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2017 (11) TMI 1147 - AT - Income TaxDisallowance of “Provision for outstanding expenses" - Held that:- The difference between the provision and actual amount shall usually be adjusted in the subsequent years by debiting/credit the profit and loss account. The assessee submitted that the assessee is consistently following same methodology of estimation year after year. We find merit in the submissions of the assessee. We have also gone through the details of outstanding expenses given in page No. 66 of the paper book. We noticed that the same pertain to various expenses. It, inter alia, includes certain payments covered by the provisions of sec. 43B of the Act like leave encashment, excise duty etc. In respect of expenses attracted by the provisions of section 43B, the AO is required to examine them in terms of sec. 43B only. In this view of the matter, we are of the view that this issue requires fresh examination at the end of the Assessing Officer. Accordingly we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer with the direction to examine the items covered by section 43B of the Act in accordance with the said section. MAT computation - addition of outstanding expenses while computing book profit under the provisions of section 115JB treating the same as unascertained liability - Held that:- Since we have held that the liabilities are accrued liabilities, the same would fall under the category of ascertained liabilities. Hence the same is not required to be added u/s. 115JB of the Act. Accordingly, we set aside the order passed by the tax authorities on this issue. Addition of modvat credit - Held that:- We notice that the assessee has given workings relating to modvat in page No. 30 of the paper book, wherein it has computed the modvat amount under inclusive method. The assessee has demonstrated that there is no impact on the profit if modvat is accounted under inclusive method. Further identical issue in assessee’s own case relating to A.Y. 2007-08 has deleted identical disallowance made in that year. Since the assessee has demonstrated that there is no impact on profit if inclusive method of accounting is followed, we do not find any substance in the addition made by the Assessing Officer. Denial of set off of unabsorbed depreciation against long term capital gain - Held that:- Direct the Assessing Officer to allow set off of unabsorbed depreciation against long term capital gain. As decided in case of M/s. Amforge Industries Ltd. (2014 (10) TMI 957 - ITAT MUMBAI) wherein it was held that treatment given to current year depreciation would equally apply to brought forward depreciation and accordingly unabsorbed depreciation can be set off against capital gain. Disallowance of depreciation on walls and fences - Held that:- The assessee has taken entire amount of sale consideration as pertaining to land. When we allocate a portion of the same towards wall & fences, the sale consideration pertaining to land should be reduced by that amount. Accordingly, we direct the Assessing Officer to reduce the sale consideration of land by ₹ 7,64,689/- and compute long term capital gains accordingly. Rejection of claim of set off of unabsorbed depreciation against business income - Held that:- Provisions of section 32(2) as amended by the Finance Act, 2001 would allow the unabsorbed depreciation allowance available in A.Ys. 1997-98 to 2001-02 to be carried forward to the succeeding years and if any unabsorbed depreciation or part thereof could not be set off till A.Y. 2002-03 then it would be carried forward till time it is set off against the profits and gains of subsequent years Charging of interest u/s 234A - A.R submitted that the due date for filing return of income was extended during the year under consideration upto 15th October, 2010 and the assessee has filed the return of income on 11th October, 2010. Accordingly she submitted that the interest u/s 234A is not chargeable - Held that:- We restore this issue to the file of the AO for examining the claim of the assessee. We direct him not to levy interest u/s 234A of the Act, if the assessee had filed return of income within extended time limit.
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