TMI Blog2007 (10) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... rst for consideration. I. Assessment year 1998-99 (ITA No. 1001/Hyd/04): 2. In the first ground the Department is aggrieved against the exclusion of the sum of Rs. 2,60,845 as income derived by the industrial undertaking from the business of generation or generation and distribution of power. The assessee-company is engaged in the generation of electric power. For the year under consideration, the loss under the normal provisions of the Income-tax Act, 1961 ( the Act ) was determined at Rs. 32,68,39,399 under section 143(3) of the Act. It was found that in view of the loss, provisions of section 115JA were applicable and hence the assessment was reopened under section 147 of the Act. In response to the notice under section 148, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or debt payments/debt service reserve Rs. 49,04,296 ( b )Margin money deposits Rs. 2,60,845 ( c )Deposits with telephone department Rs. 4,155 ( d )Fixed deposits Rs. 58,58,803 Rs. 1,10,28,099 (2)Expenses on green belt written off in the assessment year 1997-98 now written back Rs. 3,42,071 (3)Recoveries from staff Rs. 78,932 Rs.1,14,49,102 Considering the provisions of clause ( iv ) of the Explanation to section 115JA and referring to several judicial pronouncements, the Assessing Officer held that the other income as detailed above cannot be reduced from the book profits under clause ( iv ) as it is not derived fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the computation furnished by the assessee, it has referred to deduction under section 80-IA of the Act, and at the same time, has submitted that it is seeking reduction from the book profit under clause ( iv ) of the Explanation. It may be noted that the book profit has to be reduced by the deduction under section 80-IA under clause ( vi ) of the Explanation and not under clause ( iv ) of the Explanation. Both the clauses are distinct and separate from each other. Under clause ( vi ), the deduction by which the book profits is to be reduced refers to the amount of profits derived by an industrial undertaking from the business of developing, maintaining and operating any infrastructural facility as defined in the Explanation to sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly such income can be excluded, which has been included in it. This being the principle laid down by the Special Bench and upheld by the Delhi High Court, it will have applicability while working out the profits under other provisions also. Accordingly, we uphold the order of the CIT(A) on this issue. 7. In the remaining two grounds, the Department is aggrieved against the deletion of the addition of Rs. 3,42,071 which was disallowed by the Assessing Officer towards expenses on green belt written off. It was fairly conceded by the learned counsel at the time of hearing that the CIT(A) was not justified in deleting this addition. Accordingly, the addition made by the Assessing Officer is restored. 8. In the result, this appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany such loss only when repayment of loan was effected by the assessee. 11. On due consideration of the matter, we agree with the contention of the learned counsel. So far as the loan transaction is concerned, AP Transco is not a privy to the said transaction. Primarily, it is the duty of the assessee to repay the loan obtained by it in foreign currency. It is altogether a different agreement between the assessee and AP Transco that whatever additional liability is incurred by the former on account of foreign exchange fluctuations, the same would be reimbursed by AP Transco. On the date of Balance Sheet, when the assessee is required to reflect a true and fair view of the state of affairs, it is incumbent upon it to state, the liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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