AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 357
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....rming the enhancement of book profit u/s. 115JB of the IT Act on account of disallowance of deduction of Rs. 88,90,87,000/- claimed by the appellant in terms of provision of clause (i) to Explanation 1 to Sub-section (2) to section 115JB of the Act without appreciating the facts of the case properly. 3. The learned CIT (A) erred in law and on facts in issuing direction to the Assessing Officer to verify the claim of unabsorbed forward business losses and unabsorbed depreciation and instead of issuing the direction, the learned CIT(A) ought to have allow himself the brought forward loss and unabsorbed depreciation. 4. The appellant craves leave to add, amend or alter the grounds of appeal at the time of hearing, if need arise. 3. The Revenue has raised the following grounds of appeal: i) "Whether on the facts and circumstances of case and in law, the Ld.CIT(A) is justified in deleting the Addition on account of Extraordinary items amounting to Rs. 3,53,90,000/- without remanding the issues to AO for verification even though CIT(A) has powers under section 250(4) of the Income Tax Act, 1961 to do so?" ii) Whether on the facts and circumstances o....
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.... 20/03/2006 26,253/- 23/03/2006 Total 37,31,520/- It is submitted by the appellant that the same was wrongly disallowed on account of delay in payment of PF contribution. The date viz., 22/07/2005 mentioned in the Annexure to the Tax Audit Report pertains to the payment of 'Pension Contribution' and not the 'PF Contribution'. For the other payments, the appellant has given reason for not remitting the amount of employees' contribution within due dates in para 1.2 to 1.7 of written submission. 10.3 On perusal of documents submitted by appellant as annexure-VI, related to statement showing details of PF deduction & payment thereof CL 16(b) CL-21 (II) (b), for FY 2005-06, I find that employees' contribution towards PF for the month of June, 2005 was only Rs. 25,324/-, which was remitted to the government account on 14/07/2005 within due date i.e. 15/07/2005. This detail was provided to the AO vide submission dated 22/07/2016, which is already settled in above paras. Hence, the burden shifts over the AO to prove the contention of appellant wrong by establishing the fact. However, the AO has simply taken the stand of non-compliance....
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....l:- Enhancement of Book Profit u/s 115JB -Rs. 88,90,87,000/- 9. This issue relates to reduction claimed under clause (i) of Explanation 1 to section 115JB(2) towards amount withdrawn from reserves. The Tribunal in the first round had specifically remanded the issue to verify whether the amount withdrawn from reserves was credited to the Profit & Loss Account and consequently included in the net profit. The relevant observation of the Tribunal is reproduced hereunder:- "46. In our considered opinion, as per Explanation-1 below section 115JB(2) clause (i) the profit as shown in the profit & loss account for the relevant previous year has to be reduced by the amount withdrawn from any reserve or provision, if any amount is credited to the profit & loss account. We find that a reading of the assessment order shows that the AO disallowed deduction claimed for amount withdrawn from reserves on the ground that the same was not credited in the profit & loss account of the year under consideration, and therefore, not included in the net profit as per the profit & loss account of the year. The CIT(A) deleted the addition without recording any finding whether the amount was inc....
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....are its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 (1 of 1956) : Provided that while preparing the annual accounts including profit and loss account,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including profit and loss account; (iii) the method and rates adopted for calculating the depreciation, shall be the same as have been adopted for the purpose of preparing such accounts including profit and loss account and laid before the company at its annual general meeting in accordance with the provisions of section 210 of the Companies Act, 1956 (1 of 1956) : Provided further that where the company has adopted or adopts the financial year under the Companies Act, 1956 (1 of 1956), which is different from the previous year under this Act,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including profit and loss account; (iii) the method and rates adopted for calculating the depreciation, shall ....
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....2 apply, if any such amount is credited to the profit and loss account; or [(iia) the amount of depreciation debited to the profit and loss account (excluding the depreciation on account of revaluation of assets); or (iib) the amount withdrawn from revaluation reserve and credited to the profit and loss account, to the extent it does not exceed the amount of depreciation on account of revaluation of assets referred to in clause (iia ); or] [(iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account. Explanation.-For the purposes of this clause,- (a) the loss shall not include depreciation; (b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil; or] (iv) the amount of profits eligible for deduction under section 80HHC, computed under clause (a) or clause (b) or clause (c) of sub-section (3) or sub-section (3A), as the case may be, of that section, and subject to the conditions specified in that section; or (v) the amount of profits eligible for deduction under section 80HHE computed under sub-se....
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.... verify the computation given by the assessee after applying the provisions of Section 115JB of the Act. Appeal of the assessee on this ground is allowed for statistical purposes. Ground No. 3 of assessee's appeal Direction to AO to verify unabsorbed losses & depreciation 12. On the above issue, the findings of the Ld. CIT(A) are as under:- "12.1 I have perused the written submission and other materials uploaded by the appellant on this issue. At the outset, it may be mentioned that this issue was never in dispute before the Ld. CIT(A) or before the Hon'ble ITAT in the 1st round of appellate proceedings. As the same was never part of set-aside proceedings and came up for the 1st time in this second round of appeal, the issue deserves to be dismissed at the outset. However, as the issue arises out of the OGE of the Ld. AO, in the interest of justice, and keeping in mind various judicial pronouncements on allowability- of brought forward-losses and unabsorbed depreciation, AO is directed to verify the claim of unabsorbed brought forward business losses and unabsorbed depreciation of earlier years, including prior to demerger, and give credit of remaining unabsorbed ....