JUDGMENT 1. The Income-tax Appellate Tribunal, Jodhpur, has submitted the statement of case and referred the following questions of law arising out of the appellate order dated January 10, 1995, passed in Income-tax Appeal No. 1047/JP/94 for the assessment year 1990-91 at the instance of the assessee on an application for assessment under section 256(1) of the Income-tax Act, 1961. "Question No. 1 : Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the order passed by the Commissioner of Income-tax under section 263 was correct and thereby upholding the same ? Question No. 2 : Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the order passed by the Assessing Officer was erroneous and prejudicial to the interests of the Revenue ?" 2. The facts giving rise to this appeal are as under : 3. That the assessee is a public limited company carrying on the business of textiles. For the assessment year 1990-91 the assessee returned a net loss of Rs. 5,72,56,454. The assessment was completed under section 143(3) of the Act on October 22, 1991, and the total income was assessed at nil. 4. Thereafter, the Commissioner of Income-tax issued a notice under section 263 calling upon the assessee as to why book profit may not be computed under section 115J in accordance with the provisions of the Act at Rs. 3,26,16,000 and consequently 30 per cent. of the same be not taken as taxable income as subject to tax. 5. Annexure 2 submitted on October 22, 1991, shows that in computing the total income, the assessee has shown net loss as per profit and loss account at Rs. 31,65,800 and had claimed adjustment on account of depreciation at Rs. 8,29,95,990. The Assessing Officer after considering the claim to depreciation in respect of different assets finally allowed the depreciation at Rs. 8,71,81,294 and after making some adjustments, disallowed certain part of the claim made by the assessee in this regard. However, no additions were made on account of depreciation provided for by the assessee in his books of account, on newly installed plant and machinery. Determination of depreciation and its allowance in computing taxable income of the assessee in accordance with the Income-tax Act, 1961 was not found to be erroneous. However, no additions were made on account of depreciation provided for by the assessee in his books of account, on newly installed plant and machinery. Determination of depreciation and its allowance in computing taxable income of the assessee in accordance with the Income-tax Act, 1961 was not found to be erroneous. The Assessing Officer in the assessment order dated October 20, 1991, had referred to section 115J. 6. After the assessment was completed, the Commissioner of Income-tax was of the opinion that the order dated October 22, 1991, passed by the Assessing Officer was erroneous and prejudicial to the interests of the Revenue in considering the entire claim of depreciation of new machinery as provided in the profit and loss account which were duly audited, approved by the AGM and certified by the Registrar of Companies to be erroneous and prejudicial to the interests of the Revenue resorted to his jurisdiction under section 263 of the Income-tax Act and recomputed the book profit of company by disallowing the claim to deprecation. From the order dated March 21, 1994, passed by the Commissioner of Income-tax, it is revealed that the Assessing Officer while making the assessment under section 143(3) and computing the total income under the provisions of the Income-tax Act has not considered the applicability of section 115J of the Income-tax Act by way of reasoned order. 7. So far as the consideration of the applicability of section 115J is concerned, the Assessing Officer has observed that the applicability of section 115J was also considered. The Assessing Officer has further considered that certain additions are required to be made in the return of the assessee in its correct perspective and on the basis of which, he has made certain modifications in computing the total income of the assessee and also computed the amount for carrying forward of losses/unabsorbed depreciation to subsequent years with which we are not concerned here. 8. The power of the Commissioner under section 263 was exercised in respect of the finding that the computation of book profit made under section 115J by the Assessing Officer was erroneous. For this purpose, he referred to the following Table about the information furnished by the assessee in his return regarding the applicability of section 115J(4) : Rs. Rs. 8. The power of the Commissioner under section 263 was exercised in respect of the finding that the computation of book profit made under section 115J by the Assessing Officer was erroneous. For this purpose, he referred to the following Table about the information furnished by the assessee in his return regarding the applicability of section 115J(4) : Rs. Rs. Profit as per profit and loss account 31,65,800 Less : Amount credited to profit and loss account (i) Excess provisions written back 43,74,155 (ii) Provision for doubtful debt, written back. . . . . . (iii) Export profit under section 80HHC 88,10,754 1,31,84,909 (-) 1,00,19,109 Tax due Nil 9. By referring to footnote 4(b) to schedule 13 of the balance-sheet, he came to the conclusion that it appears that the profit and loss account of the assessee did not reflect the correct book profit. The Assessing Officer ought to have recomputed the book profit by reducing the inflated claim to depreciation to the extent of Rs. 436. 35 lakhs and obviously the book profit would have come to Rs. 3,26,16,000 which according to the Commissioner of Income-tax ought to have been computed as book profit in terms of section 115J and accordingly for 30 per cent. of this recomputed book profit, the assessee ought to have been subjected to tax in terms of the provision which is popularly known as M.A.T.10. The principal ground for passing the order by the Commissioner of Income-tax was that in terms of Schedule XIV the depreciation ought to have been allowed on pro rata basis and not in respect of complete year. Therefore, excess depreciation of Rs. 436.35 lakhs has been made and to that extent, the book profits are to be reduced. As a result of this conclusion, the Commissioner of Income-tax held the order of the Assessing Officer relating to the applicability of section 115J to be erroneous and prejudicial to the interests of the Revenue and directed the Assessing Officer to recompute the book profit as above and levy tax.11. As a result of this conclusion, the Commissioner of Income-tax held the order of the Assessing Officer relating to the applicability of section 115J to be erroneous and prejudicial to the interests of the Revenue and directed the Assessing Officer to recompute the book profit as above and levy tax.11. On further appeal, the Tribunal has affirmed the order of the Commissioner of Income-tax overruling the objection of the assessee that book profit shown in the profit and loss account of the company prepared in terms of Part II and Part III of Schedule VI to the Companies Act was not open for recomputation by any authority under the Income-tax Act except the permissible adjustments under the Explanation to section 115J(1A). The Commissioner of Income-tax was in error in holding the assessment orders to be erroneous and prejudicial to the interests of the Revenue.12. The Tribunal found that the order of the Assessing Officer if read in the light of applicability of section 115J, no reference is found to section 115J in the entire order only observation is made about section 115J, however, there is no discussion whatever in the order that section 115J is not applicable. Section 115J being an important provision, some discussion in the order would not have been out of place.13. This sort of passing reference by the Assessing Officer may lead a superior officer to think as to whether the subordinate officer must have considered all the aspects of law as well as facts or not in arriving at a particular conclusion.14. On these premises, the Tribunal found that the Commissioner of Income-tax was right in holding that the order of the Assessing Officer was erroneous to that extent.15. The other objection of the assessee was that there was nothing on the basis of which, the Commissioner of Income-tax could also find the order to be prejudicial to the interests of the Revenue. The Tribunal went into various provisions of the Companies Act to find what is the purpose of maintaining accounts and what ought to be the fair book profit in its opinion.16. The Tribunal went into various provisions of the Companies Act to find what is the purpose of maintaining accounts and what ought to be the fair book profit in its opinion.16. The Tribunal was of the view that the condition laid down in sub-section (1A) of section 115J that the company has prepared its profit and loss account in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956, has to be read conjoined with the provisions of section 211(2) and other provisions of the Companies Act. The principal ground was that as per Schedule XIV the depreciation on new machines ought to have been allowed on pro rata basis and not for the whole year. In not adhering to Schedule XIV the profits declared by the company are not fair and true as per section 212(2) of the Act.17. With this premise, the Tribunal held that what is the fair and correct result is the essence of finding the book profit within the meaning of sub-section (1A) of section 115J. It said, "Substantial provision of section 212(2) is the true and fair result concept. Section 212(2) not only requires a company to show a true and fair view of profit or loss, but further it also requires that while complying with the requirement of Parts II and III of Schedule VI to the Companies Act, the end result shall be subject to the true and fair result concept. While applying section 115J enquiry into the question whether the book profit shown by the company is true and fair is permissible."18. The Assessing Officer according to the Tribunal is required to probe into the profit and loss account of the company while considering the acceptability of book profit shown in the profit and loss account while applying the provisions of section 115J(1).19. The Tribunal embarked on the discussion of other provisions of the Companies Act rather than confined to Parts II and Part III of Schedule VI to find out whether the book profit shown by the assessee satisfied the test of declaring "true and fair result".20. The Tribunal embarked on the discussion of other provisions of the Companies Act rather than confined to Parts II and Part III of Schedule VI to find out whether the book profit shown by the assessee satisfied the test of declaring "true and fair result".20. The Tribunal referred to the report of the auditors regarding profit and loss account and balance-sheet that the accounts of the company give a true and fair value result subject to the various notes appended by which, included note 4(b) under schedule 13, inter alia, reads as under "Depreciation on additions to fixed assets acquired and put to use after October 1, 1987, together with existing looms in sulzen weaving unit except temporary construction at Banswara, wherein the rate applied is 20 per cent. has been provided on written down value method at the rates specified in Schedule XIV to the Companies Act, 1956 for the whole year instead of pro rata for the period of use. As a result of the above, charge on account of depreciation for the year is higher by Rs. 426.35 lakhs, the resultant profit for the year is lower to this extent" and came to the conclusion that by considering the various aspects of the accounting and the different requirements of the Companies Act for the purpose of providing of depreciation under section 350 and the general guidelines issued by the Institute of Chartered Accountants, it came to the conclusion that by not providing pro rata depreciation in the new acquired assessment during the previous year relating to the assessment year, the books of account do not give true and fair value of the profit and loss account of the company in terms of section 211(2). This addition made in the book profits on account of depreciation charged referred to above was added back to the book profit, otherwise shown in the profit and loss account of the company and affirmed the order of the Commissioner of Income-tax passed under section 263 of the Income-tax Act. 21. This addition made in the book profits on account of depreciation charged referred to above was added back to the book profit, otherwise shown in the profit and loss account of the company and affirmed the order of the Commissioner of Income-tax passed under section 263 of the Income-tax Act. 21. The two questions which have been referred to us, in our opinion, are the aforesaid two aspects of the exercise of jurisdiction by the Commissioner of Income-tax under section 263, namely whether the order passed by the Assessing Officer is erroneous and secondly if it is erroneous, whether it is also prejudicial to the interests of the Revenue, as these are the two cumulative conditions satisfaction of which alone gives the Commissioner of Income-tax to invoke section 263 of the Income-tax Act, 1961.22. It would require inquiry into the question through the scope and ambit of the provisions related to section 115J, which was then in force in the context of the object with which the provision had been enacted and the scope of the enquiry, which the Assessing Officer can make into the book profits, disclosed in the books of account by the assessee in accordance with Part II and Part III of Schedule VI to the Companies Act.23. One more important fact, which we may notice at this juncture is that the Tribunal has said that though the auditor's report does not say that "book profit" shown in the profit and loss account is not in accordance with Part II and Part III of Schedule VI to the Companies Act or that "book profit" declared for the purpose of section 115J, does not disclose the true and fair result as per the Companies Act, yet by referring to very many other provisions of the Companies Act, regulating different matters to be taken into consideration for different purposes, more particularly Schedule XIV, that book profits shown by the assessee in its audited accounts which were duly approved by the annual general meeting and duly certified by the Registrar of Companies with whom such accounts were filed, did not disclose the true and correct results. For this reason it upheld the rejection of admitted book profits and substitution of recomputed book profits as per the Commissioner of Income-tax in his order under section 263 as correct for the purpose of invoking section 115J.24. For this reason it upheld the rejection of admitted book profits and substitution of recomputed book profits as per the Commissioner of Income-tax in his order under section 263 as correct for the purpose of invoking section 115J.24. This common ground that prevailed with the Commissioner of Income-tax while exercising jurisdiction under section 263 and on appeal by the Tribunal was that the book profit disclosed as per the profit and loss account and balance-sheet prepared in accordance with Part II and Part III of Schedule VI, did not disclose the true and fair result to relating working of the company and the matter whether the book profit declared by the assessee company reflects the true and fair result for the relevant period is a matter which is open to be inquired into and is required to be inquired into by the Assessing Officer, while considering the applicability of section 115J in respect of any company.25. It may be noticed that section 115J is to be resorted to in the alternative to a regular assessment by computing the taxable income of a company in accordance with the provisions of the Income-tax Act. It is only where the result arrived at by regular assessment of the company by computing its income in accordance with the provisions of the Income-tax Act, if the assessee's total taxable income be less than 30 per cent. of the income admitted by the assessee through declaration of book profits in its profit and loss account presented before the A.G.M. for the purpose of distributing the dividends. This is with the object that the company is at least held liable to pay tax on 30 per cent. of such admitted profits, which has been placed before the A.G.M. for the purpose of distributing its dividends. The object of insertion of section 115J initially with effect from April 1, 1988, by the Income-tax Act, 1961 and later on by introducing section 115JA with effect from April 1, 1997, vide the Finance (No. 2) Act, 1996 was to secure a minimum tax on the basis of admitted profits earned by the company for the purpose of distributing the dividends if the computation of income in accordance with the provisions of the Income-tax Act yields a lesser income. The provision was thus not introduced as an alternate regular procedure to be gone into for determining the maximum tax to be collected from the company, but it was a procedure provided in the alternative to ensure that minimum tax is paid by the company on its book profits as admitted by it before distributing dividends to its shareholders.26. Part II and Part III of Schedule VI really are not concerned with how and in what manner the accounts are to be prepared, but they deal with what disclosure has to be made in the books of account prepared by the company about the matters detailed in the accounts. It is silent about how and in what manner the accounts are to be prepared and whatever expenses, credits or tax benefits were taken into account in the profit and loss account have found their way into the books of account. Part II and Part III of Schedule VI do not direct whether they are concerned nor do these provisions envisage any directions to companies to provide for any matters in the books in a particular manner. It is significant that sub-section (1A) of section 115J was inserted with effect from April 1, 1989, vide the Finance Act, 1989 to eliminate the possible inquiry by the Assessing Officer in the matter of computation of minimum tax on profits as disclosed by the company in its profit and loss account except to make specific adjustments, if any, enumerated in the Explanation attached to the said provision, by way of additions to or deductions from such disclosed book profits. It is like acceptance of self-disclosures.27. Sub-section (1A) directed not in general way to prepare profit and loss account for the previous year in accordance with the general provisions of the Companies Act which are relevant for the various purposes, but it defined what book profit means for the purpose of section 115J. The book profit for the purposes of section 115J means the profit and loss mentioned in the profit and loss account, which has been prepared in accordance with the provisions of Part II and Part III of Schedule VI to the Companies Act, 1956. The book profit for the purposes of section 115J means the profit and loss mentioned in the profit and loss account, which has been prepared in accordance with the provisions of Part II and Part III of Schedule VI to the Companies Act, 1956. It did not rest merely with that requirement, but further ordained that net profit shown in the profit and loss account for the relevant previous year prepared as per sub-section (1A) is to be increased by such items specifically detailed under clause (a) to clause (ha) of the Explanation and further ordained that after the book profit is augmented by additions made as per clauses (a) to (ha), it be reduced by items shown in clause (i) to clause (iv) relating to the amounts to be reduced from the book profits so derived.28. Therefore, for the purpose of section 115J, a complete code was laid down to take the net profit as shown in the profit and loss account of the company and not the net profit as computed by the Assessing Officer as per his opinion of the true and correct result of working of company as the basis for making the adjustments, which have been specified in the Explanation.29. No additional adjustments are permissible whether by way of addition or by way of reduction other than those enumerated in the Explanation.30. One fact which may be noticed in this connection is that even before insertion of sub-section (1A), the position was made clear by using the expression in the Explanation which came into existence along with the insertion of section 115J. The Explanation which was existing prior to the insertion of sub-section (1A) read as under : "Explanation.-For the purposes of this section, 'book profit' means the net profit as shown in the profit and loss account for the relevant previous year prepared in accordance with the provisions of Parts II and III of the Sixth Schedule to the Companies Act, 1956 (1 of 1956)." 31. After the amendment, with the insertion of sub-section (1A) read with the Explanation it reads as under : "Sub-section (1A) Every assessee, being a company, shall, for the purposes of this section, prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 (1 of 1956). Explanation.-For the purposes of this section, 'book profit' means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (1A), as increased by- (a) the amount of income-tax paid or payable, and the provision therefor : or (b) the amounts carried to any reserves (other than the reserves specified in section 80HHD) by whatever name called : or (c) the amount or amounts set aside to provisions made for meeting liabilities other than ascertained liabilities : or (d) the amount by way of provision for losses of subsidiary companies : or (e) the amount or amounts of dividends paid or proposed : or (f) the amount or amounts of expenditure relatable to any income to which any of the provisions of Chapter III applies : or (g) the amount withdrawn from the reserve account under section 80HHD, where it has been utilised for any purpose other than those referred to in sub-section (4) of that section : or (h) the amount credited to the reserve account under section 80HHD, to the extent that amount has not been utilised within the period specified in sub-section (4) of that section : (ha) the amount deemed to be the profits under sub-section (3) of section 33AC : . . . . . and as reduced by,- (i) the amount withdrawn from reserves other than the reserves specified in section 80HHD or provisions, if any, such amount is credited to the profit and loss account : Provided that, where this section is applicable to an assessee in any previous year (including the relevant previous year), the amount withdrawn from reserves created or provisions made in a previous year relevant to the assessment year commencing on or after the first day of April, 1988 shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation : or (ii) the amount of income to which any of the provisions of Chapter III applies, if any such amount is credited to the profit and loss account : or (iii) the amounts (as arrived at after increasing the net profit by the amounts referred to in clauses (a) to (f) and reducing the net profit by the amounts referred to in clauses (i) and (ii)) attributable to the business, the profits from which are eligible for deduction under section 80HHC or section 80HHD : so, however, that such amounts are computed in the manner specified in sub-section (3) or sub-section (3A) of section 80HHC or sub-section (3) of section 80HHD, as the case may be : or (iv) the amount of the loss or the amount of depreciation which would be required to be set off against the profit of the relevant previous year as if the provisions of clause (b) of the first proviso to sub-section (1) of section 205 of the Companies Act, 1956 (1 of 1956), are applicable." 32. Therefore, for the purpose of finding the book profit, in order to determine the 30 per cent. of its profits in terms of section 115J(1) as minimum income chargeable to tax in a particular assessment year, where the chargeable income assessed in accordance with the provisions of the Income-tax Act, 1961, is less than 30 per cent. of book profit so arrived at, the 30 per cent. of the book profit so arrived at under sub-section (1A) may be taken as the chargeable income to the tax by this deeming provision.33. of book profit so arrived at, the 30 per cent. of the book profit so arrived at under sub-section (1A) may be taken as the chargeable income to the tax by this deeming provision.33. Apparently, there is no room for redetermining the net profit as shown in the profit and loss account of the company containing relevant declarations as incorporated in the light of Part III of Schedule VI. The Assessing Officer had to accept the result shown in the profit and loss account as book profit subject to the adjustment by additions or reductions, as detailed in the Explanation. The enquiry by the Assessing Officer into the conceptual "true and fair result" of the working of the company to be adverted to by the Tribunal is alien to the enquiry under section 115J. As such it is not a substitute procedure laid down for recomputing the income of the assessee in a different manner by the Assessing Officer himself, as he thinks proper, then he has already computed under the provisions of the Income-tax Act. He is not required to embark upon a detailed requirement into the different aspects of the matter and recompute the net profit shown in the books of account for applying the basis to revive as book profit which he thinks ought to be the fair and true result by resorting to the conceptual theory of true and fair result, by foraying into various other provisions of the Companies Act, that may provide many other matters to be taken into account for various other purposes. For example, section 349 (of the Companies Act) requires determination of profit for the purpose of determining the permissible limit of remuneration that could be paid to managing agents. That part of the exercise is always open to be made to the extent it is permissible under law while computing the profit and loss account of the company in accordance with the provisions of the Income-tax Act. It is open to disallow any claim to specific deductions or exemptions of benefit of tax concessions by resorting to regular computation of income at that stage.34. It is open to disallow any claim to specific deductions or exemptions of benefit of tax concessions by resorting to regular computation of income at that stage.34. It is open to the Assessing Officer while computing the income of any company in accordance with the provisions of the Income-tax Act to find whether the depreciation or other adjustments permissible to be made under the Income-tax Act, while computing the taxable income of the company. In fact the assessment order itself shows that the Assessing Officer has gone into the details of acceptable W.D.V., the claim to depreciation on specific assets and has also gone into the reason for claim to enhanced depreciation amount. Many of the assessee's claims have been denied while determining finally how much depreciation is entitled to be deducted from the assessee's income.35. It would be pertinent to mention that while computing the assessee's income in accordance with the provisions of the Income-tax Act, the claim of depreciation to which the subject-matter of controversy relates, had fully been held to be allowable in computing the taxable income of the company and on that premise, the assessment had been made.36. The order of the Assessing Officer computing the income of the company in accordance with the provisions of the Income-tax Act has neither been found erroneous nor prejudicial to the interests of the Revenue by the Commissioner of Income-tax. If the claim to depreciation in respect of the assets in question was found to be justified while computing the income in accordance with the provisions of the Income-tax Act, one fails to find reason how the same could be found to be erroneous for the purpose of arriving at the book profit as per the assessee's admission under section 115J on "the concept of fair and true result" of the company for the same period. There can hardly arise any occasion to make adjustment of book profit on that account.37. In the present case, this position is obvious from the computation of income in terms of the provisions of the Income-tax Act, in which the claim to depreciation had not been found to be erroneous because that claim has resulted in nil income while computing the income of the assessee. The same cannot be found to be not resulting in giving true and fair picture of the assessee's book profits in terms of section 115J.38. The same cannot be found to be not resulting in giving true and fair picture of the assessee's book profits in terms of section 115J.38. This is apart from our conclusion that no such inquiry is permissible for the purpose of recomputing the book profit by the Assessing Officer. In the absence of any note by the auditors or the AGM or the Registrar of Companies that the books of account of profit and loss account and balance-sheet have not been prepared in accordance with Part II and Part III of the Schedule VI to the Companies Act.39. As a matter of fact, the issue is now no more res integra.40. The Kerala High Court and the Andhra Pradesh High Court had taken the view that while applying section 115J for the purpose of determining alternative tax in order to fix a minimum tax liability on companies the book profit shown as per profit and loss account and balance-sheet of the company is not open to scrutiny by the Assessing Officers. The view taken by the Kerala High Court and the Andhra Pradesh High Court in this regard has since been affirmed by the Supreme Court in Apollo Tyres Ltd. v. CIT reported in (2002) 255 ITR 273. 41. In Apollo Tyres Ltd. v. CIT reported in (2002) 255 ITR 273 , the Supreme Court was concerned with a case in which the appellant assessee-company while determining its net profit for the relevant accounting year had provided for arrears of depreciation in its profit and loss account which according to the Revenue was not in accordance with Parts II and III of Schedule VI to the Companies Act. Hence, the Assessing Officer while considering the case of the assessee-company under section 115J of the Income-tax Act recomputed the said profit and loss account of the company so as to exclude the provision made for arrears of depreciation. Hence, the Assessing Officer while considering the case of the assessee-company under section 115J of the Income-tax Act recomputed the said profit and loss account of the company so as to exclude the provision made for arrears of depreciation. The said action of the Assessing Officer in questioning the correctness of the accounts maintained by the company was challenged by the company before the Income-tax Appellate Tribunal which among other things held that the Assessing Officer has no authority to reopen the accounts of a company which are certified by the auditors of the company as having been maintained in accordance with the provisions of the Companies Act and which account has been accepted in the general meeting of the company as well as by the Registrar of Companies.42. This view of the Tribunal was not accepted by the High Court which held that the Assessing Officer has the authority to examine whether the accounts of the company have been maintained in accordance with the requirements of sub-section (1A) of section 115J and in that process if he finds that the accounts of the company are not in accordance with the provisions of the Companies Act, he could make the necessary changes before proceeding to assess the company to tax under the Explanation to section 115J of the Income-tax Act.43. The apex court referred to the object of introducing section 115J in the Income-tax Act deduced from the Budget Speech of the then Finance Minister of India made in Parliament while introducing the said section, which was follows (page 279) : "It is only fair and proper that the prosperous should pay at least some tax. The phenomenon of so-called "zero-tax" highly profitable companies deserves attention. In 1983, a new section 80VVA was inserted in the Act so that all profitable companies pay some tax. This does not seem to have helped and is being withdrawn. I now propose to introduce a provision whereby every company will have to pay a 'minimum corporate tax' on the profits declared by it in its own accounts. Under this new provision, a company will pay tax on at least 30 per cent. of its book profit. In other words, a domestic widely held company will pay tax of at least 15 per cent. of its book profit." 44. Under this new provision, a company will pay tax on at least 30 per cent. of its book profit. In other words, a domestic widely held company will pay tax of at least 15 per cent. of its book profit." 44. The above speech shows that the income-tax authorities were unable to bring certain companies within the net of income-tax because these companies were adjusting their accounts in such a manner as to attract no tax or very little tax. It is with a view to bring such of these companies within the tax net, by paying tax at least to the extent it speaks through its profit and loss account to its shareholders that section 115J was introduced in the Income-tax Act with a deeming provision which makes the company liable to pay tax on at least 30 per cent. of its book profits as shown in its own accounts. For the said purpose, section 115J makes the fixed percentage of income reflected in the company's books of account the deemed taxable income for the purpose of assessing the tax.45. Viewed in this context, the Supreme Court further held that (page 279) : "The use of the words 'in accordance with the provisions of Parts II and III of Schedule VI to 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. While so looking into the accounts of the company, an Assessing Officer under the Income-tax Act has to accept the authenticity of the accounts with reference to the provisions of the Companies Act which obligates the company to maintain its account in a manner provided by the Companies Act and the same to be scrutinised and certified by the statutory auditors and will have to be approved by the company in its general meeting and thereafter to be filed before the Registrar of Companies who has a statutory obligation also to examine and satisfy that the accounts of the company are maintained in accordance with the requirements of the Companies Act. In spite of all these procedures contemplated under the provisions of the Companies Act, we find it difficult to accept the argument of the Revenue that it is still open to the Assessing Officer to rescrutinise this account and satisfy himself that these accounts have been maintained in accordance with the provisions of the Companies Act." 46. The court further held that (page 280) : "Sub-section (1A) of section 115J of the Income-tax Act in support of the above contention is misplaced. Sub-section (1A) of section 115J does not empower the Assessing Officer to embark upon a fresh inquiry in regard to the entries made in the books of account of the company. The said sub-section, as a matter of fact, mandates the company to maintain its account in accordance with the requirements of the Companies Act which mandate, according to us, is bodily lifted from the Companies Act into the Income-tax Act for the limited purpose of making the said account so maintained as a basis for computing the company's income for levy of income-tax. Beyond that, we do not think that the said sub-section empowers the authority under the Income-tax Act to probe into the accounts accepted by the authorities under the Companies Act. If the statute mandates that income prepared in accordance with the Companies Act shall be deemed income for the purpose of section 115J of the Act, then it should be that income which is acceptable to the authorities under the Companies Act. There cannot be two incomes one for the purpose of the Companies Act and another for the purpose of income-tax both maintained under the same Act. If the Legislature intended the Assessing Officer to reassess the company's income, then it would have stated in section 115J that 'income of the company as accepted by the Assessing Officer'." 47. With this conclusion, the court answered the question referred by the Tribunal by holding that the Assessing Officer cannot question the correctness of the profit and loss account prepared by the assessee-company and certified by the statutory authorities as being in accordance with the requirements of Part II and Part III of Schedule VI.48. With this conclusion, the court answered the question referred by the Tribunal by holding that the Assessing Officer cannot question the correctness of the profit and loss account prepared by the assessee-company and certified by the statutory authorities as being in accordance with the requirements of Part II and Part III of Schedule VI.48. The court clearly stated that the Assessing Officer while computing the income under section 115J 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 has the limited power of making increases and reductions as provided for in the Explanation to the said section. To put it differently, the Assessing Officer does not have the jurisdiction to go beyond the net profit shown in the profit and loss account which has been statutorily audited, approved by the AGM and filed with the Registrar of Companies who has certified its correctness except to the extent of adjustments provided in the Explanation to section 115J.49. This proposition of the Supreme Court in our opinion should give quietus to the controversy of questioning the book profit shown in the profit and loss account which has been duly audited, approved by the AGM of the company and has been filed before the Registrar of Companies who had no objection to the correctness to be beyond the scrutiny of the Assessing Officer.50. If that is so, then the Commissioner of Income-tax was apparently in error in going through the book profit shown by the assessee and taking upon himself to examine whether any amount has been wrongly taken into consideration while preparing the profit and loss account declaring the book profits to be contrary to the provisions of the Companies Act by resorting to his own view of the true and fair result of the company's working, whereas the company's accounts have been certified by its auditors to be in accordance with the provisions of the Act and approved in the annual general meeting of the company and thereafter have also been certified by the Registrar of Companies. This enquiry being beyond the jurisdiction of the Assessing Officer under the Income-tax Act, the assumption of jurisdiction by the Commissioner of Income-tax on the ground that the assessment order was erroneous and prejudicial to interest was not sustainable.51. This enquiry being beyond the jurisdiction of the Assessing Officer under the Income-tax Act, the assumption of jurisdiction by the Commissioner of Income-tax on the ground that the assessment order was erroneous and prejudicial to interest was not sustainable.51. It may further be noticed that the Supreme Court's decision in Apollo Tyres' case (2002) 255 ITR 273 was rendered in relation to the assessment year 1990-91 when section 115J only was in force at relevant time.52. Sub-section (2) of section 115JA has been inserted with effect from April 1, 1997, which provides a clear provision in this regard in sub-section (2) which reads as under : "(2) Every assessee, being a company, shall, for the purposes of this section prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 (1 of 1956) : Provided that while preparing profit and loss account, the depreciation shall be calculated on the same method and rates which have been adopted for calculating the depreciation for the purpose of preparing the profit and loss account laid before the company at its annual general meeting in accordance with the provisions of section 210 of the Companies Act, 1956 (1 of 1956)." 53. A perusal of the aforesaid provision goes to show beyond any doubt that any such scrutiny into a claim of depreciation while resorting to alternative tax is not permissible by the Assessing Officer under the proviso to sub-section (2) of section 115JA who has to accept the claim of depreciation which has been adopted for the purpose of preparing the profit and loss account laid before the AGM in accordance with the provisions of section 210 of the Companies Act, 1956, and approved by the AGM.54. We may notice that with effect from April 1, 1997, the assessment years are governed by section 115JA and not by section 115J. The applicability of section 115J stopped after the assessment year 1990-91.55. We may notice that with effect from April 1, 1997, the assessment years are governed by section 115JA and not by section 115J. The applicability of section 115J stopped after the assessment year 1990-91.55. As a matter of fact, the order of the Commissioner of Income-tax as affirmed by the Tribunal is founded on a wholly erroneous view of the object of section 115J and scope of enquiry by the Assessing Officer into finding book profit on the basis of the "true and fair result" concept of the company's working divorced from the mandate that the alternate basis of finding a minimum base to levy tax is not to arrive at a different computation of profits as per its own view of the Assessing Officer what ought to be book profit, but is to be founded on admitted profits shown in the books of account to its shareholders for declaring dividends, subject to additions or deductions envisaged under the Explanation to section 115J(1A).56. An alternative which is founded on admission of the assessee, cannot be considered to find out whether such admission is acceptable or not. The provision does not give any authority to any instrumentality functioning under the Act to probe into finding book profit de hors what has been shown in the audited books of account which are placed before the AGM and approved by the shareholders and certified by the Registrar of Companies when the same is filed with him. That is the acceptance by the shareholders and the statutory authorities to be the result of the company's affairs. Such accepted book profit has to be accepted by the Assessing Officer to find whether income computed by him in accordance with the Income-tax Act is more than or less than such admitted income. It is only if as a result of the company's total taxable income in accordance with the Income-tax Act by the Assessing Officer, is found to be less than 30 per cent. of the admitted book profits as discussed above, that resort has to be had to section 115J and not otherwise. If the computation in accordance with the provisions of the Income-tax Act gives better tax results, it is not at all required to go to section 115J.57. of the admitted book profits as discussed above, that resort has to be had to section 115J and not otherwise. If the computation in accordance with the provisions of the Income-tax Act gives better tax results, it is not at all required to go to section 115J.57. The Commissioner of Income-tax has obviously exceeded his jurisdiction to find the order of the Assessing Officer to be erroneous, not on the basis of the declared book profit, but on the basis of the book profit recomputed by him and the Tribunal too fell in like error in accepting the position.58. The view about the scope and enquiry into the book profits as per the audited profit and loss account duly approved by the AGM and certified by the Registrar of Companies is settled by the decision of the Supreme Court in Apollo Tyres's case (2002) 255 ITR 273. Hence the orders of the Commissioner of Income-tax under section 263 as well as of the Tribunal are contrary to it, and must be held to be erroneous and not sustainable.59. In view of our aforesaid discussion, questions Nos. 1 and 2 are answered against the Revenue and in favour of the assessee by holding that the Tribunal was in error in holding that the assessment order passed by the Assessing Officer was erroneous and prejudicial to the interests of the Revenue and, therefore, the Commissioner of Income-tax could pass the order under section 263 of the Income-tax Act by recomputing the book profit by adding the amount of depreciation claimed by the assessee in this profit and loss account which has been audited, approved by the AGM and certified by the Registrar of Companies. Hence the exercise of jurisdiction by the Commissioner of Income-tax under section 263 was not sustainable nor its affirmance by the Tribunal.60. There shall be no order as to costs. *******