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2017 (3) TMI 264 - AT - Income TaxMAT computation - provisions for gratuity not added to book profit - Held that:- Here the liability had been calculated on the basis of actuarial valuation towards future payment to the employees. The assessee had submitted a copy of the actuarial valuation certificate issued by the Advocate and registered valuer which is on record. We further observe that when the provisions for gratuity is made on the basis of actuarial valuation for future payments to employees such a liability cannot be held as contingent liability as held by the Hon’ble Apex Court in the case of Bharat Earth Movers Ltd.[2000 (8) TMI 4 - SUPREME Court]. We also observe that the ground of the AO for rejecting the claim of the assessee that there was a change in the method of accounting in respect of gratuity liability is not correct because the change made by the assessee was not proved to be mala fide as it is on record and the change was made on the basis of accepted accounting principles. On that basis of this finding, we do not find any infirmity in the order of Ld. CIT(A) on this issue, and, therefore, the relief granted to the assessee by the Ld. CIT(A) is sustained . - Decided against revenue. Liability of interest on turnover tax - whether an allowable expenditure for computing book profit? - Held that:- CIT(A) in his detailed order provided the reasons carefully as to why the claim of assessee is justified herein. At the same time we also observe the decision of the West Bengal Tribunal in the case of Kingsway & Co. [1989 (7) TMI 326 - WEST BENGAL TAXATION TRIBUNAL ] wherein the provisions for interest on turnover tax is determined as an ascertained liability and once it is so, the same cannot be added to the book profit u/s. 115J of the Act. We agree with the findings of the Ld. CIT(A) and the relief given to the assessee on this issue is, therefore, sustained. - Decided against revenue. Provision of doubtful debt - whether an allowable expenditure for computing book profit? - Held that:- Issue is decided in favour of the assessee company by the jurisdictional High Court of Kolkata in the case of ICI (India) Ltd. Vs. CIT (2011 (9) TMI 136 - CALCUTTA HIGH COURT ) in which the decision in the case of CIT Vs. Comnet Systems & Services Ltd.(2008 (9) TMI 18 - SUPREME COURT ) was followed by the Hon’ble Calcutta High Court. The Ld. CIT(A) held on the basis of the judicial principles and decisions that the AO is directed to delete the addition of ₹ 8,70,932/- from the computation u/s. 115J of the Act on account of provision for doubtful debts.- Decided against revenue. Disallowance on account of unabsorbed loss is being lower than brought forward business loss computing adjusted book profit for the purpose of section 115J - Held that:- Once loss is held to be arrived at after taking into account depreciation, there is no scope of disputing the contention of the assessee that the amount of depreciation of ₹ 13,85,66,473/- is to be set off in terms of clause (iv) of the Explanation to section 115J of the Act. Thus, it was a duty of the AO to set off the said amount as the said duty falls within the purview of the limited power of making increases and deductions provided for in the explanation to the said section. See M/s. Pieco Electronics & Electricals Ltd. (now known as Philips India Ltd.) Vs. CIT, WB-4 & Anr. [2011 (8) TMI 352 - CALCUTTA HIGH COURT]- Decided against revenue.
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