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TMI Blog2012 (7) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... in law in deleting the addition of Rs. 34,05,937/- made by the AO in the book profit u/s 115JB as the claim of interest capitalized in earlier years written off during the current year and added back to the book profit for computation of tax under MAT in order to prevent double deduction. 2. That the Ld. CIT (A) has erred in law in deleting the addition of Rs.2,1 1,33,8897- made in the book profit u/s 1 15JB by the A.O. as the creation of provision for employee benefits amounting to Rs.2,11,33,889/- has resulted in increasing the value of current liabilities equivalent to the diminution of the value of current assets with reference to retrospective amendment made by Finance Act 2009 applicable w.e.f. 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of which disallowance was made. 5. Before the CIT(A), it was contended by the company that it had already claimed the interest amount on year to year basis for the purpose of income tax, no benefit was required to be claimed in this year. Consequently, the company itself, in the course of assessment proceedings, asked the AO to disallow the said amount while computing income of the appellate company. The AO, in doing so also, added same amount to the book profits for the computation of tax u/s 115JB of the Act. Ld. 'AR' contended that Section 115JB(2) is a code in itself. The said Section requires that the company shall, for the purpose of Section, prepare its profit and loss account for the relevant year, in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in accordance with the provisions of schedule-VI of the Companies Act 1956 and such accounts have been adopted by the company in its annual general meeting. It is also fact that the interest expenditure of Rs. 34,06,000/- does not fall under any of the specific items given in clause (a) to (i) of explanation (1) to section 115JB of the Act., which can be added back to the book profits for the purposes of taxation. As such the disallowance made by the AO is deleted." 7. In view of the above discussions, ground of appeal raised by the revenue is dismissed. 8. In Ground No.2, revenue contended that CIT(A) erred in law in deleting the addition of Rs. 2,1 1,33,8897- made in the book profit u/s 115JB by the A.O. as the creation of provision f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of Section 115JB(2) and Explanation thereunder, including the decision of the Hon'ble Supreme Court in the case of Bharat Earth Movers v. CIT [2000] 245 ITR 428/112 Taxman 61 (SC) and CIT v Insilco Ltd. [2010] 320 ITR 322/[2009] 179 Taxman 55 (Delhi) and decision of the jurisdictional High Court in the case of CIT v National Hydroelectric Power Corporation Ltd. [2011] 201 Taxman 67 (Punj. & Har.) (Mag.)/12 taxmann.com 406 (Punj. & Har.). The CIT(A) deleted the impugned addition. 11. Ld. CIT(A) also considered other decisions in the matter, which are enlisted in para 5.4 of his order. 12. Section 115JB of the Act was amended by Finance Act (2009) by insertion of clause (1) w.e.f. 1.4.2001 to specifically include any amount, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciate here is that the provision created is on account of ascertained liability and the same should logically be excluded out of the calculation of book profits Clause (c) of Explanation (1) of Section 115JB. If the argument of the AO is accepted then every creation of provision will lead to dilution/reduction in the value of assets as a general class and therefore would not be deductible from book profit. This would mean that the deduction available for ascertained liabilities as per clause (c) would have no meaning. The judgement quoted by the AO is in fact in favour of the appellant as the Hon'ble Court has clearly held that the provision for gratuity being ascertainable liability on actuarial valuation is deductible while computing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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