TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 25
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....he Revenue as there was failure on the part of the A.O. in not taking into cognizance the following, while computing the book profit u/s 115JB of the I.T.Act :- (i) Depreciation on investment portfolio of Rs. 3028.32 crore disallowed in the regular computation. (ii) Disallowance u/s 14A of Rs. 58.58 crore made in the regular computation. (iii) Provision for Non Performing Assets of Rs. 1438.11 crore. 3. The assessee-bank filed written submission, objecting to the proposed revision u/s 263 of the I.T.Act. The Pr.CIT, however, rejected the objections of the assessee and passed order u/s 263 of the I.T.Act on 28.03.2018 by setting aside the assessment order u/s 143(3) of the I.T.Act. The CIT directed the A.O. to redo the assessment afresh after making detailed examination of the relevant facts relating to the aforesaid issues for the purpose of computation of book profits u/s 115JB of the I.T.Act. 4. Aggrieved by the order passed u/s 263 of the I.T.Act, the assessee has filed this appeal before the Tribunal. The grounds raised by the assessee reads as follow:- "1. The order of the learned Pro Commissioner of Income Tax is against law and facts of the case. 2. The learned P....
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....lurochemicals Ltd. 2019 (7) TMi 541 - Gujarat High Court. (ii) Tata Sons Limited v. ACIT 2018 (12) TMI 916 ITAT Mumbai. (iii) Vireet Investment (P). Ltd. (2017) 165 ITD 27 (Delhi Trib) (SB) Provision for NPA (ground 5) (i) Yokogawa India Ltd. (2012) 17 taxmann.com 15 (Kar.) (ii) Kirloskar Systems Ltd. (2013) 40 taxmann.com 124 (Karnataka) (iii) Vodafone Essar Gujarat Ltd. (2017) (8) TMi 451 Gujarat High Court. (iv) Telco Construction Equipment Co. Ltd. (2016)_ (6) TMI 651 - Karnataka High Court. 6. The learned Departmental Representative has filed a brief written submission essentially supporting the order of CIT passed u/s 263 of the I.T.Act. 7. We have heard rival submissions and perused the material on record. We shall adjudicate the issues on merits as under: Depreciation on Investment Portfolio (Rs. 3028.32 crore) (ground 3) 7.1.1 The assessee-bank before the CIT contended that depreciation of Rs. 3028.32 crore was not debited to Profit and Loss account and accordingly, no adjustment to the book profit is required to be made as the amount is not recognized in the regular books of account. Without prejudice to the above contention, it was submitted that this a....
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....venue. It is hereby held that the Income Tax Appellate Tribunal was justified in deleting the disallowance of provision for diminution in value of investment of Rs. 13,85,00,000/- while computing book profit under section 115JB of the Income Tax Act, 1961. The appeal, therefore, fails and is, accordingly, dismissed." 7.1.5 Similar view has been held by the Mumbai Bench of the Tribunal in the case of ACIT v. M/s.Reliance Welfare Association Circle (supra), wherein it was held as follows:- "8. We find that considering the above facts a debit of Rs. 46,94,62,365/- appearing in Profit & Loss Account is not a provisions set aside for diminution in value of investment but a actual charge to the Profit & Loss account which has been written off against the value of the current asset. Therefore, we are of the considered view that debit of Rs. 46,94,62,365/- appearing in Profit & Loss Account is not a provision of set aside for diminution in value of investment but the actual charged for the loss in the diminution in value of investment. Therefore, we are of the view that for the book profit purpose of section 115JB is not required to be increased by Rs. 46,94,62,365/- as the same is no....
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....section 115JB of the Act. However, if this was not a mere provision made by the assessee by merely debiting the Profit and Loss Account and crediting the provision for bad and doubtful debt, but by simultaneously obliterating such provision from its accounts by reducing the corresponding amount from the loans and advances on the asset side of the balance sheet and consequently, at the end of the year showing the loans and advances on the asset aside of the balance sheet as net of the provision for bad debt, it would amount to a write off and such actual write off would not be hit by clause (i) of the explanation to section 115JB. The judgment in the case of Deepak Nitrite Limited (Supra) fell in the former category whereas from the brief discussion available in the judgment it appears that case of Indian Petrochemicals Corporation Ltd. (Supra) fell in the later category."" 7.1.6 In the light of the above judicial pronouncements, the A.O. is directed to verify whether depreciation / diminution of value of investment to the extent of Rs. 3028.32 crore is concerned, the same has actually been reduced from the assets side of the balance sheet, and is in the nature of write off. Theref....
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....stimated on earning of dividend income under section 14A of the Act. 6.1 The Assessing Officer on referring to the said provision of section 115JB(2) of the Act added the said amount considering that any amount of expenditure relatable to the income exempted under section 10 of the Act shall need to be added in the profit shown in the "Profit and loss account". 6.2 When the matter travelled to the Commissioner of Income-tax (Appeals), since it deleted the addition of Rs. 1,14,43,040 while deciding question No. 1, it consequently deleted such addition under section 115JB of the Act on the ground that this would not serve any purpose. 6.3 The Tribunal decided the said issue as follows (page 576 of 1 ITR (Trib)-OL : "We have considered the rival submissions and we find that a similar issue was raised by the Revenue as per ground No. 3 above in respect of regular assessment of income and while deciding that ground, we have already upheld that disallowance of Rs. 5 lakhs in respect of administrative expenses will meet the ends of justice and no disallowance is called for in respect of interest expenditure. Hence, for the purpose of computing the book profit under section 115JB o....
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....CIT in ITA No. 3850lMuml20 1 0 to held that an amount disallowed under section 14A of the Act cannot be added to arrive at book profit for purposes of Section 115JB of the Act. The Revenue's Appeal against the order of the Tribunal in Mis. Essar Teleholdings (supra) was dismissed by this Court in Income Tax Appeal No.438 of 2012 rendered on 7th August, 2014. In view of the above, question (b) does not raise any substantial question of law. 24. Respectfully following the above decision, we hold that no addition in the book profit would be made on the basis of calculations worked out under section 14A of the Act. We allow this ground of appeal in both the years and delete the additions. 23. We take notice of the fact that in context with the third proposed question, the ITAT placed reliance on the following decisions:- (i) CIT v. Alembic Ltd. (Tax appeal No.1249/2014) (ii) CIT v. Gujarat State Fertilizers & Chemicals Ltd. (2013) 358 ITR 323 24. The issue is squarely covered and in our opinion, no error could be said to have been committed by the ITAT in taking the view that no addition in the book profit can be made on the basis of the calculations worked out under sect....
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....i) CIT v. Yokagawa India Ltd. (2012) 17 taxmann.com 15 (Kar.) (iii) CIT v. Kirloskar Systems Ltd. (2013) 40 taxmann.com 124 (Kar.) (iv) CIT v. Telco Construction Equipment Co. Ltd. 2016 (6) TMI 651 Karnataka High Court. (v) CIT v. Vodafone Essar Gujarat Ltd. (2017) 397 ITR 55 (Guj. FB). 7.3.1 The objections of the assessee was rejected by the CIT by observing as under:- "7.4. The Assessee's contention that provision for NPA is an actual write off should have been examined by the AQ which has not been done. It is further noted that in case of another leading bank assessed with the same AO, the said Bank has on its own has added the provision for NPAs while computing Book profit under MAT which has also been duly accepted by the AO. In the above context, the AO ought to have examined the issue and made appropriate changes in the computation of book profits ii] s 115JB of the Income tax Act, 1961 after due verification of facts relating to the accounting entries made by the assessee in its books and the legal position As the Assessing Officer has not examined the factual as well as legal issues in the relevant perspective, the assessment order is considered to be erroneou....