TMI Blog2013 (10) TMI 1225X X X X Extracts X X X X X X X X Extracts X X X X ..... means the net profit as shown in the profit and loss account for the relevant previous year prepared under subsection (2) as increased by the amount mentioned in the Explanation. One such amount is in sub-clause (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities Reliance has been placed on the judgment in the case of COMMISSIONER OF INCOME TAX AND OTHERS VERSUS M/s WEIZMANN HOMES LTD. [2013 (5) TMI 123 - KARNATAKA HIGH COURT] - Said amount is to be added to the book profit Decided in favor of Revenue. Interest u/s 234B of the Income tax act Held that:- Reliance has been placed upon the judgment of the Honble Supreme Court in the case of Rolta India Ltd. reported in [2011 (1) TMI 5 - SUPREME COURT OF INDIA] Also, as per Circular No. 13 of 2001, it has been clarified that section 115JB is a self-contained code and thus, all companies were liable for payment of advance tax under section 115JB and, consequently, the provisions of sections 234B and 234C imposing interest on default in payment of advance tax were also applicable Decided in favor of Revenue. - ITA 130/2007 - - - Dated:- 10-4-2013 - KUMAR N., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration the saving clause sub-section (4) to section 115JA of the Act ?" 4. The assessee claimed a sum of Rs. 4,92,69,808 being a provision made for warranty liability in respect of products sold and contended that it is not a contingent liability but should be allowed as revenue expenditure. The Tribunal held the liability to pay for warranty claims arises no sooner the sale are effected. The assessee has provided for liability on the basis of sales made during the year. Though the exact amount cannot be quantified, however, the sum is based on the scientific approach and based on the past experience and, therefore, reliance is placed on the judgment of various High Courts, which directed of the deletion of Rs. 4,92,69,808. 5. Learned counsel for the Revenue contends though now the said issue is covered by the judgment of the hon'ble Supreme Court in Rotork Controls India P. Ltd. v. CIT reported in [2009] 314 ITR 62 (SC). Such a relief is permissible only if the condition set out in the said judgment is fulfilled. In the instant case, the same is not fulfilled and, therefore, the finding of the Tribunal is to be set aside and the matter is to be remanded back to the assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application of the amount utilized for projects of software in a sum of Rs. 33,14,298. The Tribunal, on consideration of the material on record and the rival contentions held, when the expenditure is made not only once and for all but also with a view to bringing into existence an asset or an advantage for the enduring benefit, the same can be properly classified as capital expenditure. At the same time, even though the expenses are once and for all and may give an advantage for enduring benefit but is not with a view to bringing into existence any asset, the same cannot be always classified as capital expenditure. The test to be applied is, is it a part of the company's working expenses or is it expenditure laid out as a part of the process of profit earning. Is it on the capital layout or is it an expenditure necessary for acquisition of property or of rights of a permanent character, possession of which is condition on carrying on trade at all. The assessee in the course of its business acquired certain application software. The amount is paid for application of software and not system software. The application software enables the assessee to carry out his business operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile computing the "book profit" under section 115JA of the Act. The said view was accepted by the first appellate authority. However, the Tribunal held that the amount being provision made for bad and doubtful debts cannot be considered as provision for meeting any liability, which is not ascertained liabilities and, hence, "book profit" is not to be increased for such amount provided for. This court had an occasion to consider this question in the case of CIT v. Weizmann Homes Ltd. in I. T. A. No. 918/2006 and connected matters decided on March 4, 2013-since reported in [2013] 357 ITR 74 (Karn) where it was held, if the total income of the company as computed under the provisions of this Act is less than 30 per cent. of book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to 30 per cent. of such book profit. The Explanation to the section states for the purposes of this section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under subsection (2) as increased by the amount mentioned in the Explanation. One such amount which we are conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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