TMI Blog2015 (5) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... cern. Thus, the same is not in the nature of a liability of the respondent assessee, but is in the nature of a recoverable from its sister concern. Such a provision causes a possible diminution in the value of asset i.e. amount recoverable. Thus there is no debt payable by the respondent assessee, but it is a debt receivable and would not stand covered by clause (c) of the explanation to Section 115JA(2) of the Act. Thus, the issue stands concluded in favour of the respondent by the decision of the Apex Court in HCL Connect System and Services Ltd (2008 (9) TMI 18 - SUPREME COURT) and Rolta India Ltd (2011 (1) TMI 5 - SUPREME COURT OF INDIA) - Decided in favour of the respondent Assessee Interest u/s 234B&C - ITAT deleted addition - Held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the interest u/s 234B C of the IT Act, by relying on the decision of the Hon'ble Karnataka High Court in 'Kwality Biscuit Ltd. V/s CIT (243 ITR 519) and Hon'ble Supreme Court in dismissing the Appeal filed by the Department against the said decision, in '284 ITR 434(SC) which is not applicable to the Assessee's case in view of sub-section (4) of Section 115JA of the IT Act? 3. On 30/11/1997, the respondent assessee filed its return of income for the subject assessment year. As the respondent's income, under the normal provisions of the Act, was less than 30 % of its book profits, the Assessing Officer invoked Section 115JA of the Act and in terms of the explanation therein, added a sum of ₹ 20.5 lakhs to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f doubtful debts is not a liability much less an ascertained liability for the purposes of application of clause (c) of the explanation to Section 115JA(2) of the Act. Thus, the impugned order held that the book profits cannot be increased by ₹ 20.05 lakhs being a provision for doubtful debts to determine book profits in accordance with Section 115JA of the Act. So far as interest payable in respect of the default and delay in payments of advance tax under Section 234B and 234C of the Act is concerned, the Tribunal held that the same was not payable in view of the decision of the Karnataka High Court in Kwality Biscuits Ltd. Vs. CIT, reported in 243 ITR 519 and subsequent dismissal of the Revenue's Appeal by the Apex Court. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lities, which are not ascertained. In the present case, indisputably, the amount of ₹ 20.5 lakhs sought to be added to the book profits, is in fact a provision made in respect of unlikely recovery of an advance made by the respondent to its sister concern. Thus, the same is not in the nature of a liability of the respondent assessee, but is in the nature of a recoverable from its sister concern. Such a provision causes a possible diminution in the value of asset i.e. amount recoverable. Thus, on the plain reading, clause (c) of the explanation to Section 115JA(2) of the Act, would have no application to the present facts. In any case, the aforesaid issue now stands concluded in favour of the respondent assesee, by the decisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above, the substantial question of law at serial No.A is answered in the negative i.e. in favour of the respondent Assessee and against the appellant Revenue. 7. Re:-Question (B). The Counsel for both sides are agreed that this question stands concluded in favour of the Revenue, by the decision of the Apex Court in Joint Commissioner of Income Tax Vs. Rolta India Ltd. (supra). Consequently, it is answered in the affirmative i.e. in favour of the appellant Revenue and against the respondent Assessee. 8. In view of the above, the appeal is partly allowed. Appeal with regard to question A is dismissed and appeal with regard to question B is allowed. 9. The above appeal is disposed of in above terms. No order as to costs. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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