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2016 (8) TMI 556 - ITAT MUMBAIGrant of depreciation - Held that:- We have observed that the assessee company has claimed depreciation on certain assets which were acquired by the assessee company being in the nature of UPS, routers, switches and cables, projector, pipes and racks etc. for which the assessee company is claiming depreciation @ 60%. However, the same was denied by the A.O. The ld. CIT(A) allowed depreciation @ 60% on routers. In our considered view, the assessee company acquired the fixed assets and if the same are forming an integral parts of the computer system which can be used along with a computer and when their functions can be integrated with a computer, depreciation is to be allowed @ 60%. However it should be segregated as indicated above and as such we set aside matter back to the file of the A.O. with a direction to review the entire list of fixed items and the items which are an integral parts of the computers which can be used along with a computer and when their functions can be integrated with a computer, the depreciation is to be allowed @ 60% and for the rest of the items in the list, depreciation @ 15% may be allowed. Additions made to the book profit computed u/s 115JB of the Act on account of provision for doubtful debts - Held that:- We have observed that Income Tax Act,1961 was amended by Finance Act, 2004 w.e.f 1-4-2001 by substitution of clause (i) of Explanation1 to Section 115JB of the Act whereby the amount or amounts set aside as provision for diminution in the value of any asset is to be added back to the profit of the assessee as per Profit and Loss Account to arrive at Book Profit u/s 115JB of the Act which is clearly applicable to Provision for doubtful debt of ₹ 15,29,058/- debited to Profit and Loss Account by the assessee and the same is ordered to be added back to Profit as per Profit and Loss Account to determine book profit as per amended provision of Section 115JB of the Act. This ground of appeal raised by the assessee company is therefore dismissed. Provisions for gratuity and provision for leave encashment based on actuarial valuation conducted by the acturial is an ascertained liability which shall not be added to Profit of the assessee as per Profit and Loss Account to compute Book profit u/s 115JB Employees contribution towards provident fund paid by the assessee company before the due date prescribed under the Income Tax Act,1961 for filing return of income u/s 139(1) of the Act be allowed of which the payment details are duly reflected in the assessment order Entitlement for deduction of FBT to arrive at the book profit for the purposes of computation of Book Profit u/s 115JB - Held that:- We find merit in the contention of the assessee company after going through the records before us and have observed that the assessee company is entitled for deduction of FBT to arrive at the book profit for the purposes of computation of Book Profit u/s 115JB of the Act. On the other hand the A.O. has reduced the losses by amount of FBT instead of increasing losses to arrive at Book Profit u/s 115JB which has led to double jeopardy to the assessee company. Thus, keeping in view of the afore-stated CBDT Circular, the A.O. is directed to re-compute the losses u/s 115JB of the Act whereby the FBT will be allowed to be added to the losses prior to tax as reflected in the audited Profit and loss account to increase the loss to arrive at the book profit u/s 115JB of the Act. We order accordingly.
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