TaxTMI 
TaxTMI 
2022 (8) TMI 952
X X X X Extracts X X X X
X X X X Extracts X X X X
....of reducing appellant book loss by the amount of disallowance made by him u/s 14A without appreciating that the provisions of section 115JB are attracted only when there are book profits. "2(a) On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding AO's act of reducing appellant book loss u/s 115JB by sum of Rs. 5,26,23,522/- being amount of premium on convertible debenture offered to tax by appellant. (b). On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in giving a finding that the claim of the aforesaid amount is in the nature of unascertained liability without appreciating that the said amount was never debited to the profit and loss account of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... book loss of Rs. 124,23,37,498/-. 3. Aggrieved against this the assessee preferred appeal before the learned CIT(Appeals). The learned CIT(Appeals) partly allowed the appeal. Thereby he restricted the disallowance u/s 14A to the extent of Rs. 382/-. Further, in respect of excess claim of expenditure on account of premium payable on redemption of compulsorily convertible debentures (CCDs), it is notified by the learned CIT(Appeals) that the assessee acknowledged that this amount was not allowable as expenditure in the year under appeal due to the new accounting standards. Moreover, it was not disputed that expense was not relatable to the income being charged to tax in the year under appeal. Aggrieved against the order of the learned CIT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th under normal provision and under section 115JB computation. AO'S FINDING Page no 12 of AO's order. Ao did not give any finding as to why he is reducing book loss by the amount disallowed in the assessment while determining appellant's income under normal provisions. There was no separate computation u/s 115JB. He simply in the concluding para reduced the amount of book loss by the amount of two disallowances of Rs 21,15,14,527/- made u/s 14A and Rs 5,26,23,522/- on account of premium on redemption of debenture. Kindly refer internal page no 12 of AO's order. CIT(A)'S FINDING -Page 11 para 4 heading Ld. CIT did not give any adjudication on this issue although specific written submissions were made befor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and consequently it would not apply to loss situation. Further a question may arise that income would include loss this principle is not applicable in this case since sub section (1) of section 115B states that in case of assessees income computed by applying normal provisions is less than 18.5% of its book profit than 18.5% of book profits would be deemed to be its total income. This phrase cannot be implemented. Normal income cannot be compared with book loss, therefore by this interpretation section would become in workable. Finally, we would submit that both the adjustment in itself is infructuous as explained below. The disallowance under section 14A has been reduced from Rs 21,15,14,527/- to Rs 382 by the CIT(A). It is notewo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that borrowing cost would include amortised value of discounts/premium in connection with borrowings, meaning thereby that deduction of such expenditure would be allowed on the basis of spreading such expenditure over the tenure of the borrowing. Consequently, it was decided to change the basis of claim by spreading over the premium amount year wise instead of claiming the same in one lumsum at the time of redemption. Consequent to the aforesaid decision premium on redemption amount of Rs 38,82,91.686/-, was claimed as deductible expenditure by way of revise return. While filing subsequent year's return it was noticed that there was error in computation of premium amount last year. Filing of revised return of income had lapsed by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is required to be added to book profit and therefore has been correctly added by the assessing officer and the addition of RS 5,26,23,522/- to the book profit is upheld." APPELLANTS CONTENTIONS Kindly note the above finding of the ld. CIT(A) is erroneous as amount of premium on redemption was never debited to P&L account. This amount was claimed as deduction way of revise return. Had this amount stood debited to P&L a/c question of revising the return would not have arisen? Kindly see the P&L a/c at PB 28,39 & 40. The issue in ground is also erroneous as per our stand in ground no 1 that there is no provision in Income Tax Act for computing or recomputing book loss. In view of above submissions, it is hu....