TMI Blog2011 (12) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... f unabsorbed business loss being set off against such profit and gains of the undertaking would not arise - against revenue. Deleting the addition being the provision for gratuity while determining the book profits u/s 115JB of the Act - CIT(A) allowed the assessee's claim by holding that the provision for gratuity could not be added back under the Explanation (1c) to sec.115JB while determining the book profits – revenue appeal – Held that:- no infirmity in the order of the CIT(A) who made the decision relying on Bharat Earth Movers vs. CIT (2000 - TMI - 5816 - SUPREME Court) case stating that if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther sources without appreciating the facts and circumstances stated in the assessment order and the relevant provisions of the Act. 3. The learned CIT(Appeals) was not justified in holding that the loss is to be set off against the profits of the undertaking eligible for deduction u/s 80HHE of the IT Act, 1961, relying on certain judicial decisions without adjudicating on the priority in the matter of set off the loss of the Hyderabad Unit eligible for deduction u/s 10A against the profits of the 2 (two) units, viz., the Hyderabad Unit eligible for deduction u/s 80HHE and the Bangalore Unit eligible for deduction u/s 10A of the IT Act,1961. 2.1 The brief facts of the case are that the assessee had, during the assessment year, three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I and from Bangalore Unit-I were on the same footing, for the purpose of the provisions of sec.70, it used its prerogative to adjust loss from Hyderabad Unit - II against the profit of Hyderabad Unit-I. The assessee also relied on the order of the ITAT, Bangalore Bench, in the case of M/s.Mindtree Consulting Pvt. Ltd. vs. ACIT (102 TTJ (Bang) 691) wherein the ITAT, while discussing the applicability of sec.10B, held that deduction u/s 10B was merely deduction from income and not an exemption. Accordingly, the assessee was eligible for set off of loss of such unit u/ss. 70 and 71 of the Act. The ITAT also held that in order to compute the total income, the provisions of sections 70 and 71 should be applied. It was also pointed out by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits of 80HHE units was disallowed. 2.2 Aggrieved, the assessee moved the matter in appeal before the first appellate authority and made elaborate submissions which are incorporated in the appellate order. The first appellate authority, after considering the decision of the Karnataka High Court and the Bangalore Tribunal, came to the conclusion that the assessee was eligible for set off of loss of 10A undertaking against profits of 80HHE undertaking in view of the provisions of sec.10A(6) as well as sec.70 of the Act. 2.3 Now, the revenue is aggrieved and is on second appeal before us with the grounds of appeal extracted elsewhere of this order. At the time of hearing, learned Departmental Representative reiterated the contents of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the CIT(A) by deciding this issue in favour of the assessee. 3. Now let us turn to the second issue relating to deletion of addition of Rs.28,73,947/- being the provision for gratuity while computing income under the book profit u/s 115JB. The relevant grounds of appeal read as under: "4. The learned CIT(Appeals) has erred in deleting the addition of Rs.28,73,947/- being the provision for gratuity while determining the book profit u/s 115JB, without appreciating the fact that the provision was not for meeting an ascertained liability and the decisions relied upon are not applicable in the facts and circumstances of the assessee's case stated in the relevant assessment order." 3.1 Brief facts of the case are that the AO noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not be added back under the Explanation (1c) to sec.115JB while determining the book profits. 3.3 Now, the Revenue is on second appeal before us with the ground extracted elsewhere of the order. At the time of hearing, learned Departmental Representative relied on the contents of the assessment order and she also submitted that the decision of the Apex Court in the case of Bharat Earth Movers Ltd.(supra) dealt with leave encashment and not provision for gratuity. Per contra, learned AR of the assessee relied on the Hon'ble Supreme Court decision in the case of Bharat Earth Movers Ltd.(supra) and contended that there was no error in the order. 3.4 We have heard rival submissions and considered the facts and materials on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
