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2014 (6) TMI 536
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....essee. 2. The revenue is aggrieved by the decision of the ld CIT(A) in directing the AO to exclude the following items from the book profit computed u/s 115JB of the Act: i) Unabsorbed deprecation Rs. 6,44,22,982/- ii) Interest levied by ICICI bank credited to P&L A/c Rs. 4,61,18,083/- 3 The facts relating to the issues cited above are stated in brief: The assessee herein filed its return of income for the year under consideration declaring a loss of Rs. 81.92 lacs under normal provisions of the Act and a Book profit of Rs. 517.63 lacs computed u/s 115JB of the Act. The return was processed u/s 143(1) of the Act on 12.9.2007 raising a demand of Rs. 53.59 lacs. Subsequently, the assessee filed a petition dated 28.10.2008 seeking rectific....
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....to "unabsorbed deprecation or brought forward loss whichever is less" actually works out to Rs.6,44,22,982/- as against the amount of Rs.93,61,651/- deducted by the AO. The assessee also further submitted that it has credited the profit and Loss account with an amount of Rs. 4,61,18,083/- and it relates to the 'reversal of provision made towards interest and other charges' payable on the loans taken from ICICI bank. It was submitted that the assessee duly provided for the interest payable on the bank loan every year and debited the same in the Profit and Loss account of respective years. However, for the purpose of computing income and book profit under the Income tax Act, the interest so provided was disallowed u/s 43B of the Act in the re....
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....sorbed depreciation at Rs. 6,44,22,982/-, i.e., at the figure claimed by the assessee from the Book Profit. The ld CIT(A) directed the AO to reduce the interest provision reversed by the assessee also from the book profit. Aggrieved by the decision of Ld CIT(A), the revenue has filed this appeal before us. 5. We have heard rival contentions and carefully perused the record. The first issue relates to the deduction of "lower of unabsorbed depreciation or brought forward business loss" while computing the book profit u/s 115JB of the Act. There is no dispute that the amount to be reduced from the Net profit is "the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account, meaning thereby that the s....
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..../s 115JB of the Act. According to the assessee, the lower of brought forward loss or unabsorbed depreciation is Rs.6,44,22,982/-. However we notice that the said submission of the assessee has not been verified by the assessing officer. Accordingly, in our view, the figure reported by the assessee needs to be verified at the end of the assessing officer. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the assessing officer with the direction to segregate the amount of Profit and Loss account of Rs.28,19,60,045/- into "brought forward loss" and "unabsorbed depreciation" and allow the lower of the two figures as deduction while computing the book profit u/s 115JB of the Act, after affording n....
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....omputing the total income under the normal provisions of the Act and also while computing the "Book Profit" under sec. 115JA/115JB of the Act. In terms of "One time settlement scheme" entered with the bank, the assessee was not liable to pay interest to the tune of Rs.4,61,18,083/- and hence it had reversed the provision for interest to the extent and credited the same in the Profit and Loss account. According to the assessee, clause (i) of Explanation 1 to sec. 115JB is applicable to the above said claim. 6.1 A careful perusal of the proviso given under clause (i) of Explanation 1 to sec. 115JB, which is extracted above, would show that it is prescribing a condition for allowing deduction under clause (i), i.e., the book profit of earlier....
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....ment either u/s 115JA or u/s 115JB to increase the Net Profit by the amount of above said provision, since it is an ascertained liability. We also notice that the assessee has disallowed the provision for interest so created by invoking the provisions of sec. 43B of the Act, since it did not pay the said amount before the due date for filing the return of income. The said disallowance is required to be made while computing the total income under the normal provisions of the Act. However, the provisions of sec. 115JA / 115JB are self contained code and it does not prescribe that the amount to be disallowed u/s 43B is required to be added to the Net profit. Thus, what we notice is that the assessee has wrongly included the amount of Provision....