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2016 (10) TMI 1360 - AT - Income TaxDisallowance under section 14A r.w.r 8D towards expenditure incurred for earning exempt income while computing tax under section 115JB - computing the “book profit” of the company under section 115JB of the Act which is a section with fiction another provision with fiction such as section 14A cannot be imported - HELD THAT:- As relying on M/S. BEACH MINERALS COMPANY PVT LTD [2015 (8) TMI 1031 - ITAT CHENNAI] held that while computing the “book profit” of the company under section 115JB of the Act which is a section with fiction another provision with fiction such as section 14A cannot be imported - we hereby hold that in the case of the assessee provisions of section 14A cannot be invoked for the purpose of computing tax under section 115JB of the Act. Thus, this ground raised by the assessee is held in its favour. Disallowance being the compensation paid for delayed commissioning of windmills - HELD THAT:- For the relevant assessment year, it appears that the assessee had promised compensation to its sister concerns which are loss making concerns. The apprehension of the Revenue is that the assessee had promised such payments to its clients who are its sister concerns in order to shift its profit to those companies which are loss making companies. Therefore in order to ascertain the genuineness of the promised payment, we hereby remit the matter back to the file of the learned Assessing Officer who shall verify the parameters considered by the assessee while paying compensation to its client M/s. Indonet Global Ltd., for the assessment year 2006-07 [2016 (10) TMI 1358 - ITAT CHENNAI] and if the same falls in parity in the case of the assessee for the relevant assessment year, then allow the claim of deduction though the compensation has been shown only as payable, otherwise pass appropriate orders as per law & merit. Disallowance being the expenses related to issue of FCCB - foreign currency convertible bonds issue expenses - as submitted that the expenditure is allowable under section 37 of the Act because these expenses related to obtaining loan - HELD THAT:- From the facts of the case, we find that the entire expense is incurred by the assessee during the previous year 2006-07 relevant to the assessment year 2007-08. Further, this is an expense incurred for either raising loan or for raising capital. If the expense is incurred for raising loan then the same will be allowed as deduction spread over evenly for the period of loan extended because it is an expenditure related to the financial charge. However, if the amount is incurred for raising capital, then the same will not be allowed as deduction by virtue of the decision of the Hon’ble Apex Court in the case of Brooke Bond India Ltd. Vs. CIT [1997 (2) TMI 11 - SUPREME COURT] Therefore, we hereby remit back the matter to the file of the learned Assessing Officer for fresh consideration in the light of our observations made herein above. Disallowance being difference in depreciation as per Companies Act - HELD THAT:- It appears that the assessee had claimed higher depreciation than what is prescribed by the Companies Act while computing book profit for the purpose of tax under section 115JB of the Act, the difference of which being Rs.1,36,56,865/-, though the facts are not clearly emerging out of the order of the learned Assessing Officer or the learned Commissioner of Income Tax (Appeals). Since the facts are not clear, we remit back this issue to the file of the learned Assessing Officer for de novo consideration. We also direct the learned Assessing Officer to consider the decision rendered by us in the Revenue’s appeal [2016 (10) TMI 1358 - ITAT CHENNAI] in the case of the assessee’s own case, and if the facts are identical on the issue as discussed of the above said order then pass appropriate in the light of the same. Addition being the impairment losses charged to P&L A/c as per Accounting Standard-28 for the purpose of determining book profit under section 115JB - CIT-A deleted the addition - HELD THAT:- Section 2(11) (3A) of the Companies Act provides that the profit and loss account and balance sheet of the company shall comply with the accounting standards. Accounting Standard-28 states that an asset is said to be impaired when carrying amount of the asset is more than the recoverable amount. It further states that such impairment loss on the asset is to be accounted and the asset should be shown in the balance sheet at its cost less depreciation less impairment loss. Precisely the impairment loss has to be written off in the books of accounts by debiting to profit & loss account and crediting to asset account. This is mandatory as per Accounting Standard-28, which every company has to follow while preparing its statement of affairs. As held by the learned Commissioner of Income Tax (Appeals) there is no whisper in the provisions of section 115JB of the Act for adding back the impairment loss to the profit & loss account of the assessee while computing “book profit” & tax under section 115JB of the Act. Therefore, we do not find it necessary to interfere with the orders of the learned Commissioner of Income Tax (Appeals) on this issue. - Decided against revenue.
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