TaxTMI 
TaxTMI 
2022 (5) TMI 1596
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..... The Appellant filed return of income for the Assessment Year 2004-05 on 01.11.2004 offering to tax the Book Profits as per provisions of Section 115JB of the Act which was processed under Section 143(1) of the Act. Thereafter, the Assessee filed a revised return on 31.03.2006 declaring total income of INR 169,16,298/- under the normal provisions of the Act and Book Profit of INR 1,50,76,67,103/- as per the provisions of Section 115JB of the Act. 3. The case of the Assessee was selected for scrutiny and notice under Section 143(2) and 142(1) of the Act were issued. In response to the same, the Assessee filed various replies/submissions, and furnished information and documents. The Assessing Officer (Assessing Officer) completed the assessment under Section 143(3) of the Act vide order, dated 26.12.2006, after making additions/disallowances under normal provisions of the Act and also making adjustments to the book profits. The Assessing Officer determined total Income under normal provisions of the Act at INR 63,60,985/- and computed book profits under Section 115JB of the Act at INR 3,05,82,73,260/-. Since the assessed income tax payable on income as computed under the normal p....
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....levant facts are that during the previous year the Appellant incurred expenditure of INR 17,45,829/-, consisting of club entrance fee of INR 15,00,000/- and subscription fee of INR 2,45,829/- which were disallowed by the Assessing Officer on the ground that the same were capital in nature since the same provided enduring benefit to the Assessee. 8.2. In appeal, the CIT(A) deleted the addition holding the expenditure to be business expenditure of revenue nature incurred for smooth running of business of the Assessee by relying upon the decision of Hon‟ble Bombay High Court in the case of Otis Elevator Co (I) Ltd. vs. CIT (1992) 195 ITR 682 (Bom) and American Express International Banking Corporation vs. CIT (2002) 258 ITR 601 (Bom). The CIT(A) also noted that similar issue has been decided by the Tribunal in the favour of the Assessee in the Assessee‟s own case for Assessment Year 1987-1988 to 1991-1992. 8.3. We have heard the rival contentions and perused the material on record. We note that the Tribunal has decided identical issue in the favour of the Assessee in Assessee‟s own case in ITA No. 647/Mum/1997 (AY 1991-92), ITA No. 2361/Mum/1995 (AY 1990- 91), ....
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....village Naupada, District Thane. Assessee surrendered four separate portions of land aggregating to 8,632.68 Sq. Meters for widening and development of roads to Thane Municipal Corporation (TMC). The details of the land handed over are as under: CTS No. Area in Sq. Meters Purpose of surrender 1. 1,500.00 Setback of LBS Marg 2. 4,443.00 18 m wide DP Road 3. 1,725.00 15 m wide DP Road (service road) 4. 964.68 Set back area of Mental Hospital Road Total 8,632.68 9.2. Thus, out of the 1,11,093 Sq. Meters, the Assessee had surrendered land aggregating to 8,632.68 Sq. Meters, and in lieu thereof, the Assessee got Transferable Development Rights (TDRs) which were sold to Kalapataru Properties (Thane) Pvt. Ltd. for consideration of INR 6,60,61,542/- during the relevant previous year. 9.3. In the original return of income the Assessee offered to tax capital gains arising from sale of TDRs while in the revised return the Assessee did not offer the same to tax. This was noticed by the Assessing Officer in the assessment proceedings which lead to issuance of show-cause notice to the Assessee in this regard. In reply to the show....
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....ta (supra), we are of the view that the same cannot be applied to the facts of the present case in view of the following observations made by the Hon‟ble Tribunal in paragraph 5 of the aforesaid decision: "5. We may mention that as far ............................ The CIT(A)‟s observations that this right cannot be said to be without any cost of acquisition because the TDRs have been received on surrender of reserved plot to the Government is ex facie incorrect inasmuch as what we are really concerned with is the right to receive the TDR on the plot owned by the assessee, and not with the right to receive the TDR from the Government. The person getting TDRs from the Government has to surrender the reserved plot but the person on whose plot such TDRs can be used, as is the case we are in seisin of, does not do anything more than owning the "receiving plot" (Emphasis Supplied) 9.6. In the case before us issue pertains to determination of the cost of acquisition of TDRs obtained by the Assessee in lieu of surrender of land. The cost of acquisition of TDRs is identifiable and can be determined, as opted by the Assessee, by taking fair market value of land surren....
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....per details furnished by the assessee. Therefore, the cost of acquisition of TDR is taken at Rs. 29,071. Now, the assessee has furnished a copy of regd. Valuer Report dated 08.07.2006 regarding value of the said land as on 01.04.81 which can be taken under Section 55(2)(b)(i). The regd. Valuer has reported value of land as on 01.04.81 to the tune of Rs. 1986.57 per sq.mt. Perusal of the said report revealed that the valuation done by regd. valuer is purely on basis of estimation. No instance of sale of land in the vicinity of the said area during the period has been quoted in the report. Rather, the report has been based on hypothetical methods. In other case namely M/S Colour Chem Ltd., that assessee has sold a piece of land at Thane and a report form regd. Valuer has been furnished regarding valuation as on 01.04.81. In that case, the regd. Valuer has reported the value of land as on 01.04.81 to the tune of Rs. 260 per sq.mt. The land in present case is situated at rear side of ACC Ltd. and near to Mental Hospital, Thane. The piece of land in case of M/S Colour Chem Ltd. is situated at old Mumbai Agra Road, Thane. The value of land in a relatively small city can not vary from Rs.....
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....the observations made by the Hon‟ble Supreme Court in the case of K.P. Varghese vs. ITO (1981) 131 ITR 597 (SC) while interpreting provisions of Section 55(2) of the Act: "This rule being a rule of construction has been repeatably applied in India in interpreting statutory provisions. It would, therefore, be legitimate in interpreting sub-section (2) to consider what was the mischief and defect for which section 52 as it then stood did not provide and which was sought to be remedied by the enactment of sub-section (2) or in other words, what was the object and purpose of enacting that subsection. Now in this connection the speech made by the Finance Minister while moving the amendment introducing subsection (2) is extremely relevant, as it throws considerable light on the object and purpose of the enactment of sub-section (2). The Finance Minister explained the reason for introducing sub-section (2) in the following words: "Today, particularly every transaction of the sale of property is for a much lower figure than what is actually received. The deed of registration mentions a particular amount; the actual money that passes is considerably more. It is to de....
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.... of Goetz India, the Ld. CIT(A) erred in giving such a direction to the Assessing Officer, the effect of which has reduced the Total Income to less than the Returned Income. Additional Ground No. 2: On the facts and in the circumstances of the case and in view of the decision of the Apex Court in the case of M/s Apollo Tyres Ltd. Vs. CIT [2002] [255 ITR 273] [SC], the Ld. CIT(A) erred in directing to deduct exempted sales tax for computation of Book Profit u/s 115JB of the Act. Additional Ground No. 3: On the facts and in the circumstances of the case the Ld. CIT(A) ought not to have granted the relief on the basis of the decision in the case of Reliance Industries Ltd. as the facts of the appellant case is different from that of the facts of the case relied on by the Ld. CIT(A) as the case of Reliance Industries relates to State of Maharashtra, whereas in the assessee‟s case the schemes relating to other states are different where the income is Revenue in nature. 10.1. Ground No.3 & Additional Ground No. 3: The relevant facts are that during the year relevant to assessment year the Assessee availed incentive/ sales tax subsidy of INR 95,12,68,516/- . However, in the....
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....ed by this Tribunal in assessee‟s own case for A.Y. 96-97 referred supra. We find from para 21 of this order that Sales Tax exemption availed was held to be capital receipt. Following this decision, we direct that the Sales Tax incentive/subsidy relating to the impugned previous year also, be treated only as capital receipt. Assessee succeeds in its additional ground No. 7" 10.5. The aforesaid decision of the Tribunal for the Assessment Year 1997- 98 has been relied upon in the subsequent years. We note that for the Assessment Year 2002-03, the Tribunal has remanded the issue to the file of Assessing Officer with the directions for fresh adjudication after examining the incentive schemes whereas for the immediately succeeding Assessment Year 2003-04, the issue has been decided in favour of the Assessee by the Tribunal. For the Assessment Year before us, the CIT(A) has, in paragraph 14.9 of the impugned order, merely concluded that sales tax subsidy received by the Assessee is revenue in nature without examining the provisions of the incentive schemes as was the case in the Assessment Year 2002-03. While deciding this issue in appeal for the Assessment year 2002-03, the Tri....
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.... Officer held that the amounts received by it had to be taxed as revenue receipts. Accordingly, he added Rs. 84.73 Crores to the income of the assessee under the normal provisions and the MAT provisions. In the appellate proceedings, the FAA held that the sale tax subsidy being capital in nature cannot be the part of the total income under either of the provisions." 20.1 .... 20.2. We have heard the rival submissions. As far as addition under the MAT provisions is concerned we are of the opinion that in view of the judgment of Apollo Tyres (supra) the Assessing Officer is not authorised to disturb the book result. Therefore, we confirmed the order of the FAA to that extent. But, the issue of addition of various subsidies/incentives, we are of the opinion that same needs further verification. While deciding ground no. 9, we have held that the Assessing Officer should analyse the scheme and then only adjudicate it. Following the same, we are restoring back the matter to the file of the Assessing Officer for fresh adjudication, who would decide the issue after affording a reasonable opportunity of hearing to the assessee. Ground no. 19 is decided in favour o....
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....n to different states and has set aside the issue to the file of Assessing Officer. We are agreement with the aforesaid decision of the Tribunal. Accordingly, we set aside the issue to the file of CIT(A) for fresh adjudication after calling remand report from the Assessing Officer and giving reasonable opportunity of being heard to the Assessee. With the aforesaid directions, Ground No.3 as well as Additional Ground No. 3 raised by the Revenue letter dated 28.01.2008 stands disposed. 10.8. Additional Ground No. 2: The Additional Ground No.2 pertains to inclusion/exclusion of Sales Tax Subsidy while computing book profit under Section 115JB of the Act. In paragraph 10.7 above, we have remanded the issue to the file of CIT(A) for determination of the nature of Sales Tax Subsidy being capital or revenue in nature for the purpose of computing income under the normal provision of the Act. The determination of this issue would be relevant for adjudication of Additional Ground No. 2. Accordingly, this issue is also remanded to the file of CIT(A) for adjudication in light of conclusion to be derived by the CIT(A) as to the nature of Sales Tax Subsidy. (Additional Ground No. 1 r....
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....ejecting the contentions raised by the Assessee and following the assessment order for the immediately preceding Assessment Year 2003-04, the Assessing Officer disallowed deduction for INR 2,23,00,000/- claimed by the Assessee by treating the aforesaid expenditure as capital in nature. The Assessing Officer, however, allowed depreciation of INR.11,15,000/- computed at the rate of 5% of INR 2,23,00,000/. 11.2. In appeal, the CIT(A) held that the expenditure of INR 2,23,00,000/- incurred on construction of Jukehi-Kymore Road was revenue in nature. The road belonged to the Government of Madhya Pradesh, and therefore, it could not be said that the aforesaid expenditure resulted in creation of any asset of enduring nature for the Assessee. Thus, the CIT(A) deleted the addition of INR 2,23,00,000/- following the decision of Hon‟ble Supreme Court in the case of the Assessee, i.e., CIT vs. Associated Cement Companies Ltd. (1988) 172 ITR 275 (SC), and withdrew the depreciation at the rate of 5% allowed by the Assessing Officer. 11.3. Revenue is in appeal challenging the decision of CIT(A) to delete the addition of INR.2,23,00,000/-. 11.4. The Ld. Departmental Representative r....
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....R 257 (SC). The facts are not distinguishable at this stage 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." 11.6. In the present case as a result of the expenditure incurred by the Assessee, there has neither been any addition to the capital asset, nor has there been any change the capital structure. Accordingly, applying the principles laid down by the Hon‟ble Supreme Court in the CIT Vs. Associated Cement Companies Ltd. (1988) 172 ITR 257 (SC), and respectfully following the decision of the co-ordinate bench of the Tribunal in the case of the Assessee for the Assessment Year 2003-04, we confirm the order of CIT(A) of setting aside the disallowance of INR 2,23,00,000/- made by the Assessing Officer. Accordingly, Ground No. 4 rai....
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....000/- and withdrew the depreciation at the rate of 10% allowed by the Assessing Officer. 12.3. Revenue is in appeal, challenging the decision of CIT(A) of deletion of INR.4,57,00,000/-. While the Departmental Representative relied upon the assessment order, the Authorised Representative of the Assessee reiterated the submissions made before the lower authorities and relied upon the judgment of Hon‟ble Supreme Court in the case of CIT vs. Associated Cement Companies Ltd. (1988) 172 ITR 275 (SC) and CIT v. Madras Auto Services (P) Ltd. : (1988) 233 ITR 468 (SC). 12.4. We have heard the rival contentions and perused the record. We do not find any infirmity in the order passed by the CIT(A) on this issue. On perusal of orders passed by lower authorities it is clear that admittedly the Assessee is not the owner of the Dry Flash Ash Handling System. The expenditure did not result in creation of any asset of enduring nature and was incurred for smooth running of the business. Accordingly, applying the principles laid down by the Hon‟ble Supreme Court in the CIT Vs. Associated Cement Companies Ltd. (supra), and CIT v. Madras Auto Services (P) Ltd. (supra), we confirm the ....
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....ceding assessment year (AY 2003-04), identical issue has been decided in favour of the Assessee. The relevant extract of the common order, dated 13.03.2019, passed in ITA No. 4242&4988/MU/2007 for the Assessment Year 2003-04 reads as under: "59. On appraisal of the above said finding, we find that CIT(A) has decided the issue on the basis of the decision of the case titled as Bharat Earth Movers and Echjay Forgings P. Ltd. (supra). Furthermore, we noticed that the issue 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 Assessing Officer 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 a....
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....venue is dismissed. 14. Ground No. 7 to 13: While computing Book Profits under Section 115JB of the Act, the Assessing Officer increased the Book Profits by the following provisions created by the Assessee during the relevant previous year debited to the Profit and Loss Account. Ground No. Provision For Amount (INR) 7 Bad and doubtful debts 6,53,53,040 8 Wealth tax 70,00,000 9 Normal and additional gratuity 5,86,82,751 10 Leave Encashment 3,26,00,238 11 Director‟s Retirement 1,88.97,500 12 Contingencies 2,60,43,844 13 Technical fees, interest and royalty 2,07,95,361 Before taking up the specific grounds raised by the assessee, it would be relevant to consider the legal prepositions laid down by the Hon‟ble Supreme Court and the Hon‟ble Bombay High Court. In the case of Apollo Tyres Ltd. Versus CIT:255 ITR 73, the Hon‟ble Supreme Court has, while examining the provisions of section 115J (pari materia to section 115 JB), held as under: "5. The above Speech ....... In spite of all these procedures contemplated under the provisions of the Companies Act, we find it ....
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....t have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to section 115J." (Emphasis Supplied) Following the above judgment, in the case of CIT versus Adbhut Trading Co. (P) Ltd: 338 ITR 94 (Bombay) the Hon‟ble Bombay High Court has held as under: "1. In the present case, .....Once the accounts including the profit and loss account are certified by the authorities under the Companies Act it is not open to the Assessing Officer to contend that the profit and loss account has not been prepared in accordance with the provisions of the Companies Act, 1956." In the case of Bharat Earth Movers Vs. CIT: 245 ITR 428, the Hon‟ble Supreme Court has, while examining the nature of ascertained and contingent liability, held as under: "4. The law is settled: if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certain....
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....e of Usha Martin Industries Ltd. (supra), the decision of Mumbai High Court in the case of Echjay Forgings (P) Ltd. (Supra), as well as my own orders in A.Y. 2002-03 & 2003-04 in appeal no. CIT(A)-I/IT/07/05-06 and CIT(A)- I/IT/67/06-07 respectively, stated here-in-above, the addition made by the A.O. in computing book profit u/s 115JB is deleted and this ground of appeal is allowed." 14.1.3. During the pendency of the appeal before the Tribunal, clause (i) to Explanation 1 to Section 115JB(2) by the Finance Act, 2009, with retrospective effect from 01.04.2001 which reads as under: "(i) the amount or amounts set aside as provision for diminution in the value of any asset." 14.1.4. We note that Hon‟ble Gujarat High Court while examining the above provision in the case of CIT v. Vodafone Essar Gujarat Ltd. : (Tax Appeal No. 749 of 2012, reported in 397 ITR 55) has held as under: "24. By way of culmination of above judicial pronouncements and statutory provisions, the situation that arises is that prior to the introduction of clause (i) to the explanation to section 115JB, as held by the Supreme Court in case of HCL Comnet Systems & Services Ltd. (supra),....
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.... 1 to Section 115JB(2) of the Act. Wealth-Tax chargeable under WealthTax Act, 1957 cannot be held to be Income-tax and therefore is not required to be added back to the Book Profits. However, the Assessing Officer following the Assessment Order for the Assessment Year 2003-04, added back the Provision Wealth-Tax amounting to INR 70,00,000/-. 14.2.2. In appeal, CIT(A) granted relief to the Assessee and deleted the addition to Book Profits on account of provision for Wealth-Tax by placing reliance on the decision of the Special Bench of the Tribunal in the case of CIT vs. Usha Martin Industries Ltd. : (2007) 288 (18) ITR 63 (Kol) (SB), judgment of Hon‟ble Bombay High Court in the case of CIT Vs. Echjay Forgings P. Ltd. : (2001) 251 ITR 15 (Bom) and the orders passed by CIT(A) for the Assessment Year 1998-99 and 2003-04. 14.2.3. Revenue is in appeal, challenging the relief granted by CIT(A). We have heard the rival contentions and perused the record. While the Departmental Representative relied upon the assessment order, the Authorised Representative of the Assessee reiterated the submissions made before the lower authorities and relied upon the decision of the Tribunal in....
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....n view of the decision of Bombay High Court in the case of CIT Vs. Echjay Forgings (P) Ltd. (2001) 251 ITR 15 (Bom) and JCIT Vs. Usha Martin Industries Ltd. (2007) 104 ITD 249 (Kolkata Tribunal) SB. We also noticed that the matter of controversy has been adjudicated by CIT(A) for the A.Y. 1998-99 also 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." (Emphasis Supplied) 14.2.6. In view of the above, we confirm the order of CIT(A) and hold that provision for Wealth-Tax of INR 70,00,000/- is not required to be added back while computing Book Profits under Section 115JB of the Act. Accordingly, Ground No 8 raised by the Revenue is dismissed. 14.3. Ground No. 9 : On the facts and in the circumstances of the case and in law, the l....
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....Year 2003-04 reads as under: "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 Assessing Officer is deleted and the ground stands allowed in favour of the appellant." 47. On appraisal of the said finding, we noticed that this issue has been covered by decision of Hon‟ble ITAT in the assesee‟s own case for the A.Y. 1990-91 in ITA. No.2361/M/1995 & in the A.Y. 2002-03 in ITA. No.4987/M/2007. There is nothing on record to which it can be assumed that the order has been varied or changed in appellate proceeding. Since this issue has been duly adjudicated in favour of the assessee by above mentioned decision....
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.... Forgins (P) Ltd. (2001) 251 ITR 15. Revenue is in appeal, challenging the aforesaid decision of CIT(A). 14.4.3. The Departmental Representative appearing before us relied upon the Assessment Order, whereas the Authorised Representative of the Assessee reiterated the submissions made before the lower authorities and relied upon the order passed by CIT(A) on this issue. 14.4.4. We have considered the rival contentions and perused the material on record. We note that the CIT(A) has granted relief to the Assessee by following the judgment of the Hon‟ble Supreme Court in the case of Bharat Earth Movers (245 ITR 528), and the Hon‟ble Bombay High Court in the case of CIT v. Echjay Forgins (P) Ltd. (2001) 251 ITR 15. We do not find any infirmity in the order passed by the CIT(A) to the extent it holds that provision for Leave Encashment of INR 3,26,00,238/- is in the nature of provision for ascertained liability created on the basis of actuarial valuation and is, therefore, not required to be added back while computing Book Profits in terms of Clause (c) of Explanation 1 to Section 115JB(2) of the Act. Accordingly, order of CIT(A) on this issue is confirmed and Ground No....
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....ct of the order, dated 13.03.2019, passed by the Tribunal in the case of the Assessee for the Assessment Year 2003-04 (ITA No. 4242 & 4988/MUM/2007 reads as under: 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 be considered as unascertained liability since the same has been calculated on the basis of actuarial valuation and is squarely covered by the decision of Hon‟ble Apex Court in the case of Bharat Earth Movers (supra). Therefore, provision for director‟s retirement is an allowable deduction in computing profits and gains of business or profession. Further, in my view additions made in computing book profit u/s 115JB on the ground that the same has been added back in the computing total income under normal provisions of the Act is not tenable. Thus, res....
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.... Profit. The aforesaid provision created by the Assessee is not covered by Explanation (c) to Sec. 115JB. 14.6.2. In appeal, the CIT(A) granted relief to the Assessee holdting that Provision for Contingencies is not required to be added back while computing Book Profit under Section 115JB of the Act. Revenue is in appeal, challenging the aforesaid decision of CIT(A). 14.6.3. We have heard the rival contentions and perused the record. While the Departmental Representative relied upon the decision of the Tribunal in Assessee‟s own case for the Assessment Year 2003-04, the Authorised Representative of the Assessee reiterated the submissions made before the lower authorities before fairly conceding that the identical issue has been remanded to the to the file of the Assessing Officer by the Tribunal in Assessee‟s own case for the immediately preceding Assessment Year 2003-04. 14.6.4. During the pendency of the appeal before the Tribunal, clause (i) to Explanation 1 to Section 115JB(2) by the Finance Act, 2009, with retrospective effect from 01.04.2001 which provides that the amount set aside as provision for diminution in the value of any asset is required to be ad....
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....a) of the Act on account of failure to deduct tax at source. However, the aforesaid provisions was not added back while computing Book Profits under Section 115JB of the Act. In response to the query raised by the Assessing Officer during the assessment proceedings, the Assessee, vide letter dated 22.11.2006, submitted that the aforesaid provision was not made for unascertained liability, and therefore should not added back while computing Book Profit under Section 115JB of the Act. The Assessee relied upon the judgment of Hon‟ble Supreme Court in the case of Bharat Earth Movers (245 ITR 528) and the judgment of Hon‟ble Bombay High Court in the case of CIT Vs. Echjay Forgings P. Ltd. : (2001) 251 ITR 15 (Bom). However, the Assessing Officer, not being satisfied with the submissions of the Assessee, added back the aforesaid provision for while computing Book Profits under Section 115JB of the Act holding that the Assessee has failed to establish that the same was for an ascertained liability. 14.7.2. In appeal before CIT(A) the Assessee contended that the aforesaid provisions was not made for unascertained liability. The Profit & Loss account of the Assessee has been ....
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....7.4. In the present case the books of accounts have been accepted by the Assessing Officer and therefore, the Assessing Officer only has limited power to increase/decrease of book profits in terms of Explanation to Section 115JB of the Act. Provision for Technical Fees, Royalty and Interest is not a provision made for unascertained liability and does not fall within the ambit of any of the clauses of Explanation to Section 115JB of the Act. 14.7.5. In view of the above, we do not find any infirmity in the order passed by CIT(A) on this issue. The order of CIT(A) holding that the Provision for Technical Fees, Royalty and Interest amounting to INR 2,07,95,361/- is not required to be added back while computing Book Profit under Section 115JB of the Act is confirmed. Accordingly, Ground No. 13 raised by the Revenue is dismissed. 15. Ground No. 14: On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the addition made in respect of revenue generated from trial run production at Rs.86,55,040/- in computation of book profit u/s 115JB of the I T Act. 15.1. During the relevant previous year, the Assessee had reduced the revenue generate....
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....wherein it has been held that there is a distinguishable relationship between the assessable income and the profits of business concern in a commercial sense. Hence, this ground of appeal is allowed." 41. On appraisal of the above said finding, we noticed that the CIT(A) has decided the matter of controversy on the basis of decision in the case of CIT Vs. Bipin Chandra Magan Lal (1961) 41 ITR 290 (SC). Moreover, we also noticed that this issue has been covered in favour of the assessee in the assessee‟s own case for the A.Y. 2002-03 in ITA. No.7987/M/2007. By honoring the order passed by the Hon‟ble ITAT in the assessee‟s own case (supra), 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." 15.4. In view of the above, we do not see any infirmity in the order passed by the CIT(A) on this issue. Respectfully following the abovesaid decision of the Tribunal in the case of the Assessee for the Assessment Year 2003-04, we confirm the order of CIT(A) on this i....
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....de the addition. However, In appeal, the CIT(A) granted relief to the Assessee holding as under:- "32.4 I have considered the submissions made by A.R. of the Appellant I find that the amount of expenditure incurred on account of VRS, the amount debited to the profit and loss account in different years and the amount of deduction allowed in the normal computation in the said years are fully reconcilable as could be seen from the details given in Annexure A to this order. In my view additions made in computing total income under normal provisions of the Act has nothing to do with computation of book profits under section 115JB, which is a selfcontained code and it is subject to only those adjustments which are specified in the Explanation to section 115JB(2). Further, VRS expenditure amortised in the profit and loss account cannot be said to be answered an ascertained liability and is also not covered under the provisions of Explanation to Section 115JB(2). Hence, respectfully following the principles laid down by the Hon‟ble Apex Court in the case of Apollo tyres Ltd (supra) as well as other decisions cited hereinabove, the addition made by the Assessing Officer is de....
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....tances of the case and in law, the learned CIT(A) erred in deleting the addition in respect of capital expenditure debited to P & L account of INR 14,16,56,815/- in computation of book profit u/s 115JB of the Act. 17.1. During the relevant previous year, the Assessee had debited INR 14,16,56,815/- to the Profit & loss account being capital expenditure. The Assessing Officer added back the aforesaid capital expenditure to Book Profits for the reason that the same has been added back while computing profits under normal provisions of the Act. 17.2. In response to the query raised during the course of assessment proceedings, the Assessee, vide letter dated 08.12.2006, submitted that the aforesaid capital expenditure has been debited to Profit & Loss Account as per accepted accounting practice which is in line with the applicable accounting standards. Since the accounts has been prepared m accordance with Parts II and III of Schedule VI to the Companies Act and the same has been duly certified by the statutory auditors, no further adjustment is called for on this account in view of the decision of Apex Court in the case of Apollo Tyres -vs.- CIT (2002) 255 ITR 273 (SC). However, ....
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.... Since the issue has been decided in favour of the assessee in the assessee‟s own case for the A.Y. 2002-03 (supra), therefore, 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." 17.5. Applying the principles laid down by the Hon‟ble Supreme Court in the Apollo Tyres Ltd. (supra) and respectfully following the decisions of the co-ordinate bench of the Tribunal in the case of the Assessee for the Assessment Year 2002-03 (ITA No. 4987Mum/2007 & others) and Assessment Year 2003-04 (ITA No. 4988/Mum/2007), we confirm the order of CIT(A) holding that capital expenditure of INR 14,16,56,815/- debited to Profit & Loss Account is not required to be added back while computing book profits under Section 115JB of the Act. Accordingly, Ground No. 16 raised by the Revenue is dismissed. 18. Ground No. 17: On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the addition in respect of deferred revenue expenditures of earlier years amo....
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....ly those adjustments which are specified in the Explanation to section 115JB(2). Hence, respectfully following the principles laid down by the Hon‟ble Apex Court in the case of Apollo Tyres Ltd. (supra) as well as other decisions cited here-in-above, the addition made by the Assessing Officer is deleted and this ground of appeal is allowed." 39. 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 Apex Court in the case of 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 th....
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....epresentative of the Assessee fairly conceded that the issue was decided against the Assessee in Assessee‟s own case for the Assessment Year 1998-99 to 2001-02 and Assessment Year 2003-04. 19.4. We note that in the immediately preceding Assessment Year 2003-04, the Tribunal has decided this issue in favour of the Revenue, vide common order 13.03.2019 passed in ITA No. 4242/MUM/2007 and ITA No. 4988/MUM/2007, holding as under: "52. Under this issue the revenue has challenged the deletion of the addition of profit on sale of fixed assets in computation of book profit u/s 115JB of the Act in sum of Rs.5,19,20,846/-. At the time of argument, the Ld. Representative of the assessee has disclosed this fact that this issue has been decided against the assessee in the assessee‟s own case for the A.Y.2002-03 in ITA. No.4241/M/2007 dated 29.07.2015. Since this issue has been decided against the Assessee in the assessee‟s own case (supra), therefore, the finding of the CIT(A) on this issue is hereby ordered to be set aside and we allow the claim of the revenue for the addition of said amount while computing the book profit u/s 115JB of the Act. Accordingly, this i....
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....e Assessing Officer added back the aforesaid amount while computing book profit under Section 115JB of the Act. 21.2. In appeal, the CIT(A) granted relief to the Assessee holding as under: "38.3 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 order of my predecessor for AY 1997-98 and A.Y. 1998-99 as well as my own order for A.Y. 2003-04, the addition made by the A.O. of Rs. 9,66,64,158/- is deleted. Hence, this ground of appeal is allowed." 21.3. Now, the Revenue is in appeal before us against the above finding of the CIT(A) on this issue. We note that CIT(A) has granted relief to the Assessee following decision of the Tribunal in the case of the Assessee in Assessment Year 1990-91 and 1998-99. Further, in the immediately preceding assessment year (AY 2003-04), identical issue has been decided in favour of the Assessee. The relevant extract of the order, dated 13.03.2019, passed by the Tribunal in the case of the As....
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....CIT(A) erred in deleting the interest levied of INR70,87,210/- u/s 234D of the I T Act. 22.1. The Assessing Officer imposed interest under Section 234D of INR 70,87,210/- on refund granted vide intimation under Section 143(1) of the Act which was deleted by the CIT(A). Revenue is now in appeal. Ground No. 21 relating to levy of interest under section 234D of the Act is disposed off as being consequential. 23. Ground No. 22 : On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing the assessee‟s claim of additional gratuity amounting to Rs. 86,82,751/-. 23.1. During the relevant previous year, the appellant had made provision for additional gratuity of INR 86,82,751/-. While dismissing Ground No. 9 raised by the Revenue, we have, in paragraph 14.3.5 above, concluded that the provision for additional gratuity is a provision for ascertained liability. Further, the CIT(A) has granted relief to the Assessee by following decision of the Tribunal in the case of the Assessee for the Assessment Year 1990-91 (ITA No. 2361/Mum/95). In view of the aforesaid, we are not inclined to interfere the order of CIT(A) on this issue. Accordingly....
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.... has been made from borrowed funds does not arise. Therefore, respectfully following the decision of the Tribunal in the case Maruti Udyog Ltd. (supra) and orders of my predecessor for A.Y. 1999-00 and A.Y. 2000-01 as well as my own orders for A.Y. 2001-02 to A.Y. 2003-04, the addition made by the A.O. is deleted and both the grounds of appeal are allowed." 24.3. Revenue is in appeal, challenging the decision of CIT(A) deleting the disallowance of INR 18,60,00,000/-. While the Departmental Representative relied upon the Assessment Order, the Authorised Representative of the Assessee reiterated the submissions made before the lower authorities. 24.4. We have considered the rival contentions and perused the material on record. We note that the CIT(A) has, while granted relief to the Assessee has, after taking into account details of investments, own funds and borrowed funds furnished by the Assessee, returned a factual finding that the dividend income received during the year pertained to investments made by the Assessee in the earlier years out of its own funds and therefore the question of assuming that the such dividend income pertained to investments made from borrowed fund....