2018 (6) TMI 281

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....t and the total income was determined at Rs. 69,19,580/- u/s. 115JB of the Act. Aggrieved by the intimation sent u/s. 143(1), assessee filed an appeal before the CIT(A), Guntur. By an order dt. 09-03-2012, the CIT(A) held that "as per the material on record the appellant is a sick company for the year under challenge and the net worth has become negative for the year under report. In such circumstances, the provisions of section 115JB are not applicable and as such the intimation made by the AO is not approved and he is directed accordingly". 2.1. On the department's appeal, the Co-ordinate Bench of ITAT, 'A' Bench Hyderabad in its order in ITA No. 1056/Hyd/2012, dt. 23-01-2013 held that "we do not find any infirmity in the order of the CI....

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....med as deduction earlier and so the credit is not taxable under normal provisions and so the same cannot be income for the purposes of Section 115JB. It further relied on the order of ITAT on an appeal against the intimation u/s. 143(1) on the same issue. 4. Ld.CIT(A) did not agree and confirmed the action of AO for the following reason: "4. The appellant's submissions are considered. It is clear from the copy of audited statements and statements filed for the assessment year 2009-10 that the appellant has shown two receipts as income viz Credit Balance Written off in the name of B.V.Reddy & Sons (Finance) at Rs. 71,48,250/-and Interest income of Rs. 200/- which constituted the total receipts at Rs. 71,48,450/-. Against it, after cla....

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....ing and subject to such restrictions or condition as may be specified in the order, give such company as it may deem fit to 2(make its net worth exceed the accumulated losses.) (3) If the Board decides under sub-section (1) that it is not practicable for a sick industrial company to (make its net worth exceed the accumulated losses) within a reasonable time and that it is necessary or expedient in the public interest to adopt all or any of the measures specified in section 18 in relation to the said company it may, as soon as may be, by order in writing, direct any operating agency specified in the order to prepare, having regard to such guidelines as may be specified in the order, a scheme providing for such measures in relation to such....

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....Referring to the provisions of Section 115JB, it was the submission that the capital credit like credit balance written-off cannot be considered as income and submitted that the deduction claimed in normal computation was accepted. Further, it was submitted that the capital receipts cannot be brought to tax u/s. 41(1) and relied on the decision of Hon'ble Bombay High Court in the case of Mahindra and Mahindra which was recently upheld by the Hon'ble Supreme Court. Ld. Counsel relied on the following cases in support: i. NCL Industries Vs. JCIT [88 ITD 150] (Hyd); ii. M/s. Vista Pharmaceuticals Ltd., Vs. DCIT [ITA No. 840/Hyd/2011, dt. 17-02-2012]; iii. M/s. JSW Steel Limited (Formerly known as Jindal Vijaynagar Steel Limited....