TaxTMI 
TaxTMI 
2019 (3) TMI 2041
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....B of Rs.85,479/- and Rs.5,250/- respectively in the computation of Book Profit u/s 115JB. 2. That on the facts and in the circumstances of the case, the Ld, CIT (Appeals) erred in confirming the addition of corporate tax paid at Saudi Arabia amounting lo Rs.2,05,75,346/- in the computation of Book Profit u/s 135JB. 3. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) erred in confirming the addition of Deferred Tax Liability of Rs,4,71,00,000/-in the computation of Book Profit u/s 115JB. 4. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) erred in confirming the addition of dividend distribution tax of Rs.5,48,00,000/- in computing Book Profit u/s 115JB. 5. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) erred in not allowing exclusion of provision for employees incentive written back amounting to Rs.46,00,000/- in the computation of Book Profit u/5115JB. 6. That on die facts and in the circumstances of the case, the Ld CIT (Appeals) erred confirming the addition of expenditure on computer software of Rs.39,00,000/- in the computation of Book Profit u/s 115JB. 7. That on the fac....
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....sued on 31.03.2004. The assessee filed the revised return of income on 31.03.2005 and offered interest on income tax refund of Rs.4,26,95,068/- and sum of Rs.12,50,000/- being subsidy received which was not offered as income and offered certain adjustments. Thereafter, the notice u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. Thereafter, the assessment of the assessee was completed by assessing the loss to the tune of Rs.65,84,52,848/- and book profit u/s 115JB of the Act to the tune of Rs.1,89,56,60,483/- and tax @ 7.5% of the book profits and Surcharge @ 5% total to the tune of Rs.14,92,83,263/- was assessed. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who partly allowed the claim of the assessee but the assessee was not satisfied on the grounds mentioned above, therefore, the assessee has filed the present appeal before us. ISSUE NO. 1:- 5. At the time of argument, this issue has not been pressed by the assessee, therefore, this issue is being decided in favour of the revenue against the assessee being not pressed. ISSUE NO. 2:- 6. Under these issues the assessee has challenged the confirmation of the addition of Corporate Ta....
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....the finding of the CIT(A) is not justifiable, hence, by relying upon the law mentioned above i.e., Apollo Tyres Ltd. Vs. CIT (2002) ITR 273 (SC) and National Hydroelectric Power Corporation Ltd. Vs. CIT (2010) 187 Taxman 193 (SC), we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee. ISSUE Nos. 3,4, & 5:- 7. At the time of argument, issue nos. 3, 4, & 5 have not been pressed by the assessee, therefore, these issues are being decided in favour of the revenue against the assessee being not pressed. ISSUE NO. 6:- 8. Under this issue, the assessee has raised the addition in computing book profit u/s 115JB of the Act in respect of expenditure on computer software in sum of Rs.39,00,000/-. On this issue the assessee has raised the similar contention which he raised while arguing the issue no. 2 and also relying upon the case titled as Apollo Tyres Ltd. Vs. CIT (2002) ITR 273 (SC) and National Hydroelectric Power Corporation Ltd. Vs. CIT (2010) 187 Taxman 193 (SC). Since the claim of the assessee nowhere falls within the purview of the Explanation of 115JB of the Act, therefore, the addition is not liable to be sustainable in the eyes of law. Ac....
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....(A) has also declined the claim of the assessee on the basis of this fact that Section 71 deals with inter head adjustment and have precedence over section 74 of the Act. Nothing seems to contrary to the law. No law in support of the claim of assessee has been produced before us, therefore, taking into account, all the facts and circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. ISSUE NO. 11:- 13. At the time of argument, this issue has not been pressed by the assessee, therefore, this issue is being decided in favour of the revenue against the assessee being not pressed. ISSUE NO. 12:- 14. Under this issue the assessee has challenged the treatment of interest on tax refund as income from other sources. The Ld. Representative of the assessee has argued that the interest received on the income tax refund is liable to be treated as income from business or profession in view of the law settled in Donnald Mirada (1961) 42 ITR 166 (SC). However, on the other hand, the Ld. Representative of the Department has refuted the said contention. The dispute is in....
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....assessee's claim of long term capital gain in respect of sales of land at Kaza mines and Nimabur at Kaza South," 7. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made in respect of provision for bad and doubtful debts at Rs.8,64,03,258/- in computation of book profit u/s 115JB of the I T Act/' 8. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made in respect of provision for Director's Retirement Benefit at Rs.46,27,200/- in computation of book profit u/s 115JB of the Act." 9. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made in respect of Expenses on VRS pertaining to earlier years of Rs.18,69,64,996/- in computation of book profit u/s 115JB of the I T Act." 10- "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made in respect of Expenses Capital expenditure debited to P fit L account of Rs. 15,02,74,405/- in computation of book profit u/s 115JB of the I T Act." 11- "On the facts and in the circumstances of the ....
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....D of the I T Act." 22. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the assessee's claim of additional gratuity amounting to Rs.1,21,90,817/-." 23. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made in respect of provision for Director's Retirement Benefit at Rs.46,27,200/-." 24. "On the facts and in the circumstances of the case and in law. the Ld. CIT(A) erred in deleting the interest levied u/s 234B of the IT Act," 18. The facts of the present case are that quite similar to the facts of the case as narrated above in ITA. No.4242/M/2007. However, the figure is different, therefore, there is no need to repeat the same. ISSUE NO. 1:- 19. Under this issue the revenue has challenged the deletion of addition of PF and Labour Welfare fund made u/s 43B of the Act an amounting to Rs.10,42,169/-. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - "12. I have considered the facts and submission made on behalf of the appellant. In my view the employer's contribution to provident fund and labour welfare fund ....
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....pra) and M/s. Ambuja Cement Eastern Ltd. (supra). Further, similar issue has been allowed in favour of the appellant bymy own order in appeal no. CIT(A)-1/IT/87/04-05 for AY 2001-02 and in appeal no. CIT(A)-1/IT/07/05-06 for AY 2002-03. Hence the addition made by the AO is deleted and this ground of appeal is allowed." 22. On appraisal of the above mentioned finding, we noticed that the CIT(A) has allowed the claim of the assessee on the basis of the decision in the case of CIT Vs. PJ Chemicals Ltd. (1994) 210 ITR 830 (SC) and DCIT Vs. Reliance Industries Ltd. (2004) 88 ITD 273 (Mum). At the time of argument, the Ld. Representative of the assessee has also placed reliance upon the decision of CIT Vs. Shree Balaji Alloys (2011) 335 (J&K High Court) in which such type of incentive held as capital receipt in the hands of industrial unit. No doubt, the issue has been remanded in the assessee's own case for the A.Y. 2001-02 in ITA. No.4562/M/2007 and A.Y 2002-03 in ITA. No.4240/M/2007 dated 29.07.2015, but, there is no need to remand the case being this issue has been settled. Taking into account of all the facts and circumstances of the case and also relying upon the law discussion a....
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....e also. Since the matter of controversy has duly been covered and decided in favour of the assessee in the assessee's own case and L.H. Sugar Factory and oil Mills (P) Ltd. V CIT (1980) 125 ITR 293 (SC), therefore, in the said circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. ISSUE NO. 5:- 26. Under this issue the revenue has challenged the deletion of Sales Tax Subsidy in computation of book profit u/s 115JB as well as in computing total income under normal provisions of the Act. The revenue has also raised the additional ground nos. 2 & 3 in this regard. The Ld. Representative of the revenue has argued that the claim of the assessee has wrongly been allowed by the CIT(A), therefore, the finding of the CIT(A) is not liable to be sustainable in the eyes of law and is liable to be set aside. However, on the other hand, the Ld. Representative of the Assessee has argued that the issue in question has duly been covered by asseessee's own case in ITA. No.1999-2000 in IT....
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....nterfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. ISSUE NO. 6:- 28. Under this issue the revenue has challenged the allowance of claim of Long Term Capital Gain in respect of sales of land at Kaza mines and Nimabur at Kaza South. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - "21.3 I have considered the submissions made on behalf of the appellant. In my view, as per provisions of section 55(2)(b) of the Act, the appellant has an option to consider fair market value of the land as on 1.4.1981 as the cost of acquisition for the purpose of computing long term capital gain. Further, the appellant is also entitled to reduce indexed cost of improvement as per provisions of second proviso to section 48 of the Act in computing long term capital gain. Thus, in the light of the aforesaid discussions the AO is directed to recompute the long term capital gain on sale of land by considering the fair market value as on 1.4.1981 as well as the indexed cost of improvement as submitted by the appellant after verification of correctness of the facts as well as the registe....
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....addition can only be raised in view of the provision u/s 115JB of the Act and in Explanation to sub section 2. The case of the assessee nowhere fall within the ambit of the said section, therefore, in the said circumstances, the CIT(A) has rightly deleted the said addition, hence, allowed the claim of the assessee. The facts are not distinguishable at this stage also. No contrary law to the law relied by the assessee has been produced before us. Therefore, in the said circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. ISSUE NO. 8:- 32. Under this issue the revenue has challenged the deletion of addition in respect of provision for Director's Retirement Benefit in computing Book Profit U/s 115JB of the Act amounting to Rs.46,27,200/-. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - "26.5 On consideration of the submission made by the ARs of the appellant, I find that provision for director's retirement benefit cannot b....
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.... 35. Under this issue the revenue has challenged the deletion of the addition made in respect of Capital expenditure debited to P&L Account in computing book profit u/s 115JB of the Act in sum of Rs.15,02,74,405/-. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - "28.2 I have considered the submission made on behalf of the appellant. In my view additions made in computing total income under normal provisions of the Act has nothing to do with computation of book profit u/s 115JB and respectfully following the decisions of Hon'ble Apex Court in the case of Apollo Tyres Ltd. (supra), Max Well Dyes & Chemicals P. Ltd. (supra) as well as my own order for AY 1998-99 and 2002-03 in appeal no CIT(A)-I/IT/232/4-5 and CIT(A)-I/IT/7/5-6 respectively discussed herein above and for the reasons stated therein the addition made by the AO is deleted. Hence the ground of appeal is allowed." 36. On appraisal of the above said finding, we noticed that the CIT(A) has allowed the claim of the assessee on the basis of the decision of the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. Vs. CIT (2002) 255 ITR 273 (SC). Moreover, we also noticed tha....
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....f Apollo Tyres Ltd. Vs. CIT (2002) 255 ITR 273 (SC). It is specifically held that the computation of income under the normal provision of the Act has nothing to do with computation of book profit u/s 115JB of the Act in which specifically adjustment has been given in Explanation to Section 115JB(2) of the Act. No doubt, the addition which nowhere fall within the provision of Section 115JB of the Act and Explanation (2) of the Act is not required to be added to the income of Assessee, therefore, in the said circumstances, the same is not required to be added while computing the book profit u/s 115JB of the Act. Since the matter of controversy has been adjudicated by the CIT(A) judiciously and correctly, therefore, the finding of the CIT(A) is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. ISSUE NO. 13:- 40. Under this issue the revenue has challenged the deletion of addition made in respect of revenue generated from trial run production in computing of book profit u/s 115JB of the Act in sum of Rs.15,71,82,196/-. Before going further, we deemed it necessary to advert the finding of t....
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....ital Investment Subsidy received from WBIDC of Rs.26,90,000/- constitute capital receipt in the hands of the appellant and hence not taxable, as decided in ground no. 7(a) here-in-above and thus cannot be added back in computing book profit u/s 115JB. As regards, refund of sales tax of Rs.54,88,396/- is concerned, as discussed in ground no, 8(a) & 8(b) here-in-above, the said amount needs to be added back to the profit and loss account and at the same time a corresponding deduction for equivalent amount has to be granted since the said refund has been adjusted against sales tax demand for the period 01-04-1994 to 31-03-1995 As regards, interest received on deposit with ARV Society and MSEB of Rs.85,479/- and Rs.5,250/- respectively, is concerned, since the said receipt constitute income in the hands of the appellant, the same needs to be added back in computing book profit u/s 115JB, Thus, the ground of appeal is partly allowed." 43. On appraisal of the above said finding, we noticed that the CIT(A) has categorized the claim which nowhere fall under the provision u/s 115JB of the Act. The foreign exchange gain of Rs.37,07,480/- and capital subsidy received towards purchase of ass....
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....lso and against the said decision, the revenue is not in appeal. It is reiterated that the adjustment can only be made in view of Section 115JB of the Act which has been specified in Explanation to Section 115JB of the Act. In view of the said circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. ISSUE NO. 16:- 46. Under this issue the revenue has challenged the allowance of claim of provision for additional gratuity in computing book profit u/s 115JB of the Act amounting to Rs.1,21,90,817/-. The proposition is the same which has been discussed above while deciding the issue no. 15. The finding of the CIT(A) in this regard is hereby reproduced as under.: - "38.2 I have considered the submission made on behalf of the appellant. Respectfully following the order of Hon'ble Tribunal for the A.Y. 1990-91 as well as my own orders for AY 1998-99 in appeal no. CIT(A)-I/IT/232/04-05 the addition made by the AO is deleted and the ground stands allowed in favour of the appellan....
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....e facts are not distinguishable at this stage also. We nowhere found any irregularity and infirmity in the order, we uphold the finding of the CIT(A) on this issue and decide this issue in favour of the assessee against the revenue. ISSUE NO. 18:- 50. Under this issue the revenue has challenged the deletion of addition made in respect of amount withdrawn from share premium account in computation of book profit u/s 115JB of the Act. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - "40.3 I have considered the submissions made on behalf of the appellant. In my view write back of share premium account is an allowable deduction in view of clause (i) of Explanation to Section 115JB(2). Therefore, respectfully following the decision of the Hon'ble ITAT for A.Y. 1990-91 as well as the orders of my predecessor for A.Y. 1997-98 and A.Y. 1998-99 the addition made by the AO of Rs.76,63,200/- is deleted. Hence this ground of appeal is allowed." 51. On appraisal of the above said finding, we noticed that the claim of the Revenue is in connection with the deletion of addition made in respect of amount withdrawn from share premium account in com....
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....21:- 54. Issue no. 21 is in connection with the interest levied u/s 234D of the Act which is consequent in nature and nowhere required for any specific direction. ISSUE NO. 22:- 55. Under this issue the revenue has challenged the allowance of claim additional gratuity on provisional basis under normal provisions in sum of Rs.1,21,90,817/-. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - "52.3 I have considered the submission made on behalf of the appellant. Respectfully, following the decision of Hon'ble Tribunal in the appellants own case in A.Y. 1990-91 in ITA. No. 2361/M/1995 vide order dated 18.1.2007 as well as my own order for A.Y. 2001-02 and A.Y. 2002-03 in appeal no. CIT(A)- I/IT/87/2004-05 and CIT(A)-I/IT/07/2005-06, respectively, discussed here in above, this ground of appeal is allowed." 56. On appraisal of the above said finding, we noticed that the CIT(A) has allowed the claim of the assessee in view of the finding of the Hon'ble ITAT in the assessee's own case for the A.Y.2002-3 in ITA. No.2361/M/1995 dated 18.01.2007. Since this issue has squarely been covered by the decision of the Hon'ble ITAT in the assessee....
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....has been squarely covered by assessee's own case in ITA. No.4987/M/2007.The relevant finding has been given in para no. 19 which is hereby reproduced as under.: - "19.Deletion of addition in respect of provision for Director's Retirement Benefit in computing income under normal provisions of the Act of Rs.2,84,53,850/ is the subject matter of the next ground.During the assessment proceedings,the AO found that the assessee had created provision for director's retirement benefit on the basis of actuarial valuation and it was added in computing total income.Subsequently,exclusion was claimed before the FAA. As the similar addition was deleted in MAT computation,so,he allowed the claim made by the assessee. 19.1.Before us,the DR argued that the FAA allowed the claim that was not before the AO. The DR contended that provision made for Director's Retirement Benefit was made on the basis of actuarial valuation,that it represented a liability in praesenti that was to be discharged at future date.He referred to the case of Bharat Earth Movers(245ITR428).He also stated that similar claim was allowed by the Tribunal while deciding the appeal for the AY.1990-91. 19.2.We find t....