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2014 (9) TMI 1011 - AT - Income TaxMAT computation - CIT(A) deleting the disallowance made by the Assessing Officer in computing the book profit u/s 115JB in respect of provisions made for Gratuity, Leave Encashment and Post- Retirement Medical Benefits - Held that:- This issue is covered in favour of the assessee company by the order of the ITAT in assessee’s own case in assessment year 2002-03 [2010 (10) TMI 1022 - ITAT DELHI ] wherein held once the assessee is maintaining his accounts on mercantile system, a liability accrued though to be discharged at a future date would be a proper deduction while working out the profits and gains of business, regard being had to be accepted principles of commercial practice and accountancy. If the facts of the case are viewed in the light of the decisions referred to above, we find that the provision made by the assessee in respect of gratuity, leave encashment and post retirement medical benefit on actuarial basis cannot be said provisions for unascertained liability so as to fall in clause (c) of the Explanation to section 115-JB (2) of the Act. Accordingly the ld. CIT (Appeals) and the assessing officer erred in holding the provisions made by the assessee were on account of un-ascertained liability to be added back under clause (c) of the Explanation to section 115- JB (2) of the Act. Accordingly, we set aside the order of the authorities below and direct the assessing officer to allow the claim of the assessee - Decided in favour of assessee Disallowance of provisions made for the bad and doubtful debts - Held that:- The Ld. AR fairly conceded that in view of the retrospective amendment made by the Finance (No.2) Act, 2009 this issue is covered against the assessee. This ground of the revenue’s appeal for making addition on account of the provisions for bad and doubtful debts is allowed. - Decided in favour of revenue Addition in computing the book profit in respect of the expenditure on account of the amortization of the land on the reasoning that no depreciation is allowable on land under the Companies Act as no rate of depreciation is provided in Schedule XIV of Companies Act - CIT(A) deleted the addition - Held that:- It is not the case of the Revenue here that the adjustment made by the AO is under Explanation to section 115J. The contention of the Revenue here is that land is not a depreciable asset and depreciation charged in the profit and loss account which is not in accordance with the provisions of the Companies Act read with Accounting Standard 6. As stated hereinabove, the contention of the Revenue that the land in question of the assessee company is not a depreciable asset is factually incorrect and further as held by the Supreme Court no adjustment can be made to net profit as certified by the statutory auditors.Accordingly we uphold the order of CIT(A) deleting this addition - Decided in favour of assessee
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