AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (9) TMI 1067
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....of appeal read as under:- "(1) That the order U/S 250 passed by the Learned Commissioner of Income-Tax (Appeals) V, New Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned DCIT, Circle -2(1), New Delhi in computing the deduction u/s 80-IA after reducing a sum of Rs. 1,72,82,880/- on account of Synchronization Charges even though the liability for the same had yet not been fructified and that the same has not been debited to Profit and Loss Account. (2) That the order u/s 250 passed by the Learned Commissioner of Income- Tax (Appeals) V, New Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned DCIT, Circle -2(1), New Delhi in adding back a sum of Rs. 8,00,000/- under Section 14-A of the Income Tax Act, 1961 on account of expenditure incurred in relation to exempt income while computing income under the normal provisions of the Income-tax Act,1961. (3) That the order u/s 250 passed by the Learned Commissioner of Income-Tax (Appeals) V, New Delhi is against law and facts on the file in as much as he was not justified to uphold the action....
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....e rival contentions. The assessee's main contention that the Assessing Officer was not right in reducing synchronization charges from the profits of the eligible units for computation of exemption u/s 80-IA, cannot be accepted. The assessee is following mercantile system of accounting. The synchronization charges that were levied by the U.P. Power Corporation were not crystallized and consequently the accrual of liability has taken place during the relevant previous year. Although the assessee has not debited the same to the P&L A/c the Assessing Officer is duty bound to reduce the said sum from the profits of the eligible unit for proper computation of deduction u/s 80-IA of the Act. The payability of these liabilities may depend upon the decision of the High Court but the liability itself has crystalised during the year in question. In our view the learned CIT (A) was right in rejecting the main contention of the assessee. We see no reason to interfere. 6.5 As regards the alternative contention of the assessee on the aforementioned issue, it was claimed that the Assessing Officer was not correct in reducing the amount of synchronization charges from the profits of the el....
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....reduced by profit eligible for deduction u/s 80HHC as computed under clause (a), (b) and (c) of subsection (3) or sub-Section (3A), as the case may be of that Section and subject to the conditions specified in the Section. Therefore, profits from export business under clause (a), (b) and (c) of sub-section (3) of 80HHC cannot be reduced for the purpose of computation of book profit u/s 115JB. Therefore, such claim of the assessee is decided against the assessee. 10. Now, coming to the second limb of the ground No.4, which is with respect to reduction of book profit for the purpose of calculating MAT u/s 115JB by an amount of Rs.1,17,68,617/- being the amount of provision for fringe benefit tax, it is the submission of the learned AR that this portion of the ground No.4 is covered in favour of the assessee by the decision of ITAT Delhi Bench in the case of ITO vs. Vitage Distillers Ltd. (2010) 130 TTJ 79 (Del) and he has produced before us copy of the said decision. For the sake of convenience, the findings recorded in the said decision for holding this issue in favour of the assessee are reproduced below:- 9. Now, we decide the issue on merit. For this purpose the provi....
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.... "tax" proves beyond doubt that the term "tax" includes both "income-tax" as well as "FBT" and hence the term "income-tax" cannot include the term "FBT". When there was amendment made in s. 2(43) by the Finance Act, 2005 w.e.f. 1st April, 2006, no amendment was made in cl. (a ) of Explanation to s. 115JB by either including the term "FBT" in addition to the term "income-tax" or by substituting the words "income-tax" by the term "tax" and thereby bringing "FBT" also within the purview of cl. ( a ) of Explanation to s. 115JB. The above discussion clearly proves that as per cl. ( a ) of Explanation to s. 115JB, payment or provision for "FBT" is not required to be added back for the purpose of computing book profit under s. 115JB of the IT Act, 1961. This is also important to note that there was controversy as to whether provision for "deferred income-tax" is required to be added back for computing book profit under s. 115JB. As per retrospective amendment w.e.f. 1st April, 2001 by the Finance Act, 2008, a new cl. ( h ) was added in Expln. 1 to s. 115JB to the effect that if provision for deferred tax is debited to the P&L a/c, the same is to be added back for computing book profit. At....
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....CIT (A). 12. After hearing both the parties, so as it relates to the amount of Rs.21,55,44,187/-, we decide the issue against the assessee in view of aforementioned retrospective amendment in the provisions of Section 115JB. For the remaining amount of Rs.1,17,68,617, we decide the issue in favour of the assessee respectfully following the aforementioned decision of coordinate Bench in the case of ITO vs. Vintage Distillers Ltd. (supra). It may be mentioned here that no contrary decision was brought to our notice. Therefore, ground No.4 is partly allowed in the manner aforesaid. 13. Apropos ground No.5, it was the submission of the learned AR that in view of amendment brought in Explanation 1 to Section 115JB in Clause (i), the issue with regard to provision for doubtful debt for the purpose of computing book profit has to be decided against the assessee. Clause (i) in Explanation 1 to Section 115JB prior to its substitution by the Finance (No.2) Act, 2009 with retrospective effect from 1.4.2001 read as under:- "If any amount referred to in clauses (a) to (h) is debited to the profit and loss account, and as reduced by - " 13.1 Substituted clause wi....
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....unt of Rs.14,20,593/- on the addition inter alia including an amount of Rs.13,02,257/- disallowed on account of EPF/ESI. The amount relate to employees contribution to Provident Fund and ESI, the chart of which has even been given in the impugned penalty order and, for the sake of convenience, the same is reproduced below:- Nature of payment Due Date Actual date of payment Amount (in rupees) EPF 15.05.2003 23.05.2003 3,70,020 EPF 15.10.2003 23.10.2003 3,85,049 EPF 15.01.2004 22.01.2004 4,04,200 EPF 21.05.2003 23.05.2003 40,305 EPF 21.05.2003 23.05.2003 5,816 EPF 21.10.2003 23.10.2003 48,546 EPF 21.01.2004 22.01.2004 48,321 TOTAL 13,02,257 18. As it can be seen from the above chart, as the assessment year is 2004-05, it can be seen that all the payments were made within the accounting year itself. On account of there being belated deposit under the respective Acts, the disallowance was made on which the concealment penalty was levied. Learned CIT (A) has deleted such penalty with the following observations:- "There is another iss....