ITO-6(1)-2, MUMBAI v. M/S. IRB INFRASTRUCTURE LTD., MUMBAI

ITA 6445/MUM/2008 | 2005-2006
Pronouncement Date: 11-01-2010 | Result: Dismissed

Appeal Details

RSA Number 644519914 RSA 2008
Assessee PAN AAACI3369P
Bench Mumbai
Appeal Number ITA 6445/MUM/2008
Duration Of Justice 1 year(s) 2 month(s) 5 day(s)
Appellant ITO-6(1)-2, MUMBAI
Respondent M/S. IRB INFRASTRUCTURE LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 11-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 11-01-2010
Date Of Final Hearing 25-11-2009
Next Hearing Date 25-11-2009
Assessment Year 2005-2006
Appeal Filed On 06-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'I' BENCH MUMBAI BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 6445/MUM/2008 (ASSESSMENT YEAR: 2005-06) INCOME TAX OFFICER 6(1)-2 M/S. IRB INFRASTRUCTURE L TD. ROOM NO. 503 AAYAKAR BHAVAN 501 DATTASHRAM HINDU COLONY M.K. ROAD MUMBAI 400020 VS. DADAR (E) MUMBAI 400014 PAN - AAACI 3369 P APPELLANT RESPONDENT APPELLANT BY: SHRI AJAY KUMAR SRIVASTAVA RESPONDENT BY: SHRI MITESH SHAH O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY REVENUE IS AGAINST THE ORDER OF THE CIT(A) VI MUMBAI DATED 29.01.2008. 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CIT(A) IS CORRECT TO HOLD THAT NO ADJUSTMEN T CAN BE MADE TO THE BOOK PROFIT OF THE ASSESSEE COMPANY EVEN IN THIS C ASE WHERE TOLL TAX COLLECTED BY THE ASSESSEE HAS NOT BEEN CREDITED TO THE PROFIT AND LOSS ACCOUNT EVEN THOUGH IT IS A REVENUE RECEIPT AND BOO K PROFIT HAS BEEN DETERMINED U/S. 115JB WITHOUT CREDITING SUCH REVENU E RECEIPTS TO THE PROFIT AND LOSS ACCOUNT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW LD. CIT(A) IS CORRECT TO HOLD THAT THE BOOKS O F ACCOUNTS OF THE ASSESSEE COMPANY ARE MAINTAINED AS PER THE COMPANY LAW EVEN WHEN THE TOLL TAX COLLECTED BY IT BEING A REVENUE RECEIP T HAS NOT BEEN CREDITED TO THE PROFIT AND LOSS ACCOUNT. 3. BRIEFLY STATED THE ASSESSEE IS A BOT COMPANY INCOR PORATED SPECIALLY AS SPV FOR UNDERTAKING INFRASTRUCTURE PROJECTS. TH E ASSESSEE COMPANY HAD UNDERTAKEN AN INFRASTRUCTURE PROJECT FOR CONSTRUCTI ON OF A MAJOR BRIDGE ACROSS PATALGANGA RIVER AND RAIL OVER BRIDGE ON NAT IONAL HIGH WAY-17 IN RAIGAD DISTRICT FROM GOVERNMENT OF MAHARASHTRA UNDE R BUILT OPERATE AND TRANSFER (BOT) SCHEME WITH TOLL RIGHTS. CONSTRUCTIO N OF THE ABOVE BRIDGE WAS ITA NO. 6445/MUM/2008 M/S. IRB INFRASTRUCTURE LTD. 2 COMPLETED ON 20.07.1999 AND THE TOLL COLLECTION WAS STARTED FROM 21.07.1999. IN ITS BOOKS OF ACCOUNT THE COMPANY HAS ACCOUNTED FOR THE RECEIPTS IN RESPECT OF ITS TOLL COLLECTION AS A RED UCTION FROM WORK IN PROGRESS AND AS SUCH NO PROFIT HAS BEEN OFFERED IN THE A.Y. 2000-01. IN THE A.Y. 2001-02 THE A.O. HAS NOT ACCEPTED THE METHOD OF ACC OUNTING AND MADE REVISED COMPUTATION ON THE BASIS OF TOLL RECEIPTS R ECEIVED DURING THE YEAR BEING BROUGHT TO TAX AND OPENING WORK IN PROGRESS A T THE BEGINNING OF THE OF THE YEAR WAS CONSIDERED FOR APPORTIONMENT FOR THE R EST OF THE PERIOD AND ACCORDINGLY HE BROUGHT TO TAX THE TOLL RECEIPTS RED UCED BY PROPORTIONATE COST DURING THE YEAR. CONSISTENT WITH THE VIEW TAKEN BY THE AO IN ACCORDANCE WITH THE ORDERS FOR A.Y. 2001-02 THE ASSESSEE IN T HE LATTER YEARS WAS OFFERING THE INCOMES IN THE INCOME TAX COMPUTATION AND IN THE IMPUGNED YEAR THE ASSESSEE HAS OFFERED INCOME ON A TOTAL LOS S OF RS.1 10 845/- ORIGINALLY. THE REVISED RETURN WAS FILED ON 31.03.2 002 AT TOTAL INCOME AT NIL AFTER CLAIMING DEDUCTION UNDER SECTION 80IA OF THE GROSS TOTAL INCOME AT RS.3 41 23 451/-. IN THE SCRUTINY ASSESSMENT THE A. O. ACCEPTED THE COMPUTATION UNDER THE NORMAL PROVISIONS OF THE TAX AND ALLOWED THE DEDUCTION UNDER SECTION 80IA. INCOME FROM OTHER SOU RCES OF RS.49 004/- WAS COMPUTED AS TOTAL INCOME. THEREAFTER THE A.O. C ONSIDERED THE INCOME UNDER SECTION 115JB AND BROUGHT TO TAX 7.5% OF THE BOOK PROFIT OF THE SAME INCOME COMPUTED UNDER NORMAL PROVISIONS BEFORE THE ALLOWING DEDUCTION UNDER SECTION 80IA I.E. RS.3 41 23 415/-. ACCORDIN G TO THE A.O. THE ASSESSEE SHOULD HAVE OFFERED THE RECEIPTS IN THE P& L ACCOUNT AND THEREFORE THE BOOK PROFIT HAS TO BE REVISED BY CONSIDERING TH E TOLL RECEIPTS AS GROSS RECEIPTS AND ACCORDINGLY HE ADOPTED THE METHOD OF A CCOUNTING FOLLOWED BY HIM FOR REGULAR ASSESSMENT FOR THE PURPOSE OF 115JB AS WELL. THE ISSUE WAS CARRIED TO THE CIT(A) AND THE CIT(A) IN HIS ORDER H ELD THAT THE A.O. WAS NOT JUSTIFIED IN COMPUTING THE BOOK PROFIT UNDER SECTIO N 115JB BY MODIFYING THE STATEMENT OF ACCOUNTS ITSELF. IT WAS HIS FINDING TH AT THE A.O. CAN ONLY ADD OR REDUCE ANY AMOUNT WHICH IS PRESCRIBED UNDER SECTION 115JB AND SUBSTITUTING RECEIPTS AND EXPENDITURE WHICH IS DIFF ERENT FROM THE BOOKS OF ACCOUNT MAINTAINED UNDER THE COMPANY LAW IS NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 115JB. THE LEARNED CIT(A) ALS O RELIED ON THE DECISION OF ITA NO. 6445/MUM/2008 M/S. IRB INFRASTRUCTURE LTD. 3 THE APOLLO TYRE VS. CIT 225 ITR 273 WHEREIN THE HON 'BLE SUPREME COURT HAS HELD THAT THE A.O. HAS NO POWER TO MODIFY THE BOOKS OF ACCOUNTS WHEN THEY ARE MAINTAINED IN ACCORDANCE WITH THE ACT. IT WAS F URTHER HELD BY HIM THAT THE A.O. HAS THE LIMITED POWER OF MAKING INCREASE A ND REDUCTION AS PROVIDED FOR IN THE EXPLANATION TO SECTION 115J AND ACCORDIN GLY HE DIRECTED THE A.O. NOT TO DISTURB THE BOOKS PROFIT SHOWN BY THE ASSESS EE. REVENUE IS AGGRIEVED. 4. THE LEARNED D.R. SUBMITTED THAT THE ASSESSEES ACCO UNTS ARE NOT ACCORDING TO THE ACCEPTED PRINCIPLES OF ACCOUNTING AND THE A.O. HAS POWER TO CHANGE THE METHOD OF ACCOUNTING IF THE ASSESSEE HAS NOT MAINTAINED THE BOOKS ACCORDING TO THE SCHEDULE VI OF THE COMPANIES ACT. HE DREW OUR ATTENTION TO THE CHANGE OF METHOD OF ACCOUNTING ACC EPTED BY THE ASSESSEE IN EARLIER YEARS WHILE COMPUTING THE INCOME FOR THE IN COME TAX PURPOSE AND ALSO ACCEPTANCE OF THE METHOD OF ACCOUNTING FOR EVE N 115JB PURPOSES IN THE LATER YEARS. IT WAS SUBMITTED THAT THE ACCOUNTING P OLICIES MODIFIED ARE BINDING ON THE COMPANY AND HE RELIED ON THE DECISIO N OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAIN PROCESSING & WEAVING MILLS (P) LTD. 221 CTR 493 FOR THE PROPOSITION THAT THE A.O. HAS P OWER TO MODIFY THE BOOKS OF ACCOUNT TO MAKE IT OBLIGATORY UNDER PARA 2 OF SCHEDULE VI OF COMPANIES ACT AND IF THE ASSESSEE HAS NOT FOLLOWED THE METHOD OF ACCOUNTING THE A.O. CAN CERTAINLY MODIFY TO MAKE I T IN TUNE WITH SCHEDULE VI OF COMPANIES ACT. THE LEARNED D.R. ALSO SUPPORTE D ASSESSING OFFICERS ACTION IN HOLDING THAT THE ASSESSEE HAS ACCEPTED TH E CHANGE IN METHOD OF ACCOUNTING IN EARLIER YEARS AND ALSO ACCEPTED 115JB COMPUTATION IN LATER YEARS AND ON THE BASIS OF RULES OF CONSISTENCY AS H ELD BY THE HON'BLE SUPREME COURT IN THE CASE OF OSWAL AGRO MILLS LTD. 182 TAXMAN 241 THE ASSESSING OFFICERS ORDER SHOULD BE UPHELD. 5. THE LEARNED COUNSEL IN REPLY SUBMITTED THAT THE AS SESSEE WAS CONSTRUCTING VARIOUS PROJECTS ON BUILT OPERATE AND TRANSFER POLICY AND THERE WAS NO PRESCRIBED ACCOUNTING POLICY EITHER UNDER TH E INCOME TAX OR UNDER THE ACCOUNTING PRINCIPLES ESTABLISHED BY THE CHARTE RED ACCOUNTANTS INSTITUTE. THE ASSESSEE WAS HAVING AN OPTION TO FOL LOW THE PERCENTAGE COMPLETION METHOD OR COMPLETED CONTRACT METHOD FOR ACCOUNTING THE INCOMES AS PRESCRIBED IN THE ACCOUNTING POLICY. TH E ASSESSEE CHOOSE TO OPT ITA NO. 6445/MUM/2008 M/S. IRB INFRASTRUCTURE LTD. 4 FOR THE COMPETED PROJECT METHOD AND ACCORDINGLY IN THE BOOKS OF ACCOUNT THE RECEIPTS FROM TOLL RECEIPTS ARE ADJUSTED IN THE WOR K IN PROGRESS AVAILABLE TO BE SET OFF AND ONLY AFTER RECEIPT OF THE COST OF PR OJECT THE PROFIT WILL BE OFFERED. THE ASSESSEE WAS CONSISTENTLY FOLLOWING THE SAME ME THOD OF ACCOUNTING FROM THE INCEPTION AND THERE IS NO CHANGE IN THE ACCOUNT ING POLICY IN ANY OF THE YEARS INCLUDING THE LATER YEARS AND FILED VARIOUS B ALANCE SHEETS AND P & L ACCOUNT IN SUPPORT OF THE CONTENTION THAT THE ASSES SEE WAS CONSISTENTLY FOLLOWING THE SAME ACCOUNTING POLICY UNDER THE COMP ANIES ACT. IT WAS FURTHER SUBMITTED THAT THE ASSESSEES BOOKS OF ACCO UNT WERE ACCEPTED UNDER THE COMPANIES ACT AND HENCE THE A.O. HAS NO POWER TO CHANGE THE METHOD OF ACCOUNTING WHILE REDETERMINING THE BOOK PROFIT U NDER SECTION 155JA AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF AP OLLO TYRE VS. CIT 225 ITR 273. THE A.O. HAS ONLY LIMITED POWER IN MAKING JUDG EMENT AS PROVIDED FOR IN THE EXPLANATION TO SECTION 115JB AND DOES NOT HA VE JURISDICTION TO REDRAW THE P & L ACCOUNT DIFFERENT FROM THE P & L A CCOUNT SHOWN IN THE BOOKS OF ACCOUNT. HE ALSO SUBMITTED THAT EVEN THOUG H THE ASSESSEE HAS CHANGED THE METHOD OF ACCOUNTING WHILE OFFERING THE INCOMES UNDER INCOME TAX PROVISIONS THE SAME IS NOT RELEVANT FOR COMPUTA TION OF INCOME UNDER SECTION 115JB. HE ALSO REFERRED TO THE ORDERS OF TH E ITAT WHEREIN THE ITAT HAS NOT ACCEPTED THE ASSESSING OFFICERS ORDERS FOR A.Y. 2001-02 IN WHICH THE A.O. FOR THE FIRST TIME BROUGHT OUT CHANGE IN M ETHOD OF ACCOUNTING. IT WAS ALSO FURTHER CONFIRMED BY THE HON'BLE BOMBAY HI GH COURT IN ASSESSEES OWN CASE AND ACCORDINGLY THE ORDERS PASSED BY THE A .O. FOR A.Y. 2001-02 HAS NO RELEVANCE FOR THE ISSUE IN THIS YEAR. IT IS THE SUBMISSION OF THE LEARNED COUNSEL THAT SINCE THE ACCOUNTS ARE MAINTAI NED ACCORDING TO THE ACCEPTED PRINCIPLES OF ACCOUNTING AND SINCE THE A.O . HAS NO POWER TO MODIFY THE P & L ACCOUNT BUT ONLY HAS LIMITED POWER TO MAK E ADJUSTMENTS AND THE PROFITS DETERMINED BY THE BOOKS OF ACCOUNT THE ORDE R OF THE CIT(A) REQUIRED TO BE UPHELD. 6. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE FACT S OF THE CASE THE ASSESSEE HAS FOLLOWED CONSISTENTLY THE COMPETED PRO JECT METHOD AS FAR AS THE METHOD OF ACCOUNTING FOR THE PURPOSE OF COMPANY LAW IS CONCERNED. ADMITTEDLY IT IS ONE OF THE METHODS PRESCRIBED UND ER THE ACCOUNTING ITA NO. 6445/MUM/2008 M/S. IRB INFRASTRUCTURE LTD. 5 POLICIES. THERE IS NO CHANGE IN THE METHOD OF ACCOU NTING FOLLOWED BY THE ASSESSEE IN ALL THE YEARS UNDER THE COMPANIES ACT 1 956. HOWEVER FOR THE PURPOSE OF INCOME TAX COMPUTATION FROM A.Y. 2002-0 3 THE ASSESSEE HAS CHANGED THE METHOD OF ACCOUNTING ACCEPTING THE YEAR LY ACCRUAL BASIS BY AMORTIZING THE BOT PROJECT COST AS PER THE INCOME T AX ORDER PASSED FOR A.Y. 2001-02. BY VIRTUE OF THE ORDER FOR ASSESSMENT YEAR 2001-02 BY THE ITAT IN ITA NO. 2802/MUM/2005 THE METHOD OF ACCOUNTING FOLL OWED BY THE ASSESSEE UNDER THE COMPANIES ACT WAS APPLIED AND ACCEPTED IN THE INCOME TAX PROCEEDINGS FOR THAT YEAR AND THESE ORDERS HAVE BE COME FINAL BY THE DISMISSAL OF THE REVENUE APPEAL BY THE HON'BLE BOMB AY HIGH COURT IN ITA NO. 943 OF 2008. SINCE THE ASSESSEE HAS CHANGED ITS METHOD OF ACCOUNTING FOR INCOME TAX PURPOSES THE AMORTIZATION OF PROJECT COST WAS DIRECTED TO BE CHANGED FROM A.Y. 2002-03 ON THE BASIS OF THE ASSES SEES OWN RETURNS. HOWEVER AS FAR AS ITS BOOKS OF ACCOUNTS ARE CONCER NED THE ASSESSEE HAS CONSISTENTLY FOLLOWED THE SAME METHOD OF ACCOUNTING I.E. COMPLETED CONTRACT METHOD IN ALL THE YEARS INCLUDING THE IMPUGNED YEAR . AS SEEN FROM THE NOTES FORMING PART OF THE ACCOUNTS AND BALANCE SHEET AS O N 31.03.2001 THE METHOD OF ACCOUNTING AS PRESCRIBED FOR CONSTRUCTION CONTRACT IS AS UNDER: - IN THE CASE OF BUILT OPERATE AND TRANSFER (BOT) C ONTRACTS THE COMPANY HAS OBTAINED EXPERT OPINION AND ACCORDINGLY HAS ADO PTED THE COMPLETED CONTRACT METHOD OF ACCOUNTING ON THE GROUND THAT IT IS NOT POSSIBLE TO PRESENTLY ESTIMATE BOTH THE PROJECT COST WHICH WILL BE INCURRED IN FUTURE AND ALSO ITS RECOVERY IN FUTURE. THE COMPANY IS ADV ISED BY ITS TAX ADVISOR TO FOLLOW THE SAME METHOD IN ARRIVING AT TH E INCOME TAX PROVISION. ACCORDINGLY THE COMPANY IS CONSISTENTLY FOLLOWING T HE COMPLETED CONTRACT METHOD OF ACCOUNTING IN THE BOOKS OF ACCOUNTS AND A S SEEN FROM THE P & L ACCOUNT THE ANNUAL INCOME TAKEN TO THE P & L ACCOUN T IS WITH REFERENCE TO THE OTHER INCOMES OF INTEREST ETC. 7. EVEN THOUGH THE ASSESSEE HAS CHANGED ITS METHOD OF ACCOUNTING FOR INCOME TAX PURPOSE AND HAS OFFERED THE POSITIVE GRO SS TOTAL INCOME FOR INCOME TAX PURPOSE THE ASSESSEE WAS ENTITLED FOR DE DUCTION UNDER SECTION 80IA AND ACCORDINGLY ITS TOTAL INCOME BECAME NIL. THE A.O. HAS INVOKED THE PROVISIONS OF SECTION 115JB AND ADOPTED THE SAME CO MPUTATION OF INCOME FOR THE PURPOSE OF SECTION 115 JB AS WELL. IT WAS R IGHTLY HELD BY THE CIT(A) ITA NO. 6445/MUM/2008 M/S. IRB INFRASTRUCTURE LTD. 6 THAT THE A.O. HAS NO POWER TO SUBSTITUTE THE P & L ACCOUNT AND ADOPT A DIFFERENT FIGURE THAN THE NET PROFIT SHOWN IN THE C OMPANYS ACCOUNT. 8. THE LEARNED D.R. HAS VEHEMENTLY SUPPORTED THE ORDER OF THE A.O. BY RELYING ON THE PRINCIPLES ESTABLISHED BY THE HON'BL E HIGH COURT OF DELHI IN THE CASE OF CIT VS. SAIN PROCESSING & WEAVING MILLS (P) LTD. 221 CTR 493. THE FACT IN THAT CASE WAS THAT THE ASSESSEE COMPANY HAS NOT DEBITED DEPRECIATION TO P & L ACCOUNT. IT IS OBLIGATORY UND ER CLAUSE 3(IV) OF PART II OF SCHEDULE VI TO THE COMPANIES ACT TO GIVE INFORMATIO N WITH REGARD TO DEPRECIATION WHICH HAS NOT BEEN PROVIDED FOR ALONG WITH THE QUANTUM OF ARREARS. ONCE THIS INFORMATION IS DISCLOSED IN THE NOTES TO THE ACCOUNTS IT WOULD CLEARLY FALL WITHIN THE AMBIT OF THE EXPLANAT ION TO SECTION 115J. THAT PART SECTION 205(1) PROVISO (B) OF THE COMPANIES ACT READ WITH CLAUSE (IV) OF EXPLANATION TO SECTION 115J PERMITS REDUCTION OF NE T PROFIT TO THE EXTENT OF PAST LOSSES OR UNABSORBED DEPRECIATION WHICHEVER I S LESS. ON THOSE FACTS THE HON'BLE DELHI HIGH COURT HAS HELD THAT THE CURRENT DEPRECIATION WHICH IS NOT CHARGED TO THE P & L ACCOUNT BUT DISCLOSED IN THE N OTES APPENDED TO THE ACCOUNTS HAS TO BE DEDUCTED FROM THE NET PROFIT ARR IVED AT THE BOOK PROFITS FOR THE PURPOSE OF SECTION 115J. THE ISSUE BEFORE T HE HON'BLE DELHI HIGH COURT WAS WITH REFERENCE TO DEPRECIATION WHICH WAS REQUIRED TO BE PROVIDED UNDER THE COMPANIES ACT BUT NOT PROVIDED IN THE SAI D CASE. HOWEVER THE FACTS IN THE PRESENT CASE ARE ENTIRELY DIFFERENT. T HE ASSESSEE HAS FOLLOWED AN APPROVED METHOD OF ACCOUNTING FOR THE PURPOSE OF CO MPANIES ACT. IT IS NOT THE CASE OF THE REVENUE THAT THE METHOD OF ACCOUNTI NG FOLLOWED BY THE ASSESSEE IS NOT AN APPROVED METHOD. ONCE THE ASSESS EE HAS FOLLOWED CONSISTENTLY THE COMPLETED CONTRACT METHOD FOR THE PURPOSE OF ACCOUNTING ITS INCOME IN THE BOOKS OF ACCOUNT AND THE SAME WER E ACCEPTED UNDER THE COMPANY LAW THE A.O. HAS NO JURISDICTION TO MODIFY THE ACCOUNTS AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF APOLLO TYRES VS. CIT 225 ITR 273. HE HAS ONLY LIMITED POWERS OF MAKING INCREASE OR DECREASE AS PROVIDED FOR IN THE EXPLANATION TO SECTION 115 JB. IT WAS RI GHTLY HELD BY THE CIT(A) THAT THE A.O. DOES NOT HAVE JURISDICTION TO SUBSTIT UTE THE NET PROFIT SHOWN IN THE P & L ACCOUNT. THERE IS NO MERIT IN REVENUES C ONTENTION AND ACCORDINGLY THE GROUNDS ARE REJECTED. ITA NO. 6445/MUM/2008 M/S. IRB INFRASTRUCTURE LTD. 7 9. THE LEARNED COUNSEL HAS RELIED ON THE DECISION OF T HE HON'BLE BOMBAY HIGH COURT IN THE CASE OF KINETIC MOTOR CO. LTD. VS . DCIT 262 ITR 330 WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT IT WAS NOT IN DISPUTE THAT UNDER THE COMPANIES ACT BOTH THE STRAIGHT LINE METH OD AND WRITTEN DOWN METHOD ARE RECOGNISED. THEREFORE ONCE THE AMOUNT O F DEPRECIATION ACTUALLY DEBITED TO THE PROFIT AND LOSS ACCOUNT WAS CERTIFIE D BY THE AUDITORS IT WAS NOT PERMISSIBLE FOR THE A.O. TO MAKE BOOKS ADJUSTME NTS. THE FACTS IN THE ABOVE SAID CASE WAS THAT THE ASSESSEE WAS A PUBLIC LIMITED COMPANY AND FOR THE ASSESSMENT YEAR 1991 THE ASSESSEE DEBITED AN AM OUNT OF RS.6.32 CRORES ON ACCOUNT OF DEPRECIATION CALCULATED ON WRITTEN DO WN VALUE METHOD WHICH IS ONE OF THE PERMISSIBLE METHODS UNDER THE COMPANI ES ACT AS WELL AS INCOME TAX ACT ALTHOUGH THE ASSESSEE USED TO PROVI DE DEPRECIATION ON THE STRAIGHT LINE METHOD IN ITS CORPORATE ACCOUNTS. THE ABOVE RESULTED IN THE BOOKS LOSS OF RS.1.64 CRORES AND THE ACCOUNTS ARE C ERTIFIED TO BE TRUE AND FAIR BY THE AUDITORS. THE A.O. TOOK THE VIEW THAT T HERE IS NO JUSTIFICATION FOR ASSESSEE TO CHANGE BASIS OF PROVIDING DEPRECIATION AND THE A.O. SHOULD WORKOUT THE DEPRECIATION AND ARRIVE AT THE REVISED FIGURE OF BOOK PROFIT OF RS.2 22 10 525/- AS AGAINST THE BOOK LOSS OF RS.16 14 937/-. THE CIT(A) FOLLOWING THE PRINCIPLES LAID DOWN BY THE HON'BLE S UPREME COURT IN THE CASE OF APOLLO TYRE (SUPRA) HAD HELD THAT THE A.O. CANNO T MAKE SUCH BOOKS ADJUSTMENTS. THE SAME WAS UPHELD. THE FACTS ARE SIM ILAR TO THE PRESENT CASE. RESPECTFULLY FOLLOWING THE PRINCIPLES ESTABLI SHED BY THE SAID DECISION WE ARE OF THE OPINION THAT THE A.O. HAS NO POWER TO MAKE ADJUSTMENT TO THE BOOKS PROFIT ITSELF OTHER THAN SPECIALLY PROVIDED U NDER EXPLANATION 1 TO SECTION 115JB. 10. IT IS ONE OF THE CONTENTIONS OF THE LEARNED D.R. TH AT THE ASSESSEE ITSELF HAS MODIFIED ITS COMPUTATION OF BOOK PROFIT IN THE LATER YEARS AND MODIFIED THE P & L ACCOUNT. WE ARE NOT IN A POSITION TO COMM ENT ON THE ACTION OF THE ASSESSEE IN SUBSEQUENT YEARS AS THOSE ISSUES ARE NO T BEFORE US. SUFFICE TO SAY THAT IN THIS ASSESSMENT YEAR THE ASSESSEE HAS N OT CHANGED THE METHOD OF ACCOUNTING NOR IT IS THE CASE OF THE REVENUE THA T THE ASSESSEES METHOD OF ACCOUNTING IS NOT CORRECT. WE ARE OF THE OPINION TH AT THE A.O. HAS NO JURISDICTION TO SUBSTITUTE THE P & L ACCOUNT AS WAS DONE WHILE COMPUTING ITA NO. 6445/MUM/2008 M/S. IRB INFRASTRUCTURE LTD. 8 THE INCOME UNDER SECTION 115JB. ACCORDINGLY WE ARE NOT PERSUADED BY THE ARGUMENT OF THE LEARNED D.R. THAT RULE OF CONSISTEN CY WILL APPLY EVEN IN THIS YEAR ON THE BASIS OF THE RETURNS FILED IN LATER YEA RS. THIS ARGUMENT IS REJECTED. 11. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY 2010. SD/- SD/- (R.S. PADVEKAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 11 TH JANUARY 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) VI MUMBAI 4. THE CIT VI MUMBAI CITY 5. THE DR I BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P. ITA NO. 6445/MUM/2008 M/S. IRB INFRASTRUCTURE LTD. 9 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 31.12.09 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 06.01.10 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR. PS/PS 7 FILE SENT TO THE BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER