 191.00 331.84 91.66 788.5 5 365. 05 160. 00 39.8 9 223.6 1 28. 42 252.03 STL 750.00 79.86 355.55 292.04 128.73 35.74 891.9 1 727. 44 60.0 0 14.9 6 89.51 32. 15 121.66 CORPO RATE LOAN- II 1500.00 65.94 287.74 293.43 276.93 78.12 1002. 16 647. 11 120. 00 29.9 2 205.1 3 36. 12 241.25 FITL 191.23 465.60 127.2 4 784.0 7 191. 23 0.00 0.00 592.8 4 28. 26 621.10 TOTAL 7310.00 304.94 1252.2 6 1573.79 1774.1 7 494.8 0 5399. 96 3130 .99 584. 80 145. 80 1538. 37 194 .62 1732.99 LESS: CASH PAID 7.50 1725.49 15. SINCE LIQUIDATED DAMAGES AND INTEREST WERE CHAR GED TOGETHER AND AS ASSESSEE GOT WAIVER OF THE SAME, WE ARE UNABLE T O UNDERSTAND HOW LD. CIT COULD GIVE A FINDING THAT LIQUIDATED DAMAGES WE RE ALLOWED. PROVISIONS OF I.T.ACT DO NOT PERMIT PAYMENT OF INTE REST OR ANY PENALTY THEREON IN THE FORM OF LIQUIDATED DAMAGES, UNLESS T HEY ARE PAID UNDER THE PROVISIONS OF SECTION 43B. AS SEEN FROM THE CO MPUTATION OF EARLIER YEARS, OUT OF TOTAL CLAIM PAYABLE BY ASSESSEE, ASSE SSEE CHARGED PART AMOUNTS IN THE P&L A/C UNDER THE HEAD 'FINANCIAL EX PENSES' AND PART OF IT WAS DEFERRED. THE AMOUNTS WERE DISALLOWED IN TH E COMPUTATION OF INCOME TAX AS THE AMOUNTS NOT PAID. AS SEEN FROM THE ORDER OF CIT, HE HAS NOT GIVEN ANY FINDING THAT THE INTEREST WAS ALL OWED IN EARLIER YEARS. THEREFORE, WE ARE OF THE OPINION THAT HIS FINDING O F LIQUIDATED DAMAGES WERE ALLOWED IS WITHOUT ANY MERIT. AS SEEN FROM T HE STATEMENT FILED BEFORE US, WE PRIMA FACIE AGREE WITH ASSESSEE THAT NO CLAIM OF LIQUIDATED DAMAGES WERE ALLOWED IN EARLIER YEARS. HOWEVER, WE COULD NOT GIVE ANY CLEAR FINDING ON THIS ISSUE AS ASSESSEE CONVERTED P ART INTERESTS INTO DEFERRED REVENUE EXPENDITURE AND CLAIMED ONLY PART IN THE P&L A/C AND DISALLOWED THE AMOUNTS. THESE AMOUNTS REQUIRE RECO NCILIATION YEAR-WISE ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 10 -: AND AS MORE THAN THREE YEARS ARE INVOLVED, WE CANNO T DELETE THE SAME OUTRIGHTLY. THEREFORE, WE MODIFY THE ORDER OF THE CIT I.E., THE DIRECTION TO ASSESSING OFFICER TO DISALLOW THE AMOUNT OUTRIGH T TO A DIRECTION TO THE ASSESSING OFFICER TO EXAMINE THE AMOUNTS AND TO CON SIDER THE AMOUNTS WHICH WERE ALLOWED AS DEDUCTION EARLIER YEARS AS IN COME U/S.41(1) IN THIS YEAR. TO THAT EXTENT, CIT'S DIRECTION IS MODI FIED AND ASSESSEE'S GROUND IS ALLOWED FOR STATISTICAL PURPOSES. ASSESS ING OFFICER IS DIRECTED TO EXAMINE THE AMOUNTS CLAIMED IN THE P&L A/C AND D ISALLOWED IN THE COMPUTATION OF INCOME, THEN ONLY ARRIVE AT ANY ADDI TION U/S.41(1) TO THE EXTENT OF AMOUNTS ALLOWED IN EARLIER YEARS. HE SHOU LD RECONCILE THE AMOUNTS AND SHOULD NOT DISALLOW, WITHOUT EXAMINING THE ISSUE, ON THE PRETEXT OF AMOUNTS ARE NOT TALLYING AS WAS DONE IN CONSEQUENTIAL ORDER. 16. THE LAST ISSUE TO BE CONSIDERED IS ABOUT THE DI RECTION OF THE CIT ON THE INCLUSION OF PRIOR PERIOD INCOME OF RS.28,28,29 ,474/- UNDER THE PROVISIONS OF SEC.115JB. DURING THE YEAR, ASSESSEE GOT WAIVER OF INTEREST AND ALSO CONVERSION OF SOME OF THE OUTSTANDING AMOU NTS TO EQUITY UNDER THE RESTRUCTURING SCHEME WITH THE BANKS. CONSEQUEN TLY, ASSESSEE HAS WRITTEN BACK AN AMOUNT OF RS.28,28,29,474/- IN THE P&L A/C AS PRIOR PERIOD INCOME, GENERALLY KNOWN AS BELOW THE LINE AD JUSTMENTS. ASSESSEE'S PROFIT BEFORE TAXATION AS PER P&L A/C ST OOD AT RS.17,05,76,352/-. THIS IS THE AMOUNT WHICH WAS ADO PTED BY ASSESSEE FOR THE PURPOSE OF 115JB AND ALSO ACCEPTED BY THE A SSESSING OFFICER IN THE ORDER U/S.143(3). HOWEVER, IN THE P&L A/C AFTE R ARRIVING AT THE PROFIT BEFORE TAXATION, ASSESSEE MADE VARIOUS PROVISIONS F OR INCOME TAX, DEFERRED TAX LIABILITY AND ARRIVED AT PROFIT AFTER TAXATION OF RS.9,50,52,953/-. THEREAFTER, ASSESSEE ADDED AMOUN T OF PRIOR PERIOD ADJUSTMENT AT RS.28,28,29,474/-. BY FURTHER INCREA SING THE BALANCE FROM THE BROUGHT FORWARD PROFIT OF RS.80,81,17,143/ -, PROFIT AVAILABLE FOR APPROPRIATION WAS ARRIVED AT RS.56,99,99,569/-. LD .CIT AFTER DISCUSSING ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 11 -: THE ISSUE ON LEGAL PRINCIPLES DIRECTED THE ASSESSIN G OFFICER TO ADOPT THE AMOUNT AT RS.37,78,82,427/- IN HIS ORDER AT PARA 10 AS UNDER: '10. WITH REGARD TO THE ISSUE OF TAXABILITY OF PRI OR PERIOD INCOME OF RS.28,28,29,474/- UNDER THE SPECIFIC PROVISIONS OF SECTION 115 JB OF THE I.T.ACT, 1961, THE CONTENTION OF THE ASSESSEE IS NOT TENABLE. SUB- S.(2) OF S.115JB PROVIDES THAT EVERY ASSESSEE COMP ANY SHALL PREPARE ITS P&L A/C IN ACCORDANCE WITH THE PROVISI ONS OF PART-II AND PART-III OF SCH.VI TO THE COMPANIES ACT, 1956. TH E SAID SCH.VI DOES NOT MAKE ANY DISTINCTION BETWEEN P&L A/C AND P&L A PPROPRIATION ACCOUNT (AFTER CONSIDERING EXTRA ORDINARY ITEMS AN D PRIOR PERIOD ADJUSTMENTS). IN FACT THE SCHEDULE DOES NOT SPEAK OF THE APPROPRIATION ACCOUNT AT ALL. IT IS ONLY AS A MAT TER OF PRESENTATION THAT MOST OF THE COMPANIES SEGREGATE TO REFLECT AS TO WHAT HAS BEEN APPROPRIATED OUT OF THE PROFITS EARNED BY THEM. F URTHER, SUB-CLS.(A) AND (B) OF CL.(VIII) OF NOTE II IN PARA 3 OF PART II OF SCH.VI SPECIFICALLY PROVIDE THAT THE AGGREGATE AMOUNTS SET ASIDE OR PR OPOSED TO BE SET ASIDE TO RESERVES SHOULD BE DISTINCTLY SHOWN IN TH E P&L A/C. SIMILARLY, SUB-CL(B) AND SUB-CLS(A) AND (B) OF CLS .(XII) AND (XIII) RESPECTIVELY IN NOTE II OF PART II OF SCH. VI PROV IDE THAT PROFITS OR LOSSES IN RESPECT OF TRANSACTIONS NOT USUALLY UNDE RTAKEN OR UNDERTAKEN IN EXCEPTIONAL CIRCUMSTANCES OR WHICH A RE OF NON- RECURRING NATURE SHOULD BE SHOWN IN THE P&L A/C. THE AGGREGATE AMOUNT OF DIVIDENDS PAID AND PROPOSED IS ALSO TO B E SHOWN IN THE P&L A/C. ALL THE ABOVE ITEMS DISCUSSED ABOVE ARE CLASSIFIED IN THE APPROPRIATION ACCOUNT AND ARE NECESSARILY TO BE IN CLUDED IN THE P&L A/C PREPARED AS PER PARTS II AND II OF SCH. VI TO COMPANIES ACT. 10.1 THEREFORE, THE STARTING POINT FOR COMPUTATION OF BOOK PROFITS FOR THE PURPOSES OF S.115JB SHOULD BE THE FINAL BALANC E IN THE P&L A/C CARRIED TO BALANCE SHEET (AFTER CONSIDERING PRIOR PERIOD ADJUSTMENTS AND EXTRA ORDINARY ITEMS). FOR THE ABOVE PROPOSIT ION, RELIANCE IS PLACED ON JURISDICTIONAL ITAT'S DECISION IN THE CA SE OF GULF OIL CORPORATION LTD VS. ACIT REPORTED IN 111 ITD AT PP.124 AND THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KHAITAN CHEMICALS AND FERTILIZERS LTD (2008) REP ORTED IN 307 ITR AT PP.150. 10.2 IT MAY ALSO BE NOTED FROM THE ABOVE DISCUSSIO N THAT EVEN EXTRAORDINARY ITEMS AND PRIOR PERIOD ADJUSTMENT HA VE TO BE TAKEN TO THE P&L A/C. THE STARTING POINT ADOPTED AS ABOVE HAS TO BE INCREASED BY THE ITEMS SPECIFIED IN CLS. (A) TO (F ) OF EXPLANATION 1 AND HAS TO BE REDUCED BY THE ITEMS SPECIFIED IN CLS.(I ) TO (VII) GIVEN IN THE SAID EXPLANATION. NO OTHER ADJUSTMENT IS PERMITTE D BY LAW AS LAID ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 12 -: DOWN BY THE SUPREME COURT IN THE CASE OF APOLLO TY RES. NONE OF THE CLAUSES GIVEN IN THE EXPLANATION PROVIDES FOR THE INCREASE OR DECREASE OF THE BOOK PROFITS BY EXTRAORDINARY ITEM S AND PRIOR PERIOD ADJUSTMENTS. THE AS-5 MERELY SAYS THAT PRIOR PERI OD AND EXTRAORDINARY ITEMS SHOULD BE SEPARATELY DISCLOSED ALONG WITH THEIR NATURE SO THAT THEIR IMPACT ON THE OPERATING RESUL TS CAN BE PROPERLY GAUGED. IT DOES NOT SAY THAT THEY ARE NOT PART OF THE P&L A/C. SIMILARLY, THE GUIDANCE NOTE ISSUED BY THE ICAI AL SO DOES NOT HELP THE CASE OF THE ASSESSEE, AS IT MERELY SAYS THAT S OMETIMES, APPROPRIATION ACCOUNT IS INCLUDED AS A SEPARATE SE CTION OF THE P&L A/C. BUT, AS DISCUSSED ABOVE, PARTS II AND III OF SCH. VI TO THE COMPANIES ACT DO NOT SPEAK OF APPROPRIATION ACCOUN T AT ALL. IN THE LIGHT OF THE ABOVE DISCUSSION, IT WAS IN ACCORDANC E WITH LAW FOR THE ASSESSING OFFICER TO HAVE TAKEN RS.37,78,82,427/- AS THE BASE FIGURE TO COMPUTE THE BOOK PROFITS FOR THE PURPOSE OF SECTION 115JB AS AGAINST THE BASE FIGURE OF RS.17,05,76,352/- AD OPTED BY THE ASSESSEE COMPANY. 10.3 IN VIEW OF THE FOREGOING, THE ASSESSING OFFIC ER IS DIRECTED TO RECOMPUTE BOOK PROFITS OF THE ASSESSEE COMPANY BY ADOPTING RS.37,78,82,427/- AS THE STARTING POINT AND THE SA ME IS TO BE INCREASED BY THE ITEMS SPECIFIED IN CLAUSES (A) TO (F) AND HAS TO BE REDUCED BY THE ITEMS SPECIFIED IN CLAUSES (I) TO ( VII) GIVEN IN THE EXPLANATION'. 17. AS FAR AS PRINCIPLE OF LAW IS CONCERNED, WE HAV E TO UPHOLD THE ORDER OF THE CIT THAT THE COMPUTATION FOR THE PURPO SE OF 115JB SHOULD NOT START FROM THE PROFIT FOR THE YEAR BUT FROM T HE FINAL BALANCE IN THE P&L A/C CARRIED TO BALANCE SHEET. THE CASE LAW RE LIED UPON BY LD.CIT IN PARA 10.1 IS DIRECTLY ON THE ISSUE. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KHAITAN CHEMICALS AND FERTILIZERS LTD., REPORTED IN 307 ITR 150 HAS HELD AS UNDER: 'ACCOUNTING STARNDARDS ARE RECOMMENDED BY THE INST ITUTE OF CHARTERED ACCOUNTANTS OF INDIA. ACCOUNTING STANDAR D (A-5) STIPULATES THAT PRIOR PERIOD ITEMS ARE INCOME OR E XPENSES WHICH ARISE 'IN THE CURRENT PERIOD' AS A RESULT OF ERROR S OR OMISSIONS IN THE PREPARATION OF THE FINANCIAL STATEMENTS OF ONE OR MORE PRIOR PERIODS. THEREFORE, THE INCOME OR EXPENSES RELATABLE TO PRI OR PERIOD ITEMS ARE THOSE WHICH ARISE IN THE CURRENT PERIOD, I.E., THE PERIOD RELAVANT FOR THE PURPOSE OF COMPUTING THE NET PROFIT OR LOSS. PRIOR PERIOD ITEMS ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 13 -: ARE TO BE INCLUDED IN THE DETERMINATION OF NET PRO FIT OR LOSS. IF A PRIOR PERIOD ITEM IS AN EXPENSE, IT WOULD GO TOWARDS RED UCING THE NET PROFIT OR INCREASING THE LOSS, AS THE CASE MAY BE. ON THE OTHER HAND, IF THE PRIOR PERIOD ITEM IS AN INCOME, IT WOULD GO TOWARDS INCREASING THE NET PROFIT OR REDUCING THE LOSS, AS BE INCOME OR EXPENSES. PRIOR PERIOD ITEMS AND EXTRAORDINARY ITEMS FORM PART OF THE NET PROFIT OR LOSS. PARAGRAPH 7 OF AS-5 STIPULATES THAT TEH NET PROFIT OR LOSS, INTER ALIA, COMPRISES EXTRAORDINARY ITEMS AND SHOULD BE DISCLOSED ON THE FACE OF THE STATEMENT OF PROFIT AND LOSS. PARAGRA PH 15 OF AS-5 STIPULATES THAT THE NATURE AND AMOUNT OF PRIOR PER IOD ITEMS SHOULD BE SEPARATELY DISCLOSED IN THE STATEMENT OF PROFIT AND LOSS IN A MANNER THAT THEIR IMPACT ON THE 'CURRENT' PROFIT O R LOSS CAN BE PERCEIVED. TWO APPROACHES HAVE BEEN INDICATED IN PARAGRAPH 19 OF THE SAID ACCOUNTING STANDARD (AS-5). THE NORMAL AP PROACH IS TO INCLUDE THE PRIOR PERIOD ITEMS IN THE DETERMINATION OF NET PROFIT OR LOSS FOR THE CURRENT PERIOD. THE ALTERNATIVE APPROACH IS TO SHOW SUCH ITEMS IN THE STATEMENT OF PROFIT AND LOSS AFTER DETERMINATION OF THE CURRENT NET PROFIT OR L OSS. THE OBJECT IS TO INDICATE THE EFFECT OF SUCH ITEMS ON THE CURRENT PROFIT OR LOSS . WHILE CALCULATING THE TAX UNDER SECTION 115JA OF T HE INCOME-TAX ACT, 1961, THE ASSESSEE COMPUTED THE NET PROFIT AS PER THE PROFIT AND LOSS ACCOUNT AFTER REDUCING THE PRIOR PERIOD EXPENSES/EXTRAORDINARY IT EMS AND PROFIT FROM GENERATION OF POWER PLANT. ACCORDING TO THE REVENU E, THE AMOUNT OF THE PRIOR PERIOD EXPENSES/EXTRAORDINARY ITEMS COULD NOT BE D EDUCTED FOR ARRIVING AT THE NET PROFIT FOR THE PURPOSE OF SECTION 115JA. ACCORDING TO THE ASSESSEE, THE NET PROFIT WAS TO BE COMPUTED ON THE BASIS OF THE PROFIT AND LOSS ACCOUNT WHICH, IN TURN , WAS TO BE IN ACCORDANCE WITH THE PROVISIONS OF PART S II AND III OF SCHED ULE VI TO THE COMPANIES ACT, 1956 . THE ASSESSEE CONTENDED THAT SUCH A COMPUTATION OF NET PROFIT, IN VIEW OF THE PRESCRIBED ACCOUNTING S TANDARD ( AS-5) REQUIRED THE PRIOR PERIOD EXPENSES/EXTRAORDINARY ITEMS TO BE SHOWN SE PARATELY. THIS DID NOT MEAN THAT BECAUSE THESE ITEMS WERE SHOWN SEPARATELY THEY D ID NOT CONSTITUTE PART OF THE NET PROFIT. THE TRIBUNAL ACCEPTED THE ASSESSEE 'S CONTENTION. ON APPEAL: HELD, DISMISSING THE APPEAL, THAT BECAUSE OF THE PRESCRIB ED ACCOUNTING STANDARD WHICH HAD TO BE FOLLOWED BY THE ASSESSEE IN VIEW O F THE PROVISIONS OF SECTION 115JA(2) READ WITH SECTION 211 OF THE 1956 ACT, THE ASSESSEE WAS REQUIRED TO SHOW THE PRIOR PERIOD ITEMS/EXTRAORDINARY ITEMS SE PARATELY SO THAT THEIR IMPACT ON THE CURRENT PROFIT OR LOSS COULD BE PERCEIVED. THE FACT THAT THE ASSESSEE ADOPTED THE ALTERNATIVE APPROACH OF SHOWING SUCH I TEMS IN THE STATE MENT OF PROFIT AND LOSS AFTER DETERMINATION OF CURRENT NET PROFIT OR LOSS, DID NOT MEAN THAT THESE ITEMS WERE NOT TO BE TAKEN INTO ACCOUNT IN COMPUTING THE NET PROFIT AS ENVISAGED IN SECTION 115JA. THUS, WHAT THE ASSESSEE HAD DONE WAS ONLY TO INDICATE THE PRIOR PERIOD ITEMS/EXTRAORDINARY ITEMS SEPARATELY. THIS DID NOT MEAN THAT THE FIGURE OF NET PROFIT WAS TO BE ARRIVED AT DE HORS THESE ITEMS. THUS, THE TRIBUNAL WAS CORRECT IN LAW IN HOLDING THAT THE ASSESSING O FFICER HAD FAILED TO APPRECIATE ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 14 -: THAT THE NET PROFIT FOR THE PURPOSE OF SECTION 115 JA WAS TO BE COMPUTED ONLY AFTER DEDUCTING THE PRIOR PERIOD EXPENSES/EXTRAORDINARY ITEMS. EXPENSES/EXTRAORDINARY ITEMS'. NOT ONLY THAT EVEN THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF APOLLO TYRES VS. CIT [255 ITR 273] (SC) AND FOLLOWED BY THE HON'BLE MADRAS HIGH COURT IN THE CASE OF TAM IL NADU CEMENTS CORPORATION LTD., VS. JCIT [349 ITR 58] (MAD) ALSO SUPPORTS THE ABOVE. IN FACT IN THE ABOVE REFERRED LATER CASE, WHILE EXA MINING THE ISSUE WHETHER THE CLAIM OF PRIOR PERIOD EXPENSES ARE DISA LLOWABLE U/S.115JB, THE HON'BLE MADRAS HIGH COURT HELD AS UNDER: 'IN APOLLO TYRES V. CIT [2002] 255 ITR 273 (SC) THE SUPREME COURT POINTED OUT THAT SUB-SECTION (1A) OF SECTION 115J OF THE INCOME-TAX ACT, 1961, DOES NOT EMPOWER THE ASSESSING OFFICER TO EMBARK UPON A FRESH INQUIRY WITH REGARD TO THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS OF THE COMPANY. SUB-SECTION (1A) MANDATE S THE COMPANY TO MAINTAIN ITS ACCOUNTS IN ACCORDANCE WITH THE RE QUIREMENTS OF THE COMPANIES ACT, 1956, AND THE ASSESSING AUTHORITY H AS A LIMITED JURISDICTION TO SATISFY HIMSELF THAT THE ACCOUNTS ARE MAINTAINED IN ACCORDANCE WITH THE PROVISIONS OF THE 1956 ACT. B EYOND THAT, THE ASSESSING AUTHORITY HAS NO JURISDICTION TO GO FURT HER INTO THE ACCOUNTS. HELD, ALLOWING THE APPEAL, THAT IN COMPUTING THE N ET PROFIT THE ASSESSEE HAD ADJUSTED THE PRIOR PERIOD EXPENSES AN D OFFERED THE BOOK PROFIT FOR ASSESSMENT. NO EXCEPTION COULD BE TAKEN TO THE COURSE ADOPTED BY THE ASSESSEE IN ADJUSTING THE PR IOR PERIOD EXPENSES IN COMPUTING THE NET PROFIT'. 18. IN VIEW OF THE ABOVE, IT IS VERY CLEAR THAT THE COMPUTATION HAS TO START FROM THE FINAL FIGURE OF P&L A/C AND NECESSAR Y ADJUSTMENTS AS PROVIDED IN EXPLANATION TO SECTION 115JB HAS TO BE CONSIDERED, WHILE COMPUTING THE BOOK PROFIT FOR THE PURPOSE OF 115JB. THUS, IN THE GIVEN CASE, THE AMOUNT TO BE CONSIDERED FOR STARTING THE COMPUTATION IS RS.56,59,99,569/- AND NOT RS.17,05,76,352/- AS ACCE PTED BY THE ASSESSING OFFICER. THERE SEEMS TO BE NO INQUIRY UN DER THE PROVISIONS OF SECTION 115JB AND THEREFORE TO THAT EXTENT, ORDER O F THE ASSESSING ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 15 -: OFFICER IS NOT ONLY ERRONEOUS ON THE FACTS BUT ALSO ON THE PRINCIPLES OF LAW. WE THEREFORE UPHOLD INVOKING THE JURISDICTIO N BY CIT ON THE ORDER OF ASSESSING OFFICER. 19. HAVING APPROVED THE PRINCIPLES TO BE ADOPTED WH ILE COMPUTING THE BOOK PROFITS U/S.115JB, WE HOWEVER, COULD NOT UNDER STAND THE DIRECTIONS OF THE CIT IN DIRECTING THE ASSESSING OF FICER TO ADOPT THE AMOUNT AT RS.37,78,82,427/-. LD.COUNSEL ALSO EXPR ESSED SURPRISE HOW THIS AMOUNT WAS ARRIVED AT BY LD.CIT. IF ONE WERE TO CONSIDER THAT AMOUNT OF RS.28,28,29,474/- I.E., PRIOR PERIOD INCO ME WAS ADDED TO THE BASE FIGURE OF RS.17,05,76,352/-, THE AMOUNT SHOULD COME TO RS.45,34,05,826/-. SURPRISINGLY, CIT DETERMINED THE AMOUNT AT RS.37,78,82,427/- WITHOUT ANY EXPLANATION. EVEN THE ASSESSING OFFICER IN CONSEQUENTIAL ORDER HAS BLINDLY FOLLOWED THE SAM E. SINCE THIS AMOUNT IS ALSO NOT CORRECT AS PER THE PROVISIONS OF LAW, W E CONSEQUENTLY MODIFY THE DIRECTION OF THE CIT AND DIRECT THE ASSESSING O FFICER TO RECOMPUTE THE BOOK PROFITS OF THE ASSESSEE-COMPANY, BY FOLLOWING THE PROVISIONS OF 115JB, STRICTLY AFTER GIVING DUE OPPORTUNITY TO ASS ESSEE. TO THAT EXTENT, CIT'S ORDER U/S.263 WAS UPHELD ON THE PRINCIPLE OF COMPUTATION OF 115JB, BUT NOT THE DIRECTION ON COMPUTATION WHICH S TANDS MODIFIED. ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE ENTI RE WORKING AS PER THE PROVISIONS OF LAW. ASSESSEE SHOULD BE GIVEN DUE OPP ORTUNITY TO MAKE SUBMISSIONS, WHICH SHOULD BE EXAMINED AND PROPERLY CONSIDERED. 20. CONSEQUENTIAL ORDER PASSED AS PER THE DIRECT I ONS OF LD.CIT IS ALSO SET ASIDE SO AS TO MODIFY THE SAME AS PER THE ABOVE DIRECTIONS. 21. LD.COUNSEL IN THE COURSE OF ARGUMENTS RELIED ON THE DECISION OF ITAT BENCH 'B' IN THE CASE OF BARTRONICS INDIA LTD. , VS. ACIT [22 TAXMANN.COM 5 (HYD)] FOR THE PROPOSITION THAT ONCE THE ACCOUNTS WERE ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 16 -: REFERRED TO SPECIAL AUDIT U/S.142(2A) AND ASSESSING OFFICER ACCEPTING THE SAME, LD.CIT HAS NO JURISDICTION TO REVISE THE ORDE R. 22. WE HAVE PERUSED THE ORDER OF THE CO-ORDINATE BE NCH IN THE ABOVE REFERRED CASE AND NOTICED THAT THE FACTS IN THE ABO VE CASE ARE DIFFERENT FROM THE FACTS OF ASSESSEE'S CASE. IN THE ABOVE RE FERRED CASE, ASSESSING OFFICER HAVING REFERRED THE ACCOUNTS TO UNDERGO SPE CIAL AUDIT, HOWEVER, DID NOT CONSIDER THE REPORT AND REJECTED THE BOOKS OF ACCOUNTS. IN THOSE SET OF FACTS, THE ITAT HELD THAT ASSESSING OFFICER WAS NOT CORRECT IN IGNORING THE SPECIAL AUDIT REPORT AND RE-ALLOCATING COMMON EXPENDITURE. THE ISSUE THEREIN IS ENTIRELY DIFFERENT FROM THE IS SUE BEFORE US. THEREFORE, THE SAID CASE LAW RELIED ON BY THE COUNS EL DOES NOT APPLY. HAVING EXAMINED THE RECORD AND EVIDENCES PLACED BEF ORE US IN THE PAPER BOOK, WE ARE OF THE OPINION THAT THERE WAS LIMITED ENQUIRY ON THE CLAIMS U/S.43B AND PRIOR PERIOD EXPENDITURE AND NO ENQUIRY BY THE ASSESSING OFFICER ON THE ISSUE OF COMPUTATION U/S.115JB. IN VIEW OF THIS, WE HAVE PARTLY UPHELD LD.CIT'S DIRECTIONS ON THE ISSUE OF J URISDICTION. 23. IN THE RESULT, ASSESSEE'S APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 11 TH MARCH, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 11 TH MARCH, 2015. TNMM ITA NO. 877 /HYD/2012 M/S. SUJANA UNIVERSAL INDUSTRIES LTD., :- 17 -: COPY TO : 1. M/S. SUJANA UNIVERSAL INDUSTRIES LTD., HYDERABAD ; C / O. SHRI P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-65 5/2/3, 1ST FLOOR, SOMAJIGUDA, HYDERABAD-82. 2. DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(2), HYD ERABAD. 3. CIT-III, HYDERABAD. 4. ADDL.CIT, RANGE-3, HYDERABAD. 5. D.R. ITAT, HYDERABAD.