Bombay High Court Considers Appeal on Disallowance of Business Loss and Book Profit Computation under Income Tax Act, 1961. The Appeal Raises Questions on Write-off of Deposits under Section 28, Scrutiny of Audited Accounts for Section 115J, and Deductibility of Miscellaneous Expenses under Section 37.

Whether the Tribunal was right in disallowing write-off of deposits and interest thereon as business loss of Rs.200.47 lakhs under section 28 of the Income Tax Act, 1961 Whether the Assessing Officer, while determining book profit under section 115J of the Act, can question the correctness of the profit and loss account prepared and certified by the statutory auditors as per Parts II and III of Schedule VI to the Companies Act, 1956 Whether the Tribunal committed an error of law in not allowing miscellaneous expenses of Rs.49,18,786 incurred for MMC under section 37 of the Act on ground of commercial expediency and to preserve reputation and business

Whether, on the facts and in circumstances of the case as well as in law, the Tribunal was right in disallowing write-off of the deposits and interest thereon as the business loss of Rs.200.47 lakhs incurred by the appellant company u/s.28 of the Act in the course of its business? Whether the Assessing Officer, while determining the book profit under section 115J of the Act, can question the correctness of the profit and loss account prepared and certified by the statutory auditors of the appellant company as having been prepared in accordance with the requirements of Parts II and III of Schedule VI to the Companies Act, 1956? Whether the Tribunal committed an error of law in not allowing miscellaneous expenses of Rs.49,18,786/- (Rupees forty-nine lac eighteen thousand seven hundred eighty-six only) incurred by the appellant for MMC under Section 37 of the 1961 Act on the ground of commercial expediency as well as on the ground of the expenses where so incurred in order to preserve the reputation of estate and business

Appeal under Section 260A of the Income Tax Act, 1961 filed by the assessee before the High Court of Judicature at Bombay. Appeal admitted on the stated substantial questions of law. Additional substantial question of law framed during the course of hearing.

• Income Tax Act, 1961: 260A, 28, 115J, 37
• Companies Act, 1956: Schedule VI Parts II and III