Tax dept must accept cos' audited accounts: SC The Supreme Court has said the Income-Tax Department has to accept the authenticity of the accounts maintained in accordance with the provisions of the Companies Act and certified by the auditors.
The assessing officer cannot go beyond the net profit shown in the profit and loss account, except to examine whether the books of accounts were duly certified by the authorities and properly maintained, the court said. A bench comprising Justice S H Kapadia and Justice B S Reddy said: "The AO (assessing officer) has to accept the authenticity of the accounts maintained in accordance with the provisions of Part II and Part III of Schedule VI to the Companies Act, which are certified by the auditors and pressed by the company in the general meeting." "The AO has only the power of examining whether the books of accounts are duly certified by the authorities under the Companies Act and whether such books have been properly maintained in accordance with the Companies Act. The AO does not have the jurisdiction to go beyond the net profit shown in the profit and loss account except to the extent provided in the explanation (appended to Section 115J of the Income-Tax Act)," it said. According to explanation of the Act, the "book profit" means the net profit as shown in the profit and loss account prepared under sub-section (2) of the Act. The court said Section 115JA of the Act, which refers to 'deemed income relating to certain companies' has an overriding effect upon other provisions of the Act. In this case, HCL Comnet Systems & Services had filed its return for 1997-98. During the course of assessment proceedings, the AO found the company had debited Rs 92.15 lakh on account of bad debts to the profit and loss account. However, on the ground that it was a provision for bad and doubtful debts, the AO added the amount to its book profits. -- Visit site at – http://investorline.co.in/ Learning Center- http://learning.investorline.co.in/ Mutual funds - http://mutualfunds.investorline.co.in/ Life Insurance - http://insurance.investorline.co.in/ Investor Forums- http://forums.investorline.co.in/ Iwebs Open Source Web Publishing Platform - http://webs.investorline.co.in/iwebs/ --~--~---------~--~----~------------~-------~--~----~ Get latest market updates & search internet right from your browser-download our toolbar here- http://investorline.ourtoolbar.com/ Visit our site at – http://investorline.co.in/ Newsroom: http://newsroom.investorline.co.in/ Learning Center- http://learning.investorline.co.in/ Mutual funds - http://mutualfunds.investorline.co.in/ Life Insurance - http://insurance.investorline.co.in/ Investor Journal - http://research.investorline.co.in/ Newscatcher- http://catcher.investorline.co.in/ Interested in Financial Planning-Let us Contact you- http://spreadsheets.google.com/viewform?key=pb_z4f1_zGMg4iBBFT3-SWQ&email=true If you like the site then promote it here- https://www.freetellafriend.com/tell/?url=http://investorline.co.in/blogs/news Create your own free blog on- http://investorline.co.in/blogger Visit this group at http://groups.google.com/group/india-investor -~----------~----~----~----~------~----~------~--~---
