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TMI Blog2014 (1) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under section 263 but had omitted to adjudicate the grounds raised on merit relating to allowability of interest expenditure and addition on account of provisions to the book profit. These grounds being the ground No.3(c), 3(d) and 5(c) and 5(d) which had been raised by the assessee before the Tribunal, which remained unadjudicated are reproduced below for ready reference :- 2. Ground 3 CIT(A) erred in setting aside assessment with direction to Assessing Officer to : c) disallow claim of interest amounting to Rs.23.39 lacs related to purchase of brand names and trade marks. d) include the provision of Rs.7.19 crores created for advertisement and sales promotion and distribution expenses while calculating book profit under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in connection with acquisition of an asset up to the period till the asset is first put to use is required to be included in the actual cost of the asset and interest paid thereafter has to be allowed as revenue expenditure. In the present case from the perusal of order of CIT it is not clear as to whether interest had been paid till the date of acquisition of the asset or thereafter. Both the parties agreed that the issue may be restored to file of AO for fresh decision after necessary examination. We, therefore set aside the order of CIT on this point and restore the matter back to AO for passing a fresh order after necessary examination of the matter and after hearing the assessee. 3. The second dispute is regarding addition of Rs.7,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book profit. CIT therefore directed the AO to include Rs.7.19 crores in the book profit. In appeal the Tribunal upheld the jurisdiction of CIT to take action under section 263 but omitted to adjudicate the ground raised by assessee on merit regarding direction of CIT for making addition of Rs.7.19 crores. The order was therefore recalled by the Tribunal to adjudicate this ground. 3.1 Before us the ld. AR for the assessee submitted that same issue had arisen in assessee's own case in assessment year 1996-97 in which the Tribunal vide order dated 7.12.2006 in ITA No.2792/M/01 had deleted the addition made by authorities on account of provisions made on account of advertisement, sales promotion and distribution expenses. It was therefore argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 crores to the book profit on account of provision made by the assessee towards advertisement, sales promotion and distribution expenses. The assessee in the books of account had made total provision of Rs.12.44 crores on this account but at the time of filing of return of income the assessee wrote back the provisions amounting to Rs.7.19 crores and added to the total income. In the original assessment made by the Assessing Officer, the said amount had not been added to book profit. CIT however initiated proceedings under section 263 and directed the said amount to be added to the book profit as the said provision was not for ascertained liabilities. Under the provisions of Explanation (c) of section 115JB(2), provision for meeting any lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect in directing the Assessing Officer to add Rs.7.19 crores to the book profit under the provisions of Explanation (c) of section 115JB(2). 4.2 The ld. AR for the assessee has placed reliance on the decision of the Tribunal in assessee's own case in 1996-97 (supra). However on careful perusal of the order of the Tribunal we find that the issue in that year was not regarding addition of provision to the book profit under Explanation (c) of section 115JB(2). The issue was regarding addition under normal provisions of the Act. The Tribunal noted that the revenue authorities had accepted that the provisions had been properly created in accordance with the principle of accounting and differences had already been written back by the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said section clearly provides that CIT can pass any order as circumstances of the case justify including an order of enhancing or modifying assessment or canceling assessment and directing fresh assessment. It is thus clear that CIT under section 263 is fully empowered to direct the Assessing Officer to make assessment in a particular manner. However in case CIT cancels the assessment or directs the Assessing Officer to make fresh assessment denovo then CIT would not be justified in giving direction to compute assessment in a particular manner. The judgments relied upon by the ld. AR relate to such situations. In case of CIT vs. Smt. Tasneem Z. Madraswala (supra) CIT had cancelled the order of assessment and therefore it was held by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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