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2011 (8) TMI 780 - AT - Income TaxMAT - Deduction of brought forward losses for computation of book profit u/s. 115JB - losses have been liquidated by adjusting debit balance against share premium and revaluation reserve pursuant to scheme of compromise sanctioned by Hon’ble High Courts of Orissa and Gujarat - Held That:- Section 391 is a complete code in itself and any scheme sanctioned under this section will have over riding effect. - in computing the book profit for the assessment years 2006-07 and 2007-08, the assessee was entitled to deduction in terms of clause (iii) of the Explanation to section 115JB(2) of the Act the adjustment of debit balance in the Profit and Loss Account with share Premium Account and Revaluation Reserve made on September 30, 2000, which is required to be excluded from consideration and accordingly, AO is required to determine amount of loss brought forward or unabsorbed depreciation for each of years without taking said adjustment into consideration and allow deduction in respect of lesser of two amounts. Decided in favour of assessee. Expenditure on account for running school and other facilities - Addition u/s 40A(9) - assessee has failed to specify its business interest by making said donations - Revenue: assessee intended to diverse its profit by making such donation - no details of students of school, school running expenses, number of employees - Held That:- The assessee will produce details as required by Assessing Officer and Assessing Officer after considering the details, whether actually the assessee has incurred expenditure on school and club, will consider the claim. This issue of revenue’s appeals for both Assessment Years is allowed for statistical purposes. Notional interest - non charging of interest from sister concern - held that:- the proceedings of winding up as well as BIFR were going on against both the parties in different forum. Despite order by the High Court, the principal amount itself was not paid to the assessee, what to say of the interest. - assessee was justified in not declaring interest income in the assessment year in question having regard to principle of real income. - Decided in favor of assessee. Deduction u/s 35 - donation made to Pushpawati Singhania Research Institute (PSRI). - held that:- There is no requirement that once the Notification is issued by the CBDT the said Institute has to be approved by any other authority. Once Notification is issued donor is qualified for weighted deduction referred in Sec.35 of the Act. - the CIT(A) has rightly deleted the disallowance as made by Assessing Officer. - Decided in favor of assessee.
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