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2015 (1) TMI 1504 - HC - Income TaxComputation of book profit - ‘lease equalization charges’ - Tribunal held that the adjustment made by the Assessing Authority by adding the amount of lease equalization charges to compute the Book Profits under Section 115JA was not permissible since the said amount was not covered within any of the clauses to Explanation below Section 115JA(2) including clause (b) Whether the Appellate Authorities were correct in reversing the finding of the Assessing Officer that a sum ‘lease equalization account’ is in the nature of a reserve and the same had to be added back when computing the Book Profits as per Explanation u/s 115JA(2) of the Act.? HELD THAT:- The ‘lease equalization charges’ is not one of the amounts which is covered under any of the clauses to Explanation to Section 115JA(2). It cannot be treated as a reserve. As the name suggest, this ‘lease equalization charges’ is nothing but the difference between the statutory depreciation on rentals and the recovery of cost of capital. Therefore, merely because the said amount entered in the P&L account, in effect, makes no difference. At any rate, it cannot be treated as a reserve. Therefore, both the Appellate Authorities were justified in directing deletion of the said amount. Decided in favour of the assessee.
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