AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 917
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....stments on account or prior period expenses, provisions, reserves, dividend etc. The assessee had taken this amount of Rs. 27,50,39,369/- as the starting point and has made certain adjustments for arriving at the book profit u/s.115JB of the Act amounting to Rs. 48,41,17,030/-. According to the AO, the net profit should have been taken at Rs. 51,16,14,000/-. Therefore, the AO observed that the assessee failed to disclose fully and truly all material facts necessary for the assessment and accordingly income chargeable to tax had escaped assessment within the meaning of sec.147 of the Act. The AO issued notice u/s.148 of the Act dated 28.03.2008 after obtaining approval of the CIT, Chennai-I. The assessment u/s.143(3) r.w.s.147 of the Act was completed on 26.12.2008, wherein profit as per the profit and loss account was adopted at Rs. 5,16,14,000/-, which was increased by the amounts of wealth-tax, provision for excess interest and provision for doubtful debts amounting to Rs. 4,28,89,085/-. Thus, the book profits as per 115JB was determined at Rs. 55,15,54,687/- Aggrieved, the assessee went in appeal before the CIT(Appeals), who observed that the reassessment proceedings were not va....
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....e based on fresh material leading to a conclusion of escapement of income from being assessed. There is hardly any quarrel that no such circumstances arise in the instant case. So, we hold that once the reopening in question turns out to be mere change of opinion, it is not sustainable in the eyes of law. The assessee's rule 27 petition challenging validity of the reopening succeeds. As a necessary consequence, the Revenue's appeal fails. The findings of the CIT(A) under challenge are confirmed in tune with Rule 27 of the Income Tax (Appellate Tribunal) Rules." Respectfully following the aforesaid order of the Tribunal, We dismiss the ground of appeal raised by the Revenue ITA Nos. 1340, 1341, 1342/Mds/2010 for A.Ys 2004-05, 2005-06, & 2006-07 5. The common ground raised in these appeals relates to deletion of addition of the amount transferred from deferred income [reserves] to profit and loss account. 6. The facts of the case are that the assessee imported waste heat recovery plant, the whole cost of which was met by the subsidy granted by the Japanese Govt. The Govt. of India on its part permitted the import of the assets by payment of concessional duty at the rate of 5 pe....
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.... has also taken a similar view in the case of CIT v. Shoorji Vallabhdas & Co. (46 ITR 144), wherein it was held as under : "Income-tax is a levy on income. Though the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt, yet the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a "hypothetical income", which does not materialize. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account." Subsequently, the Supreme Court in the case of State Bank of India v. CIT (157 ITR 67) has referred to the decision of Mogual Lines and has held as follows : "It is well settled that the way in which entries are made by the assessee in its books of account ....
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....ec.28(iv) of the Act, the pre-requisite conditions are that the benefit / pre-requisite must arise from the business of an assessee and that there must be a nexus or connection between the business of an assessee and the benefit / perquisite sought to be taxed. In this case, both the conditions are absent. Therefore, we find that the CIT(Appeals) is justified in giving direction the AO to delete the disallowance made. Further, in our opinion, it is a notional entry in its books of account and not effecting the real profit and loss account of the assessee and the provisions of sec.28(iv) have no application. This ground is dismissed. 8. The next ground in ITA No.1340/Mds/2010, for the asst. year 2004-05 is with regard to deletion of disallowance of deduction u/s.43Bof the Act. 9. The facts of the issue are that the assessee has reduced from the interest debits during the year, extraordinary item of Rs. 25,65,81,184/- and also added an amount of Rs. 17,72,00,000/- (being amount withdrawn from share premium account) for the purpose of computation of deduction u/s.43B of the Act. According to the AO, the adjustment of extraordinary item is permissible only if it is related to any rev....
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....nts paid is as under: Amount provided during the year Rs. 128,76,72,519/- Amount paid: Paid during the year Rs. 31,13,93,695 Paid from April 2004 to Sept. 04 Rs. 8,70,82,831 Rs. 39,84,76,526/- Amount not paid before due date of filing of ROI Rs. 88,91,95,993/- Accordingly, the CIT(Appeals) held that the amount disallowable u/s.43B of the Act is only Rs. 88,91,95,993/- and the AO is not correct in enhancing the disallowance by a further amount of Rs. 7,93,60,786/-. Aggrieved, the Revenue is in appeal before us. 11. We have carefully gone through the findings of the CIT(Appeals), we do not find the basis for disallowance computed by the CIT(Appeals) as above. Hence, we remit the issue to the file of the AO to decide the issue afresh. Accordingly, this ground of appeal is allowed for statistical purposes. 11. The next ground in ITA No.1341/Mds/10 for the asst. year 2005-06 is that the CIT(Appeals) has erred in deleting the addition made on account of disallowance of debenture issue expenses of Rs. 2,87,18,609/-. 12. The facts of the issue are that the AO disallowed the debentu....