TaxTMI 
TaxTMI 
2017 (9) TMI 798
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....s and under the circumstances of the case and in law ld.CIT(A) erred in confirming action of the AO in concluding that the "securities written off" does not pertain to AY 2011-12 and hence added the sum of Rs. 1.20 crores to the book profit calculated under the provisions of section 115JB, which is bad in law." 3. Only issue raised in all the grounds of appeal is against the confirmation of addition by ld.CIT(A) as made by the AO by not allowing the loss on account of "Securities written off" to the extent of Rs. 1.20 Crores for the reasons that the same was not bad debts and not allowable as the same was not part of the income in any of the earlier years and also that the "Securities written off" did not belong to AY 2011-12 and therefore added to the book profit u/s 115JB. 4. The brief facts of the case are that the assessee filed return of income on 30.9.2011 declaring total income at NIL under the normal provisions of Act and Rs. 3,09,71,107/- under MAT. The assessee was engaged in the business of investment and dealing in shares and securities and was following mercantile system of accounting. The AO upon perusal of the profit and loss account of the assessee noticed tha....
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....f the appellate order and the ld.CIT(A) after considering the submissions of the assessee rejected the claim of the assessee by dismissing the appeal of the assessee by observing and holding as under: "Ground No.1, 2 & 3 The above grounds are taken together as they address a common issue. I find that a contribution agreement dated 20th March, 2008 was entered into between the appellant and Kotak Investment Advisors Ltd. As per it the appellant agreed to' contribute capital commitment of Rs. 40 crores to the fund in terms of the agreement. The appellant company paid the initial drawdown of 3% of the total capital commitment i.e. Rs. 1,20,00,000/-. As per the second drawdown notice dated 7th Nov.2008, "Kotak India Growth Fund-Il" required the assessee to pay 10% of its capital commitment to the fund being Rs. 4,00,00,000/-. The drawdown date for this was 15th December, 2008 and not later than 17.30 IST at Mumbai. The assessee company did not pay this amount by 15th Dec.,2008. Subsequently vide letter dated 31.03.2009 'Kotak India Growth Fund-II extended the due date of second Drawdown from 5.12.2008 to 23.04.2009 and it was decided to grant an additional gra....
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....tion. ii. Accrual: It refers to the assumption that revenues and costs are accrued, that is, recognized as they are earned or incurred (and not as money is received or paid) and recorded in the financial statements of the periods to which they relate; As the claim of the expenditure of Rs. 1,20,00,000/- by the assessee does not relate to F.Y. 2010-11, the case of appellant is distinguishable from the decisions relied on by the AR in respect of book profit u/s 115JB. The Income Tax Act is annual in its structure. Each 'previous year' is a distinct unit of time for the purposes of assessment and profits made, or the liabilities or losses incurred before or after the relevant previous year are immaterial in assessing the profits of that :year. 'It' has been held so in Kikabhai V/s CIT 24 ITR 506 (SC); ITO v Murlidhar 52 ITR 335 (SC); CIT v British Paints 188 ITR 44 (SC); Re Chouthmal 6 ITR 733, 742; CIT v PLSM Concern 2 ITR 417, 420-21; CIT V Basantrai 1 ITR 197 (PC); Sukhdeodas v CIT 26 ITR 617, 625; Abdul v CIT 184 ITR 404; S.M.Ziaddin v CIT 203 ITR 136; Vipin v CIT 251 ITR 782; Bakshi v CIT 255 ITR 38, Balchand V/s CIT 10 ITR 507; Govindra....
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....ow and argued that each assessment year is an independent assessment year under the Income Tax Act, and amount to be allowed and not to be allowed had to be with reference to that of each previous year and therefore he prayed that the order of the AO be upheld. 8. We have considered the rival contentions, perused the material placed before us including the orders of authorities below and the case law relied upon by the assessee. We find that the assessee is engaged in the business of investment and dealing in shares and securities. During the course of ordinary business the assessment investment in the commitment capital funds of Rs. Rs. 4,00,00,000/- to M/s Kotak India Growth Fund-II and as per the terms and agreement the assessee also contributed Rs. 1,20,00,000/- at the rate of 3% of the total capital commitment. Due to adverse market conditions, the assessee decided to withdraw from the said investment and business understanding which resulted into forfeited of Rs. 1,20,00,000/-. According to the AO, the assessee should have charged the loss to the profit and loss account in the assessment year 2010-11 as it was pertaining to financial year 2009-10 as it became bad debts in ....