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2017 (5) TMI 1819 - AT - Income TaxMAT Addition - amount of Debt Redemption Reserve for computing the book profit u/s 115JB - HELD THAT:- We find that the assessee is adjusted the amount of Debt Redemption Reserve created by the company while working out the amount of book profit u/s 115JB of the Act. We find that similar issue is dealt in the case of Raymond Ltd. [2012 (4) TMI 127 - BOMBAY HIGH COURT] as held that mere fact that a Debenture Redemption Reserve is labeled as a reserve will not render it as a reserve in the true sense or meaning of that concept. An amount which is retained by way of providing for a known liability is not a reserve. Consequently the Tribunal was correct in holding that the amount which was set apart as a Debenture Redemption Reserve is not a reserve within the meaning of Explanation (b) to Section 115JA In the similar case ITAT Ahmedabad Bench in the case of ACIT vs. Genus Electrotech Ltd [2016 (5) TMI 1136 - ITAT AHMEDABAD] has held that the adjustment claimed by the assessee for Debt Redemption Fund was declined with a short observation that Debt Redemption Fund was an appropriation for the purpose of creating a reserve and was a below line adjustment and it did not fall in any category of adjustments provided u/s 115JB of the Act. Respectfully following the Hon’ble Bombay High Court in the case of Raymond Ltd. [2012 (4) TMI 127 - BOMBAY HIGH COURT] we allow the claim of the assessee. The orders of the lower authorities are reversed and deduction is allowed.
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