TMI Blog2016 (10) TMI 1393X X X X Extracts X X X X X X X X Extracts X X X X ..... ully all the material facts before the Assessing Officer at the time of original assessment proceedings. In the light of the proviso to Section 147 of the Act, we do not find any error or infirmity in the findings of the ld. CIT(A). Appeal filed by the Revenue is accordingly dismissed. Adjustment of MAT credit entitlement while computing book profit u/s. 115JB - AO noticed that the assessee has credited an amount as MAT credit entitlement which was not reduced from the net profit for computing book profit and there is no provision for any adjustment in respect of MAT credit entitlement credited to the Profit and Loss account - HELD THAT:- Provision for current tax is shown at Rs. 7,41,01,907/- and MAT credit entitlement has been separately shown at Rs. 6,13,84,689/- It can be further seen that the provision for current tax is shown at gross amount. The net amount comes to Rs. 1,27,17,218/-, if the MAT credit entitlement is reduced from provision for current tax. If the assessee had shown the net amount of Rs. 1,27,17,218/- and added back the same for the computation of book profit, the revenue would have accepted this computation. But for the accounting principles and set guid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the completed assessment has been reopened beyond the period of 4 years from the end of the relevant assessment year. 5. The reasons recorded by the Assessing Officer for reopening the assessment reads as under:- The assessee is engaged in the business of manufacturing and trading of paper. The assessee filed its revised return of income on 22. 09. 2007 declaring NIL income after set off of unabsorbed depreciation of Rs 16,52,47,1307- and paid tax u/s 115 JB. The case was finalized u/s 143 (3) of the I T Act deciding total assessed income of Rs NIL after making addition of Rs 9,16,87,6207- and enhancing book profit by Rs 4,75,46,243/-for the purpose of MAT. As per explanation below section 115JB of the Act, for the purpose of this section, ' book profit means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by [g] amount of income tax and provision thereof [h] amount of carried to any reserves, [i] amount of set aside by way of provisions made for meeting liability, [j] amount by way of provisions for losses [k] amount of dividend paid or proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly dismissed. 12. The learned Senior Counsel did not press the Cross Objection of the Assessee; therefore the same is dismissed as not pressed. ITA No. 2156/Ahd/2013 C.O. No. 37/Ahd/2014 for A.Y. 2008-09. 13. The substantive grievance of the revenue reads as under:- 1. On the facts and circumstances of the case, whether the Ld CIT(A) is justified in deleting the addition of Rs. 6,13,84,689/- made on account of adjustment of MAT credit entitlement while computing book profit u/s. 115JB? 2. On the facts and circumstances of the case, whether the Ld CIT(A) is justified in deleting the addition of Rs. 1,83,67,000/- out of total addition of Rs. 2,88,96,000/- made on account of Exchange fluctuation as the repayment of loan by the assessee was capital in nature? 14. The first grievance relates to the deletion of the addition of Rs. 6,13,84,689/- towards adjustment of MAT credit entitlement for computing book profit u/s. 115JB. 15. During the course of the scrutiny assessment proceedings and on verification of the assessment records, the A.O. noticed that the assessee has credited an amount of Rs. 6,13,84,689/- as MAT credit entitlement which was not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the CBDT has clarified the intention of the law relating to adjustments u/s 1115 JB as under :- Clarification on add back of ' deferred tax ' dividend distribution tax , etc for calculating book profit under section 115JB. Section 115JB of the Income-tax Act provides for levy of minimum alternate tax (MAT) on the basis of book profits of a company. As per the Explanation after sub-section(2), the expression ' book profit ' means net profit as shown in the profit and loss account prepared in accordance with the provisions of Part II and III of Schedule VI to the Companies Act, 1956, as increased or reduced by certain adjustments, as specified in that section. Clause (a) of the aforesaid Explanation, inter-alia provides for increasing the book profits by income-tax paid or payable and the provision therefore; if debited to profit and loss account. The intention behind these add back is that the items which mainly appear below the line ' in the profit and loss account should be added back to arrive at the ' book profit' if they appear above the line ' in the profit and loss account. Section 115JB has not specifically provided for add back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 78.03 12,250.44 Depreciation 18 5,883.56 4,961.29 PROFIT BEFORE TAX 4,694.47 7,289.15 Provision for Current Tax 741.02 550.80 Provision for fringe Benefit Tax 135.55 105.00 MAT Credit Entitlement (613.85) (550.80) PROFIT BEFORE DEFERRED TAX 4,431.75 7,184.15 Provision for Deferred Tax 254.71 2,378.38 PROFIT AFTER TAX 4,177.04 4,805.77 Debenture Redemption Reserve Written Back 209.54 484.58 Surplus brought forward 9,358.02 5,165.79 13,744.60 10,456.14 22. The book profit for MAT/Tax liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 689/- for computing the book profit; the same has to be deleted. Ground No. 1 is accordingly dismissed. 24. The next ground relates to the deletion of the addition of Rs. 1,83,67,000/-. 25. While scrutinizing the return of income, the A.O. noticed that the assessee has charged the Profit and Loss account with an amount of Rs. 2,88,96,000/- on account of Exchange Fluctuation on repayment of Foreign Currency Term Loan. The A.O. was of the opinion that since the repayment of loan was capital in nature; therefore, expenditure on account of exchange fluctuation on repayment of such loan was also capital in nature. The assessee was asked to justify the allowability of the same. In its reply vide letter dated 07.09.2012, the assessee placed strong reliance on the judgment of the Hon ble Supreme Court in the case of Woodward Governor India Pvt. Ltd. 312 ITR 254. 26. The contention of the assessee did not find any favour with the A.O. who was of the strong belief that the judgment of the Hon ble Supreme Court (supra) is clearly distinguishable on facts. The A.O. observed that the Hon ble Supreme Court has held that repayment of Foreign Exchange Fluctuation is allowable only if it i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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