2017 (11) TMI 1147

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he assessee had created a provision of Rs. 7,85,811/- towards certain expenses as at the year end and claimed the same as deduction. The assessee submitted that the liability in respect of those expenses has accrued during the year and hence they have been accounted for in the books of account on estimated basis. Since the assessee could not quantify the actual amount of expenditure precisely and further documentary evidences supporting the claim of expenses were not available with the assessee, the Assessing Officer took the view that this claim is not admissible and accordingly disallowed the same. The learned CIT(A) also upheld the order passed by the Assessing Officer. 4. Learned AR submitted that an identical issue was considered in assessee's own case in ITA No. 1675/Mum/2012 relating to A.Y. 2007-08, wherein the Tribunal has confirmed the disallowance. Learned AR submitted that the coordinate Bench of the Tribunal did not consider the decision rendered by Hon'ble Supreme Court in the case of Bharath Earth Movers Vs. CIT (245 ITR 428), wherein Hon'ble Supreme Court held that if a business liability has definitely arisen in an accounting year, then deduction should ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

...., the AO examine the same in the light of discussions made supra. 7. Next issue contested by the assessee relates to addition of outstanding expenses of Rs. 7,85,811/- while computing book profit under the provisions of section 115JB of the Act, treating the same as unascertained liability. Since we have held that the liabilities are accrued liabilities, the same would fall under the category of ascertained liabilities. Hence the same is not required to be added u/s. 115JB of the Act. Accordingly, we set aside the order passed by the tax authorities on this issue. 8. Next issue relates to addition of modvat credit. The assessee has followed exclusive method of accounting for taxes. The Assessing Officer disallowed the closing balance of modvat amounting to Rs. 4,15,852/-. The learned CIT(A) also confirmed the same. We notice that the assessee has given workings relating to modvat in page No. 30 of the paper book, wherein it has computed the modvat amount under inclusive method. The assessee has demonstrated that there is no impact on the profit if modvat is accounted under inclusive method. Further identical issue has been considered by the Coordinate Bench in assessee's own ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ciation, can be carried forward indefinitely and can be set off only against "profit and gains" and not against any other income. The ld. CIT(A) also confirmed the view so taken by the AO. At the time of hearing, the ld. Counsel for the assessee placed reliance on the following decisions : a) Suresh Industries (P) Ltd V/s ACIT (2012) 54 SOT 450 (Mum) b) DCIT V/s Akay Flavours and Aromatics (P) Ltd (2011) 130 ITD 41 (Cochin) (TM ) In both the cases cited above, it has been held that unabsorbed depreciation can be set off against the "Business Income" or against the income derived from any "other source", on the reasoning that the treatment given to current year depreciation would equally apply to brought forward depreciation also. By following the decisions rendered in the above said cases, we set aside the order of ld. CIT(A) and direct the AO to allow the set off of unabsorbed depreciation against capital gains." 12. We noticed that the Coordinate Bench has followed the decision rendered by Third Member, Mumbai in the case of M/s. Akay Flavours and Aromatics (P) Ltd. and also decision of the Coordinate Bench in the case of Suresh Industries (P) Ltd. C....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... to the WDV can be taken as sale consideration of Walls & fences. It has to be reduced from the WDV of Buildings. Accordingly we agree with the view so taken by the learned CIT(A) and accordingly he was justified in disallowing depreciation claimed to the extent of Rs. 76,468/-. 17. Learned AR submitted that, if WDV value of Rs. 7,64,689/- is taken as value pertaining to walls and fences, the same is required to be excluded from the sale value of land for the purpose of computing long term capital gain. We find merit in the said contentions of the assessee. The assessee has taken entire amount of sale consideration as pertaining to land. When we allocate a portion of the same towards wall & fences, the sale consideration pertaining to land should be reduced by that amount. Accordingly, we direct the Assessing Officer to reduce the sale consideration of land by Rs. 7,64,689/- and compute long term capital gains accordingly. 18. We shall now take up the appeal filed by the Revenue. We had earlier noticed that the Assessing Officer had rejected the claim of set off of unabsorbed depreciation against business income also and the learned CIT(A) had allowed that claim. The Revenue ....