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2017 (9) TMI 474 - AT - Income TaxMAT computation - Addition on account of provisions for gratuity and provisions of leave encashment made u/s 115JB to the book profit - Held that:- CIT(A) has deleted the above addition because of the reason that the provision of leave encashment as well as the provision of the gratuity are meant on the actuarial valuation as per the accounting standard 15 of Ministry of Corporate Affairs and both the liabilities are ascertained liability and therefore they cannot be stated to be an understated liability. In view of this we do not find any infirmity in the order of the Ld. CIT(A) in deleting the about disallowance. Adjustment on account of accumulated losses on account of profit of sick industrial company - Held that:- Clause (vii) of explanation 1 of section hundred and 15 JB of the income tax act provides that the amount of profits of sick industrial company for the assessment year commencing on and from the assessment year relevant to the previous year in which the said company has become sick industrial company under subsection (1) of section 17 of the sick industrial companies (special provisions) act, 1985 and ending with the assessment year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses was required to be reduced from the profit under section hundred and 115JB of the Act. Therefore, apparently, if the assessee’s net worth has become positive during the year then assessee is eligible for the deduction of the profits of sick industrial companies which Ld. CIT(A) is granted. However, the Ld. CIT(A) has noted that there are certain errors in noting of the figures of the profit, net worth of the assessee company. Therefore, in the interest of Justice we set aside the issue to the file of AO to verify the figures that when the net worth of the company has become positive and accordingly, if it has become so during the year, then grant the deduction of the above amount. Set aside issue to the file of the AO with a direction to verify the computation of net worth.
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