TaxTMI 
TaxTMI 
2012 (4) TMI 237
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....y the Appellate Commissioner ? (3) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in deleting non-allowance of deduction of Rs. 1,46,50,718/- under section 80HHC of the Act for the purpose of computation of book profit under Section 115JB of the Act, which is disallowed by the Assessing Officer and confirmed by the Appellate Commissioner ? (4) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in deleting disallowance made by the Assessing Officer of Rs. 1,63,85,686/- being the expenditure incurred for the purpose of agricultural activities for the purpose of computing book profit under Section 115JB of the Act, and confirmed by the Appellate Commissioner ? (5) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in deleting disallowance of loss of Rs. 47,23,67,295/- for the purpose of computing book profit under Section 115JB of the Act, made by the Assessing Officer and confirmed by the Appellate Commissioner ? (6) Whether, on the facts and in the circumstances of the ....
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....oject was provided and thus the expenditure resulted only in improving income and efficiency of the business. Such expenditure which was therefore, incurred for improving profit earning system would be revenue in nature. 3.2 We do not find that Tribunal committed any error. Looking to the nature of expenditure and the purpose for which the same was incurred, Tribunal correctly came to the conclusion that it had to be treated as revenue expenditure. 3.3 As held by the Apex Court in case of Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT [1997] 227 ITR 172/93 Taxman 502 (SC), mere entries in account books would not decide the nature of expenditure. Additionally we also note that this addition or deletion would have no bearing on the tax liability of the assessee company. Treatment of expenditure was for the purpose of normal computation of the company's profit which was worked out at Rs. 37.46 crores(rounded off) before giving effect to unabsorbed depreciation and losses. After giving effect to such adjustments, the profit of the company for year under consideration came to -117.46 crores(rounded off). In comparison, book profit for the purpose of Section 115JB of the Act ....
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....ause(38) thereof or section 11 or section 12 apply; or ............... if any amount referred to in clauses (a) to (i) is debited to the profit and loss account, and as reduced by,- ............... (ii) the amount of income to which any of the provisions of section 10 other than the provisions contained in clause (38) thereof or section 11 or section12 apply, if any such amount is credited to the profit and loss account; or" 6.3 On the basis of such statutory provisions, stand of the Revenue was that the amount of loss suffered by the assessee in dividend stripping, should be considered as the amount of expenditure relatable to earning dividend which would be covered by expression "any income to which section 10 of the Act applies" and in turn would be covered by clause (f) to explanation (1) of Section 115JB of the Act. 6.4 We may however, notice that the Apex Court in case of Walfort Share & Stock Brokers (P.) Ltd. (supra) had negatived this very contention of-course not in relation to question of book profit for a company. In case of Walfort Share & Stock Brokers (P.) Ltd. (supra), all through out stand of the Revenue was that loss suffered by an assessee in th....
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.... mean "expenditure" and if it is construed to mean "expenditure" in the sense of physical spending still the expenditure was not such as could be claimed as an "allowance" against the profits of the relevant accounting year under Sections 30 to 37 of the Act and, therefore, Section 14A cannot be invoked. Hence, the two asset theory is not applicable in this case as there is no expenditure incurred in terms of Section 14A." 6.5 Counsel for the Revenue sought to rely on sub-section (7) of Section 94 of the Act which was introduced with effect from 1.4.2002. It was precisely because of the controversy involved in the case of Walfort Share & Stock Brokers (P.) Ltd. (supra) that statutory amendment came to be made. Sub-section (7) of Section 94 was added in following terms : "(7) Where - (a) any person buys or acquired any securities or unit within a period of three months prior to the record date; (b) such person sells or transfers- (i) such securities within a period of three months after such date or (ii) such unit within a period of nine months after such date (c) the dividend or income on such securities or unit received or r....