9911796707
TMI Blog2007 (10) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... is taken up first 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 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 from the business of generation of power. Thus, after determining the other income which could be reduced from the book profits, the amount eligible for reduction under clause (iv) of the Explanation to section 115JA(2) was worked out at Rs. 64,58,13,723. Reducing this from the gross total in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-section (4) of section 80-IA. Thus, in order to effect reduction under clause (vi), the undertaking must have derived profit from an infrastructure facility as defined in section 80-IA. This is not the case of the assessee. The assessee by itself is a power generating company. Its entire profit is generated from the business of the gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment 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 Department is partly allowed. II. Assessment year 2001-02 (ITA No. 1003/Hyd/04): 9. In this appeal, the Department is aggrieved against the deletion of the addition of Rs. 31,21,210 which was disallowed by the Assessing Officer towards loss on foreign exchange fluctuations. In this year, while drawing its Balance Sheet as on the last day of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 liabilities as they are on that date. While drawing the Balance Sheet on that date, it cannot take into consideration, the agreement between it and AP Transco because it has to come into effect only when the repayment is effected. Thus, when the assessee has given a true and fair view of its profits/losses, the Assessing Officer has no power to tinker with the book profi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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