Indo Rama Synthetics (I) Ltd vs C.I.T,New Delhi

The Supreme Court addressed the interpretation of Section 115JB of the Income Tax Act concerning the treatment of revaluation reserves. The Court held that the amount transferred from the revaluation reserve to the profit and loss account can be excluded from the net profit calculation under clause (i) of explanation to Section 115JB(2), provided the book profit of the year in which the reserve was created was not increased by that reserve. The Court ruled in favor of the assessee, allowing the exclusion of the revaluation reserve amount from the computation of book profit.