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2014 (5) TMI 1138 - ITAT CHENNAIMAT - deduction of provision for diminution in the value of investment while computing the book profit under Section 115JB - Held that:- In a case where the assessee is reducing the diminution in the value from the current asset’s value of the company, then also credit entries are passed in the account of the current assets to reduce the value and there also the corresponding debit is made to the Profit & Loss account thereby reducing the profit or increase the loss of the company. Whether it is shown as a separate provision or it is reduced from the current asset’s value, the corresponding and consequential effect is to reduce the profit of the assessee or increase the loss of the assessee by debiting to Profit & Loss account. As far as the credit entry is concerned, it can either be shown as a separate provision on the liability side of the balance sheet or reduce from the current asset’s value shown in the asset side of the balance sheet. This is only an accounting format. It does not change the character of the amount sought to be deducted by the assessee. It does not affect the accounting/financial result. It always affects the income or loss aspect of the assessee. Therefore, only for the reason that the assessee has not created a separate provision, but only reduced the diminution in the value of investment from the current asset’s value, does not make any difference and the adjustment made by the assessee is equally covered by the retrospective amendment brought in by the Finance Act, 2009. Commissioner of Income Tax (Appeals) is justified in confirming the order of the Assessing Officer for adding back the diminution in the value of investment to the book profit of the assessee for the purpose of Section 115JB. Levy of interest under Sections 234B and 234C - Held that:- Hon’ble Madras High Court in the case of CIT v. Revathi Equipment Ltd. (2007 (6) TMI 154 - MADRAS HIGH COURT) has held that when an assessee could not have foreseen liability caused on account of a subsequent legislative amendment, the assessee cannot be liable for interest on the differential amount of tax in the reason that the assessee could not have paid the differential amount of tax for the relevant previous year. Here also, the income escaping assessment was passed because of the retrospective amendment brought in by Finance Act, 2009. The additional liability has been generated only in the assessment. It was not possible for the assessee to foresee the retrospective amendment. So, it was not possible for the assessee to pay advance tax for the relevant previous year against the differential demand of tax that would arise in future. Therefore, we delete the liability of interest made under Section 234B and 234C of the Income-tax Act, 1961.
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