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2019 (6) TMI 1526 - ITAT MUMBAIDeduction claimed towards Voluntary Retirement Scheme (VRS) expenses - HELD THAT:- Commissioner (Appeals) has found that VRS expenses in fact, has been added back by the assessee to arrive at the profit which has been considered for computation of income. Assessee had not claimed the deduction. The aforesaid factual finding of Commissioner (Appeals) remains uncontroverted before us. We find no reason to interfere with the decision of Commissioner (Appeals) on this issue. Ground is dismissed. MAT Computation - add the provision of doubtful debts and advances while computing the book profit under section 115JB - HELD THAT:- It is evident, the AO taking recourse to clause (c) of Explanation–1 to section 115JB(2) has added back the provision for doubtful debts and advances to the book profit of the assessee. Reading of the aforesaid provision makes it clear that only the amount set aside towards provision for meeting unascertained liability can be added back to the book profit under the aforesaid provisions. Undisputedly, the provision for bad and doubtful debts and advances are not in the nature of unascertained liability. Rather, it represents the assets of the assessee. Therefore, under no circumstances, clause (c) to Explanation–1 of section 115JB(2) of the Act can be brought into play to make the adjustment to book profit. Since, at the time of completion of the assessment proceedings such provision was not in the statute book, therefore, applicability of such provision has never been examined vis–a–vis the relevant facts. That being the case, at this stage we cannot entertain a completely new plea taken by the Revenue on the issue. Respectfully following the decision of the Tribunal in assessee’s own case we uphold the decision of the learned Commissioner (Appeals) on this issue. Claim of deduction u/s 80HHC from the book profit computed under section 115JB - Commissioner (Appeals) relying upon the Special Bench decision of the Tribunal, in Syncom Formulations India &Ors. [2007 (3) TMI 288 - ITAT BOMBAY-H] has held that while computing book profit under section 115JB deduction u/s 80HHC of the Act has to be allowed. DR that the aforesaid Special Bench decision is no more a good law in view of the decision in Ajanta Pharma Ltd. [2009 (5) TMI 7 - BOMBAY HIGH COURT]. We are unable to accept the aforesaid contention of the learned Departmental Representative for the following reasons. In Bhari Information Technology Systems Pvt. Ltd. [2011 (10) TMI 19 - SUPREME COURT] has approved the view taken by the Special Bench decision of the Tribunal in Syncom Formulations India &Ors. [2007 (3) TMI 288 - ITAT BOMBAY-H]. In case of KEC International Ltd.[2013 (9) TMI 673 - ITAT MUMBAI] Tribunal following the aforesaid decision of the Hon'ble Supreme Court has directed the Assessing Officer to compute deduction under section 80HHC on the basis of adjusted book profit and not on the basis of profit computed under the normal provisions of the Act. In view of the aforesaid, we do not find any reason to interfere with the decision of the learned Commissioner (Appeals). Set–off of brought forward loss and unabsorbed depreciation - HELD THAT:- While allowing assessee’s claim, learned Commissioner (Appeals) has relied upon the ratio laid down by the Hon'ble Supreme Court in case of Marshall Sons & Co. [1996 (11) TMI 6 - SUPREME COURT]. As per the aforesaid decision, the date of merger is from the appointed date and not the date on which the High Court granted its approval. In our view, as per the ratio laid down by the Hon'ble Supreme Court in assessee’s claim of set–off of accumulated loss and unabsorbed depreciation has to be allowed from the appointed date of merger in terms of section 72A of the Act. That being the case, we do not find any infirmity in the decision of learned Commissioner (Appeals) on the issue. Accordingly, the ground raised is dismissed. Disallowance of club entrance / subscription fee - Revenue or capital expenditure - HELD THAT:- The Hon'ble Supreme Court in United Glass Mfg. Co. Ltd. [2012 (9) TMI 914 - SUPREME COURT], has held that club membership fee for employees incurred by the assessee is allowable as business expenditure under section 37 - Hon'ble Supreme Court has also held that even otherwise also, it is a pure business expenditure as the expenditure is incurred by the assessee to improve its business relations and prospects. The same view has been expressed by the Hon'ble Jurisdictional High Court in Lubrizol India Ltd.[2015 (8) TMI 134 - BOMBAY HIGH COURT]. In view of the above deduction claimed by the assessee on account of club membership fee is allowable as business expenditure. Disallowance of unpaid service tax u/s 43B - HELD THAT:- Hon'ble Jurisdictional High Court in Tops Security Ltd. [2018 (9) TMI 799 - BOMBAY HIGH COURT] following its earlier judgment held that provision of section 43B of the Act does not impose liability to pay service tax before actual receipt of the fund in the account of the assessee. The Hon'ble Jurisdictional High Court held that liability to pay service tax into the treasury will arise only upon the assessee receiving the fund and not otherwise. In Knight Frank India Pvt. Ltd. [2016 (8) TMI 1096 - BOMBAY HIGH COURT] held that since the assessee did not claim any deduction on account of service tax payable, there can be no occasion to invoke provisions of section 43B. In the facts of the present case also, it is the contention of assessee that since it has not claimed any deduction on account of service tax payable, no disallowance under section 43B of the Act can be made. We delete the disallowance made by the assessee under section 43B. Disallowance u/s 40(a)(ia) - HELD THAT:- The assessee is not in a position to deduct tax at source. Further, it is the claim of the assessee that the provision so created is not claimed as a deduction. In our view, the aforesaid claim of the assessee requires consideration. If at the time of creating the provision for expenditure payee is not identifiable, the assessee cannot possibly deduct tax at source, since, the details of the payees are not known to the assessee. Further, it is the contention of the assessee that the provision created is reversed in the subsequent year on the basis of actual payment made against the expenditure claimed. This claim of the assessee also requires verification along with the fact whether at the time of actual payment, the assessee has deducted tax at source. Since, the aforesaid facts have not been properly verified by the Departmental Authorities, we are inclined to restore the issue to the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. Disallowance of brought forward loss of amalgamating company - HELD THAT:- We are of the view that this issue has to be restored back to the Assessing Officer for deciding afresh depending upon the decision to be taken on assessee’s claim on the issue in assessment years 2006–07 and 2007–08. This ground is allowed for statistical purposes.
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