TaxTMI 
TaxTMI 
2014 (1) TMI 874
X X X X Extracts X X X X
X X X X Extracts X X X X
....o computation of book profits u/s-115J of the Income Tax Act. 3. The assessee in the present case is a company. In the assessment originally completed u/s.143(3) vide an order dated 15.01.1996, its income was computed by the AO u/s. 115J of the Act at Rs.3,71,044/- being 30% of the book profit of Rs. 12,36,814/-. While computing the book profit, the AO disallowed the claim of the assessee for set off of unabsorbed depreciation and brought forward business loss of earlier years amounting to Rs.46,21,588/- against the book profit. On appeal, the ld. CIT(A),however, allowed the said claim of the assessee. On further appeal by the revenue, Ahmedabad bench of the Tribunal vide its order dated 16.05.2008 passed in ITA No. 3663/Ahd/1997 restore....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vide letter dated 16.11.2009 "The assessee vides its letter dated 16th November 2009 has stated that as per provisions of sec 32A, it is dear that the reserve is required to be applied only for the purpose of acquiring a new asset and cannot be utilized for distribution of dividend. It is because of this express restriction prohibiting any other use of the reserve that it gets a character of expenditure. The application of Reserve is specific and hence it assumes a character of provision to meet a fixed and ascertained liability. The moment Investment Allowance Reserve assumes this character of provisions as required by Part II & Ill of Schedule-VI to Companies Act, it becomes expenditure and has to be a charge against profit. The profit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cted by the Tribunal. He also held that the claim of the assessee was not acceptable because loss or depreciation as per 205 of the Companies Act for the year meant actual loss or depreciation and not the one which could be arrived at after transferring any amount to reserve treating the same as expenditure as claimed by the assessee. He therefore completed the assessment computing the total income of assessee at Rs.3,71,044/- u/s. 115J being 30% of the book profit on Rs.12,36,814/- as done in the original assessment. 6. The assessee again carried the matter in appeal filed before the ld. CIT(A) who agreed with the Assessing Officer that there was a failure on the part of the assessee to furnish the necessary particulars relating to its ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of assessment order dated 15.01.1996 passed originally in the case of the assessee placed at page no. 7 to 12 of his paper-book and submitted that the working of unabsorbed depreciation and brought forward business loss furnished by the assessee during the course of original assessment proceedings and reproduced by the AO in the order dated 15.01.1996 was correct as the same was made as per the relevant provisions of section 205(2)(b) of the Companies Act 1956. He has contended that the total unabsorbed depreciation and brought forward business loss amounting to Rs.46,21,588/- was available to the assessee for set off against the book profit but neither the AO nor the CIT(A) has been able to appreciate the said working in the right perspect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....herefore upheld and the appeal of the assessee is dismissed. 8. In the appeal of the revenue, the solitary issue involved is relating to charging of interest u/s 234B while computing the income on the basis of book profits u/s.115J of the Income-tax Act 1961. 9. In the assessment, interest u/s 234B was levied by the AO for the failure of the assessee to pay advance tax in respect of income computed on the basis of book profit as per the provisions of section 115J. On appeal, the ld. CIT(A) deleted the said interest charged by the AO u/s 234B relying on the decision of the Hon'ble Supreme Court in the case of CIT vs. Kwality Biscuits Ltd. 284 ITR 434(SC) and that of Hon'ble Bombay High Court in the case of Snowcem India Ltd. vs. DCIT 3....