2020 (11) TMI 347
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....wing substantial question of law: (i) Whether on the facts and in the circumstances of the case for this assessment year while applying 115 JB to the case of the Appellant Rs. 3,59,58,370/- is to be reduced from the book profit in full? (ii) In the alternative and without prejudice in the event that the answer to the above question is in the negative, whether on the facts and in the circumstances while applying u/s 115JB to the case of the Appellant at least a sum of Rs. 1.08 Crores being the amount of interest debited to the Profit & Loss Account for the accounting year ending 31-03-2002 should have been deducted? 2. Facts leading to filing of this appeal briefly stated are that the assessee is a company engaged in the business of ge....
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....sing Officer. The assessee thereupon filed an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The tribunal by order dated 11.04.2014 inter alia held that no provision can be made for an ascertained liability and therefore no provision was made by the assessee for interest payable and waiver of interest by IREDA cannot be considered as withdrawal of the provision and cannot be reduced from the book profit as contended by the assessee. However, it was held that only a sum of Rs. 1.08 Crores should be considered as waiver of interest and part of book profit as interest payable for pre-commencement period was capitalized, the aforesaid contention needs examination, therefore, the ma....
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....on. It is also pointed out that since the assessee had computed interest on accrual basis in accordance with the terms of the loan granted by IREDA and was unable to service the principle amount as well as the amount of interest. Therefore, the conclusion of tribunal that interest was a liability and not a provision is misplaced. In support of aforesaid submissions, reliance has been placed on decisions in 'CIT VS. INDUSTRIAL CREDIT AND DEVELOPMENT SYNDICATE LTD.', 285 ITR (ST) 310 (KAR) @ 317, 318, 'INDO RAMA SYNTHETICS (I) LTD. VS. COMMISSIONER OF INCOME TAX', 330 ITR 363 (SC) @ 372, ' CIT VS. SHYAM CENTURY FERROUS LTD.', 386 ITR 477 (CAL) @ 479 AND CBDT CIRCULAR NO.495 DATED 22.09.1987. 5. On the other hand, lear....
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.... company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2007, is less than ten per cent of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income-tax at the rate of ten per cent. (2) Every assessee, being a company, shall, for the purposes of this section prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VII to the Companies Act, 1956 (1 of 1956) Explanation 1.--For the purposes of this section, "book profi....
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....s schedules appended to the balance sheet has held that the amount of Rs. 3,59,58,370/- has neither been shown as reserve nor provision anywhere but has only been shown as liability in Schedule C. By taking into account Section 115JB of the Act, it has been held that amount withdrawn from reserves credited or provision made in a Previous Year shall not be reduced from the book profit unless book profit of such year has been increased by those reserves or provision. Thus, it has been held that in the absence of any provision created or provision made, the question of reduction from book profit does not arise. 8. The Commissioner of Income Tax (Appeals) has held that profit and loss account of the assessee as on 31.03.2007, was prepared in a....