TaxTMI 
TaxTMI 
2015 (9) TMI 222
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....e filed a revised return on 30.03.2010 revising book profit at Rs. 1115,30,68,920/- u/s 115JB of the Act. The case was selected for scrutiny through CASS and a notice u/s 143(2) of the Act was issued on 19.08.2010. In the assessment order, the AO has made several additions and disallowances while computing the income under the normal, provisions as well as under section 115JB of the, Act, which have been challenged by the assessee before the first appellate authority. The ld. CIT (A) allowed the appeal of the assessee. 3. Aggrieved, the revenue is in appeal before us. 4. The revenue has taken the following grounds of appeal :- "(A) The order of the Ld. CIT (A) is not acceptable as the assessee has failed to establish these provisions to be of ascertained in nature in spite of ample opportunities provided by the A.O. Reliance has been placed by the A.O. on the judgment of Hon'ble supreme Court in the case of Shree Sajjan Mills in which it has been mentioned that nature of provisions for gratuity is a contingent liability because the payment of gratuity is made in consideration of the entire length of service & it's ascertainment depends upon several factors & until ....
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.... the submissions of learned Counsel for the appellant and gone through the documents filed on record as well as the judicial rulings relied upon by the learned counsel and the AO. The grounds No.1 & 7 of appeal are general in nature and covered by the main grounds of appeal. In ground No. 2 of appeal, the appellant has challenged the addition of Rs. 82,57,10,238/- made on account of the Provision for gratuity, leave encashment, post retirement medical benefit, LTC, Baggage allowance and Matching Contribution on Leave Encashment etc., for the purpose of computing tax liability u/s 115JB of the Act. As discussed in para 3 of the assessment order, the AO has added the above provisions for the purpose of computing book profit u/s 115JB following the decision of Hon'ble Supreme Court in the case of Shree Sajjan Mills vs. CIT (156 ITR 585) after holding the said provisions to be only contingent and unascertained. The appellant has contended that the above provisions were created in accordance with accounting principles and standards; the valuation of liabilities was based on compilation of various details and by adopting actuarial valuation; the liabilities were 'ascertained'....
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....in subsequent assessment years 2005-06, 2007-08 and 2008- 09. Since identical issue has been considered by the Tribunal in the aforesaid assessment years and the issue raised before us is covered by the decision of the coordinate Benches of the Tribunal in assessee's own case for assessment year 2002-03 (supra), we confirm the order of the ld. CIT (A) on this issue. 10. Apropos Ground 2 is regarding depreciation on land amortized while calculating book profits under section 115JB. The AO noticed that assessee had claimed an amount of Rs. 1,80,79,857/- as per schedule 5 of the balance sheet on account of depreciation on land unclassified and leasehold land. Out of the total depreciation on land of Rs. 2,49,92,137/ -, an amount of Rs. 1,80,79,857/ - had been debited to profit and loss account and balance amount of Rs. 69,12,280/- had been added to the cost of capital work in progress. The AO confronted the assessee with these facts that Depreciation on the land was not allowed as per the Companies Act and accordingly, why the depreciation may not be added back to the shown book profit to work out the book profit as per Companies Act, 1956. The assessee replied the same vide submis....
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.... The ground No.3 of appeal is allowed." 12. At the outset itself, the ld. AR for the assessee submitted that this issue is covered in favour of the assessee in assessee's own case in ITA No.2449/Del/2008 for Assessment Year 2004-05 order dated 30.09.2014 of the Tribunal and took our attention to page 6, para 7 of the order. He also submitted that the ITAT, relying on the aforesaid order dated 30.09.2014 (supra), has decided this issue in favour of the assessee in assessee's own case in assessment years 2007-08 and 2008-09. 13. We have heard rival submissions and perused the material on record. The Tribunal in the order for assessment year 2002-03 (supra) has considered an identical issue and had decided the matter in favour of the assessee. The aforesaid order of the Tribunal was followed in subsequent assessment years 2005-06, 2007-08 and 2008-09. Since identical issue has been considered by the Tribunal and the issue raised before us is identical to the issue covered by the coordinate Bench of the Tribunal in assessee's own case for assessment year 2002-03 (supra) and other years, respectfully following the same, we confirm the order of the ld. CIT (A) on this issue. 14.....
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....omputing regular income of the assessee. There is no dispute to the fact that the appellant has declared dividend income of Rs. 51.75 crores which has been claimed exempt. The said dividend income has been earned from the investment in shares of the entities as under: 1. NHDC Rs.1002.42 crores 2. Power Trading Corporation Rs. 12.00 crores 3. Indian Overseas Bank Rs. 0.36 crores 4. National Power Exchange Ltd. Rs. 0.83 crores Total Rs.1015.61 crores The NHDC is a subsidiary company of the assessee in which investment has been made as per the sanction order of Govt. of India, Ministry of Power, vide DO No.22/3/2000/28.3.2002 and order No.34/1/2003/DO/NHPC dated 29.5.2003, out of budgetary support and equity capital invested by the Govt. to the extent of Rs. 772.42 crores. The balance investment of Rs. 230.00 crores has been made in the shares of subsidiary company out of funds raised from the issue of 'O' series bonds. The interest and bond issue expenses aggregating to Rs. 13.78 crores consisting of interest of Rs. 13.67 crores calculated at the rate of 7.7% applicable to bonds and bond issue / service charges ....
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....g Officer to proceed to compute disallowance of expenses under section 14A by merely applying rule 8D(2)(iii). The legal implications of sub-section (2) and (3) of section 14A have been examined by the Hon'ble Delhi High Court in Maxopp Investment Ltd. vs. CIT (347 ITR 272) and it has been decided in para 29 of the order as under: "29. Sub-section (2) of Section 14 A of the said Act provides the manner in which the Assessing Officer is to determine the amount of expenditure incurred in relation to income which does not form part of the total income. However, if we examine the provision carefully, we would find that the Assessing Officer is required to determine the amount of such expenditure only if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under the said Act. In other words, the requirement of the Assessing Officer embarking upon a determination of the amount of expenditure incurred in relation to exempt income would be triggered only if the Assessing Officer returns a finding t....
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....emanating from relied upon judicial rulings, this issue has been decided in favour of the appellant. Since the issue is already covered by the decision for earlier year, the addition of Rs. 15,97,10,866/- made by the AO by invoking section 14A of the Act is directed to be deleted. The ground No. 5 of appeal is allowed." 16. Aggrieved by the impugned order of the CIT(A), the Revenue is before us. The ld DR, supported the order of the AO, and took us to the same and argued that since admittedly the assessee is in receipt of exempt income, the AO, rightly invoked Rule 8D, to disallow expenditure as mandated by the Rule. So, he wants us to reverse the order of CIT(A) and restore the order of AO. On the other hand, Ld. AR for the assessee submitted that the assessee has suo motu disallowed an amount of Rs. 13.78 crores. He submitted that the AO made computation as per Rule 8D, which came to Rs. 29.75 crores and he made disallowance of Rs. 15.97 crores. Ld. AR submitted that this issue is covered in favour of assessee in assessee's own case for the AY 2008-09 in ITA No.1402/Del./2012 dated 17.10.2014. He further submitted that without prejudice to aforesaid decision of the Tribuna....