TaxTMI 
TaxTMI 
2019 (2) TMI 1721
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....rovisions inter alia disallowing interest relatable to loans given to subsidiaries, disallowance u/s 14A of the Act, disallowance of the provisions made on non-performing assets (NPA) and provisions for leave encashment. 3. The book profits u/s 115JB was computed by the Assessing Officer at Rs. 89,78,04,749/-, after making the following adjustments (a) transfer to special reserve, (b) provision for NPA, (c) profit of sale of investment, (d) expenditure for exempt income u/s 14A. 4. Aggrieved, the assessee carried the matter in appeal. The First Appellate Authority granted part relief for the various reasons given in his order. 5. Aggrieved with the order of the ld. CIT(A) both the assessee, as well as the revenue has filed these appeals. 6. We have heard Mr. Soumen Adak, the ld. Counsel for the assessee and Shri A.K. Nayak, the ld. Departmental Representative on behalf of the revenue. On a careful consideration on the facts and circumstances of the case, perusing the papers on record and orders of the authorities below as well as case laws cited, we hold as follows. 6.1 We first take up the assessee's appeal in ITA No.1318Del/2012, the grounds....
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....ms issued thereafter, it is not maintained its books of accounts strictly in terms of Part II & Part III of the Schedule VI of the Companies Act, 1956 and hence the provisions of Section 115JB is not applicable in the case of the appellant." 9. on 12.12.2018 - "That on the facts and in the circumstances of the case, education cess amounting to Rs. 22,36,508/- debited to the Profit & Loss A/c for the relevant previous year being allowable for deduction u/s 37(1) of the Act, be excluded in computing total income under the normal provisions of the Act." 6.3 The ld. Counsel for the assessee submitted that the additional grounds are purely legal ground not requiring investigation into any facts and have to be admitted in terms of the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT; [1998] 229 ITR 383 (SC). 6.4 The ld. Departmental Representative opposed the contentions of the assessee. He made detailed submissions which we would be dealing as and when necessary. 7. After hearing rival contentions, we hold as follows. 7.1 The issue for adjudication in Additional Ground No.(9) is whether the education cess can b....
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....ith Kline and French (India) Ltd (219 ITR 581), judgement of High Court of Kerala in the case of AV Thomas and Co Ltd versus CIT (159 ITR 431) have reiterated this principle and distinguished Jaipuria Collieries judgement. Thus, it is humbly prayed that the judgement of Rajasthan High Court in Chambal Fertilisers is per-incurium to this extent as the education cess presently under dispute is based on determination of profits under the head profits and gains of business and is to be computed as a rate of it. 3. Another factor that is worth considering is that the tax and consequent cess on it are 'below the line entities' in statement of accounts and therefore, can at best be considered as an application of profit rather than expenditure for the purpose of business. Alternatively, it can be said that when a business runs to loss, it need not pay cess but yet that per se will not stop the business from running. Therefore, the purpose of the cess cannot be equated to the purpose of running the business. 4. It is also noteworthy to mention that ITAT Mumbai in the case of M/s. Kalimati Investment Company Limited versus ITO-2(2) in ITA numbers 2706,4508/Mum/2010 and 255....
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....er the Companies Act. 8.1 Be that as it may, the assessee submits that, due to the mandatory directions issued by the RBI u/s 45J of the RBI Act 1934, the assessee had to make certain provisions in the accounts and consequently, the accounts cannot be said to have been drawn up under the Companies Act 1956 but should be held that the accounts was a mixture of the requirements of the Companies Act and the requirements of the RBI Act and hence the provisions of Section 115JB of the At does not apply. This argument, in our view, is not tenable. The assessee prepares its accounts as required under the Companies Act 1956. While doing so, it follows, at its own discretion, the Accounting Standards prescribed by the Institute of Chartered Accountants of India, guidance notes issued by Institute of Chartered Accountants of India on various issues, Accounting Standards prescribed under the Income Tax Act 1961 and in case of Non-banking Financial Companies, it additionally follows at its discretion the requirements suggested by the RBI. These requirements, suggestions and prescriptions are not in conflict with the requirements under the Companies Act. The auditors have not, in their....
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.... Assessing Officer to record his satisfaction in a particular format. He submitted that the assessee was questioned by the Assessing Officer and the assessee vide letter dated 24.02.2010 had given detailed explanation as to why it claims that it had not incurred any expenditure for earning exempt income. The Assessing Officer had considered this explanation and rejected the same as he was not satisfied with these contentions. He submitted that this is the satisfaction recorded by the Assessing Officer, that the claim of the assessee is not correct. On the issue of disallowance under Rule 8D(2)(ii), he relied on the judgment of the Punjab & Haryana High Court in the case of Avon Cycles Ltd. (supra) and submitted that the Assessing Officer had rightly considered the issue. 10.4 After hearing rival submissions, we hold as follows. 10.5 The Assessing Officer has noted that the assessee has earned dividend income of Rs. 23,35,176/- and claimed the same as exempt. The assessee also claimed that no expenditure was incurred by it for earning this exempt income. The Assessing Officer raised a query and the assessee replied vide letter dated 24.02.2010. This explanation was consi....
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....sion is that section 45Q of the RBI Act is a specific legislation and it overrides all other legislations and accordingly when a provision is made in compliance of a specific legislation, no disallowance can be made under the Income Tax Act, 1961. For the proposition that the specific legislation override all the other legislations, he relied in the case of TRO v. Custodian appointed under the Special Court (Trial of Offences relating to Transaction in Securities) Act, 1992 [2007] 293 ITR 369 (SC). It was his case that Hon'ble Supreme Court in its Judgment in the case of Southern Technologies vs. JCIT; 320 ITR 577 had not considered these decisions. The jurisdictional ITAT order in the case of Liluah Co-op. Bank Ltd. vs. ACIT; ITA No.2294/Kol/2010 and the judgment of the Delhi High Court in the case of M/S CIT vs. Vasisth Chay Vyapar Ltd.; ITA No.552 of 2005 and others was relied upon and it was submitted that in case where a provision has been made for overdue interest on Nonperforming Assets (NPAs) as per the directions of section 45Q of RBI Act, it was held that the same was an allowable deduction. 12.2 On the other hand, the ld. Departmental Representative submitted th....
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....ecision of the Special Bench of the Hyderabad ITAT in the case of Rain Commodities Ltd. vs. DCIT; (2010) 131 TTJ 0514 (SB). Hence this ground is dismissed. 15. The next ground is against the addition of "Provision made for Nonperforming Assets (NPA)" in computing book profits u/s 115JB of the Act. The assessee's case is that, in the absence of any reduction in the value of assets, this provision cannot be treated as a provision for diminution in the value of assets. The revenue's contention is that the amendment made by the Finance Act 2009 to section 115JB is retrospective in nature and even otherwise, the amount set aside is not an ascertained liability. 15.1 We agree with the submissions of the ld. Counsel for the assessee that the provision in question is not made for meeting liabilities. But we are of the view that the amount in question is set aside as a provision for diminution in the value of assets, hence covered by the Explanation 1(i) to section 115JB of the Act. This amendment was held as retrospective in nature. The effect of this provision is reduction in the value of the assets of the company. Hence we find no infirmity in the order of the ld. CIT(A....