TMI Blog2015 (1) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... mind of AO while accepting such a claim, could not be a ground for issuing notice u/s 148 for reassessment – thus, the order of the CIT(A) is upheld – Decided against revenue. Adjustment to book profit - MAT - Validity of direction made to not add the FBT liability – Held that:- CIT(A) while deleting the addition has inter alia held that the issue of considering FBT for the purpose of MAT is directly covered in favour of the Assessee by the Circular of the Board dated 29.08.2005 which inter alia holds that FBT whether or payable or provision thereof is not required to be added back while computing book profit u/s. 115JB of the Act - the liability of FBT having been crystallized and quantified in the books of account, it cannot be treated as contingent liability and therefore cannot be added back to the amount of book profit – thus, the order of the CIT(A) is upheld – Decided against revenue. Deletion of disallowance u/s 14A from being added to book profit – Held that:- CIT(A) after relying on the decision of Apollo Tyres vs. CIT [2002 (5) TMI 5 - SUPREME Court] has held that the amount of disallowance made u/s 14A cannot be added to book profit while working out the tax liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd on facts in allowing the assessee's ground of appeal regarding the validity of re-opening of the assessment proceedings u/s. 147 and notice u/s. 148 of the Act. 2 The Ld. CIT(A)-XIV, Ahmedabad has erred in law and on facts in directing not to added back the liability of FBT of ₹ 2,20,145/- while computing the book profit u/s. 115JB of the Act. 3The Ld. CIT(A)-XIV, Ahmedabad has erred in law and on facts in directing that the amount of disallowance u/s. 14A of ₹ 2,66,38,938/- can't be added to book profit while working out tax liability under the provisions of MAT as the said section has no applicability beyond Chapter IV. while computing the book profit u/s. 115JB of the Act. 1st ground is with respect to validity of reopening of assessment proceedings u/s 147 of the Act. 4. In the present case, the notice u/s 148 for reopening the assessment was issued for the reasons that provisions for FBT and disallowance made u/s 14A were not added to the book profits for the purpose of calculation of MAT. 5. Before us, ld. D.R submitted that for calculating taxable income u/s. 115JB of the Act, the Assessee has wrongly reduced book profit by not including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation same was accepted, merely because a certain element or angle was not in mind of Assessing Officer while accepting such a claim, could not be a ground for issuing notice under section 148 for reassessment 7. Before us, Revenue has brought any binding decision in its support nor could point out any distinguishing feature of the decision relied by ld. A.R. In view of the aforesaid facts, we find no reason to interfere with the order of CIT(A) and thus this ground of Revenue is dismissed. 2nd ground is with respect to directing not to add the liability of FBT of ₹ 2,20,145/-. 8. A.O noticed that Assessee had made provision for FBT of ₹ 2,42,00,000/- but had actually paid FBT of ₹ 2,39,79,855/- and thus the actual liability on account of FBT discharged by the Assessee was less by ₹ 2,20,145/- which according to him was unascertained liability and therefore should have been added to book profits. He accordingly added the same to the book profit while computing the MAT as per Section 115JB of the Act. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A) who deleted the addition by holding as under:- 9. Even on merits appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is lesser than the amount of provisions, it cannot be said that balance unpaid amount is unascertained or contingent liability which is required to be added under clause (c) of Explanation 1 to s. 115JB of the Act. The Appellant submitted that it is an ascertained liability as evident from the books and method of quantification does not decide the issue of ascertainment or otherwise of the liability and therefore, the provision for FBT is required to be excluded for the purpose of determining the book profits. Reliance is placed on the decision of Hon'ble Supreme Court in the case of Bharat Earth Mover V/s. CIT 245 ITR 428 (S.C.) wherein it was held that provision made by the assessee company for meeting the liability incurred by if under the leave encashment scheme proportionate with the entitlement earned by the employee of the company, inclusive-of the-officers and the .staff, subject to the ceiling on accumulation as applicable on the relevant date, was entitled to deduction out of the gross receipts in the accounting year during which the provision is made for the liability. Thus it was held that the liability was not a contingent liability. Hence, even otherwise, followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit. 13.A.O noticed that disallowance of ₹ 2,66,38,938/- was made u/s 14A while framing assessment u/s 143(3) and the disallowance made by A.O was also confirmed by CIT(A). A.O was of the view that the disallowance made u/s. 14A was required to be added to the book profit in terms of Clause f below Explanation 1 to Section 115JB of the Act. He accordingly added the same to the book profit. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A) who after considering the submissions of the Assessee decided the issue in favour of the Assessee by holding as under:- I have gone through the submission of appellant and also order of AO and found that the subject amount of disallowance .has been worked out based on the formulae given in Rule 8D. After giving due consideration to the provisions of section 14A, Section 115JB and the judicial pronouncement relied upon by the appellant including that of Apex Court in the case of Apollo Tyres (Supra) and Hon'ble Delhi Tribunal in the case of Goetze (India) Limited v CIT (2009) 32 SOT 101 (Delhi) I find merit in the argument of the appellant that the amount of disallowance made u/s. 14A cannot be added to book pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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