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2009 (9) TMI 639 - AT - Income TaxReopening - Waiver Of Interest By Government - permission from the Committee on Disputes (CoD) to file these appeals - Book Profit u/s 115JA - Reduction of provisions from net loss - AO does not have the jurisdiction to go behind the net profit shown in the P&L a/c except to the extent provided in the Explanation to s. 115J - the statutory auditors have given a qualified certificate, more particularly the non-incorporation of waiver benefits - since the details of capital restructuring proposal approved by the Government of India have been disclosed in the notes on accounts, any reference made to the P&L a/c shall include such notes also - these three provisions can only be classified as the provision made for diminution in the value of assets. Hence all these three provisions fall outside the purview of cl. (c) of Explanation to s. 115JA - The provision for future losses does not relate to any liability. According to paras 55 and 56 of AS-29, no provision is required to be made for future operating loss, as it does not meet the definition of liability. Once it is not considered as a liability, the question of adding the same for computing book profit under s. 115JA does not arise product warranty falls within the definition of a contingency, which means that though it is a liability as on the date of balance sheet, in view of the uncertainty surrounding the claims, it would fall under the category of "unascertained liability". Hence it is liable to be added to the book profit as per cl. (c) of Explanation to s. 115JA - except the provision made for guarantee repairs amounting to Rs. 1.10 crores, all other provisions would fall outside the purview of s. 115JA - Appeals are partly allowed
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