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2015 (6) TMI 807 - ITAT AHMEDABAD

2015 (6) TMI 807 - ITAT AHMEDABAD - TMI - Validity of reopening of assessment - Held that:- The undisputed facts are that the reopening is made on the basis of the note enclosed with the return of income by the assessee. The submission of the assessee that the assessee has not added provision for doubtful debt in working of the book profit relying on the judgement of Hon’ble Bombay High Court in the case of CIT vs. Echjay Forgings Pvt.Ltd. reported at [2001 (2) TMI 56 - BOMBAY High Court] is not .....

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GEB amount debited to P&L account of provision for doubtful debts to book profit u/s.115JB - Held that:- The authorities below have not given any finding that the assessee has not reduced the debtors from the asset side of the balance sheet to the extent to the corresponding amount so that, at the end of the year, the amount of debtors is shown as net of the provision for the impugned bad debt. In the absence of the same therefore, respectfully following the ratio laid down in the case(s) of CI .....

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eciation although not claimed by the assessee - Held that:- The issue is now squarely covered in favour of assessee by the judgement of Hon’ble Jurisdictional High Court rendered in the case of DCIT vs. Sun Pharmaceuticals Ind.Ltd. [2015 (1) TMI 704 - GUJARAT HIGH COURT] wherein held that depreciation not claimed for by the assessee, cannot be allowed as a deduction despite the introduction of the concept of block assets. - Decided in favour of assessee.

Addition made to the book prof .....

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affirmed. - Decided in favour of assessee. - I.T.A. No.1003/Ahd/2005, I.T.A. No.1055Ahd/2005 - Dated:- 19-6-2015 - SHRI N.S. SAINI AND SHRI KUL BHARAT, JJ. For The Assesse : Shri Vimalendu Verma, CIT-DR For The Revenue : Shri S.N.Soparkar, A.R. ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER : These cross-appeals by the Assessee and the Revenue are directed against the order of the Ld.Commissioner of Income Tax(Appeals)-VIII, Ahmedabad ( CIT(A) in short) dated 31/01/2005 pertaining to Assessment Year .....

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the validity of the assessment order impugned thereof, inter alia, for the reason that the reassessment proceedings in question had been initiated by the Assessing Officer by means of a Notice u/s. 148 which was itself issued without jurisdiction. 2.1 In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in failing to appreciate: (a) that vide Ground No. 2.1 of its appeal before him, the appellant had challenged the very levy of Minimum Alte .....

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rred in proceeding as if the appellant's dispute related merely to the quantum of the book profit and in accordingly omitting to render his decision on the appellant's challenge to the very levy of the Minimum Alternate Tax u/s. 115JB considering also the peculiar facts of the appellant's case before him. 3.1 In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in failing to appreciate: (a) that once he had categorically held vid .....

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of Provision For Doubtful Debts had been debited to the appellant's Profit and Loss Account which had been audited not only pursuant to the Companies Act, 1956 and the provisions of Section 44AB of the Income-tax Act, 1961, but further, also for the specific purposes of Section 115JB of the Income-tax Act, 1961 itself, all that he [i.e., the learned CIT(A)] could have done had necessarily to be confined to deciding as to whether the amount debited to the Profit and Loss Account on account o .....

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Profit and Loss Account on account of Provision For Doubtful Debts into: (1) ₹ 48,12,701 for which, in his view, adjustment to the book profit was justified. (2) Rs,1,16,25,712 for which, in his view, adjustment to the book profit was justified. (3) ₹ 20,16,19,831 for which, in his view, adjustment to the book profit was not justified. 3.2 The learned CIT(A) aught, accordingly, to have directed for the deletion of the adjustment in entire, instead of ordering for partial relief to t .....

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gregate of two items of ₹ 48,12,701 and ₹ 1,16,25,712), instead of ordering for the deletion of the entire adjustment of ₹ 21,80,58,244 made by the Assessing Officer (emphasis supplied): "2.7 My observation and finding in this respect is as under: (A) .......................... Since the quantum of amounts payable by GEB are reduced, obviously the same cannot be said to be income accruing to the appellant company and cannot be taken as liability as referred in 115JB(2) cla .....

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come under the normal provisions of the Income-tax Act, 1961 even though the appellant had not claimed deduction for the same and categorically stated, by way of a Note appended to its return of income, that it had opted not to claim for depreciation." 5.2 In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has further grossly erred in failing to appreciate that by no stretch of the imagination, the action of allowing deduction for depreciation (which h .....

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al before him reading as under: "3.2 Without prejudice to the foregoing, in law and in the facts and circumstances of the appellant's case, the learned Assessing Officer has grossly erred in failing to consider that even if it was ultimately held that it was open to the learned Assessing Officer to consider deduction for depreciation u/s.32 in the computation of the appellant's total income for the present A.Y. 2001-02 even though it was anterior to A.Y. 2002-03 with effect from whi .....

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years." 7. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in upholding the Assessing Officer's action of disallowing deduction of ₹ 1,52,000 debited to the appellant's Profit and Loss Account on account of Earthquake Relief expenses, in the computation of the appellant's total income under the normal provisions of the Income-tax Act, 1961. 8. In law and in the facts and circumstances of the appellant's case, .....

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has grossly erred in dismissing Grounds No. 9.1 and 9.2 of its appeal before him reading as under: "9.1 In law and in the facts and circumstances of the appellant's case, the learned Assessing Officer has grossly erred in levying interest amounting to ₹ 3,18,60,034 u/s.234B even though that provision was not at all attracted to the appellant's present case. 9.2 Without prejudice to the foregoing, in law and in the facts and circumstances of the appellant's case, there was .....

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40 was leviable under that provision." 11. The appellant craves leave to add to, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 2.1. Assessee raised the following additional ground: Appellant craves leave to raise this additional ground of appeal before the Hon ble ITAT. This is a legal ground and therefore as per the decision of Hon ble Supreme Court in the case of National Thermal Power (229 ITR 383) it can be rais .....

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ase of the assessee was reopened for assessment and the assessment u/s.143(3) r.w.s.147 of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 29/03/2004, thereby the Assessing Officer (AO in short) made disallowance of provision for bad debt and Revised Book Profit at ₹ 3,09,44,61,667/-. The AO also made allowance of depreciation of ₹ 178,83,99,967/- although not claimed by the assessee. The AO made addition on account of wealth-tax of ₹ 5 .....

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t claimed by the assessee. The ld.CIT(A) deleted the addition on account of wealth-tax of ₹ 5,19,600/- made on account of wealth-tax and also confirmed the addition made on account of disallowance of earth-quake relief expenses of ₹ 1,52,000/- and allowed the deduction claimed u/s.80G of the Act. However, the ld.CIT(A) in respect of levy of interest u/s.234-A, 234-B & 234-C of the Act, rejected the grounds of the assessee. Against the order of the ld.CIT(A), now both the Assessee .....

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r and that this was not a case of mere change of opinion and also suffered from consideration of irrelevant issues at the cost of relevant issues. It is submitted that the statement of facts as submitted before the ld.CIT(A) was ignored. In support of the challenge against validity of notice u/s.148 of the Act, the assessee has placed reliance on the decision of Hon ble Bombay High Court rendered in the case of Rallis India Ltd. vs. ACIT & Others in Writ Petition No.2514 of 2009. The relianc .....

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e orders of the authorities below on this issue and submitted that in the original assessment, scrutiny was carried out on a limited issue, therefore it cannot be inferred from the records that the AO had applied his mind on the issue in appeal. He further submitted that the ld.CIT(A) has rightly rejected the ground raised by the assessee. 5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The undisputed facts ar .....

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officer in the form of note. The ld.counsel for the assessee submitted that in view of the judgement of Hon ble Jurisdictional High Court in the case of Vishwanth Engineers vs. ACIT reported at (2012) 21 taxmann.com 5 (Guj.), the AO should not have reopened the assessment. We find that the Hon ble High Court in the said case held as under:- 17. Therefore, if from the selfsame materials, the Assessing Officer forms a second opinion and reopens-the assessment merely on the ground that on-second t .....

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we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the assessing officer to make a back assessment, but in Section 147 of the Act (with effect from 1-4-1989), they are given a go-by and only one condition has remained viz. that where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment .....

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wer to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. 7. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the assessing officer. Hence, after 1-4-1989, the assessing officer has power to reopen, provide .....

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ations from the companies against omission of the words "reason to believe", Parliament reintroduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the assessing officer. 8. We quote hereinbelow the relevant portion of Circular No. 549 dated 31- 10-1989, which reads as follows: "7.2. Amendment made by the Amending Act, 1989, to reintroduce the expression 'reason to believe' in Section 147.-A number of repre .....

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ars, the Amending Act, 1989, has again amended Section 147 to reintroduce the expression 'has reason to believe' in the place of the words 'for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new Section 147, however, remain the same." (emphasis supplied) 9. For the aforestated reasons, we see no merit in these civil appeals filed by the Department, hence, dismissed with no order as to costs." (Emphasis supplied). 18. After applying .....

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rein the Hon ble Jurisdictional High Court has held as under:- 25, It is now a settled law that if an explanation is added to a section of a statute for the removal of doubts, the implication is that the law was the same from the very beginning and the same is further explained by way of addition of the Explanation. Thus, it is not a case of introduction of new provision of law by retrospective operation. We have found that the petitioner had disclosed all the materials regarding its activities .....

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t be called a developer of any new infrastructural facility. 26. From the materials placed before him by the petitioner, the Assessing Officer earlier did not arrive at such conclusion and thus, the amended Explanation subsequently added cannot be of any help to him in arriving at the second opinion based on the alleged new law.. 27. Moreover, in the reason assigned in support of initiation of reopening proceedings, such reason has not been disclosed. 28. We, thus, find that the condition preced .....

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ertaining whether the same is a binding precedent in the facts of the present case. The same is quoted below. "1. Heard learned counsel for the parties. 2. Leave is granted. 3. By the order under challenge, a Division Bench of the High Court at Delhi dismissed the writ petition filed by the appellant challenging the validity of notices issued under Sections 148 and 143(2) of the Income Tax Act, 1961. The High Court took the view that the appellant could have taken all the objections in its .....

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been filed. Notices relating to the other five assessment years viz. 1992- 93, 1993-94, 1994-95, 1997-98 and 1998-99, are now the subject-matter of these appeals. 5. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the notice is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons .....

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nst the order of assessment before the Commissioner (Appeals), we direct the Appellate Authority to dispose of the same, expeditiously. 7. With the above observations, the civil appeals are dismissed." 31. The general observations made in paragraph 5 of the judgment, in our opinion, cannot be construed as an absolute proposition of law on the subject. It appears that the said two-judge-bench did not refer to the earlier five-judge-bench or the threejudge- bench or even the two-judge-bench d .....

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tled to quash the notice. The said decision, thus, cannot be said to have exhaustively laid down the law on the point. 5.2. The ld.counsel for the assessee has also placed reliance on the judgement of Hon ble Delhi High Court in the case of Mohan Gupta (HUF) vs. CIT and Anr. in Writ Petition (C) No.7660 of 2012, dated 28/01/2014, wherein the Hon ble Delhi High Court has held as under: 10. In response, it is argued that since the return was processed under Section 143(1) for the A.Y. 2005-06, whi .....

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that somehow the words "reason to believe" have to be understood in a liberal manner where the finality of an intimation under Section 143(1) is sought to be disturbed is erroneous and misconceived. As pointed out earlier, there is no warrant for such an assumption because of the language employed in Section 147; it makes no distinction between an order passed under section 143(3) and the intimation issued under section 143(1). Therefore it is not permissible to adopt different standar .....

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was processed under Section 143(1) in a more vulnerable position than an assessee in whose case there was a full-fledged scrutiny assessment made under Section 143(3). Whether the return is put to scrutiny or is accepted without demur is not a matter which is within the control of assessee; he has no choice in the matter. The other consequence, which is somewhat graver, would be that the entire rigorous procedure involved in reopening an assessment and the burden of proving valid reasons to beli .....

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ads to absurd results or mischief is to be eschewed. 13. Certain observations made in the decision of Rajesh Jhaveri (supra) are sought to be relied upon by the revenue to point out the difference between an "assessment" and an "intimation". The context in which those observations were made has to be kept in mind. They were made to point out that where an "intimation" is issued under section 143(1) there is no opportunity to the assessing authority to form an opinio .....

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tion 143(1) can be subjected to proceedings for reopening. The court also emphasised that the only requirement for disturbing the finality of an intimation is that the assessing officer should have "reason to believe" that income chargeable to tax has escaped assessment. In our opinion, the said expression should apply to an intimation in the same manner and subject to the same interpretation as it would have applied to an assessment made under section 143(3). The argument of the reven .....

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subjected to section 147proceedings; all that is contended by the assessee, and quite rightly, is that if the revenue wants to invoke section 147 it should play by the rules of that section and cannot bog down. In other words, the expression "reason to believe" cannot have two different standards or sets of meaning, one applicable where the assessment was earlier made under section 143(3) and another applicable where an intimation was earlier issued under section 143(1). It follows th .....

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ground that they do not meet the standards set in the various judicial pronouncements."" 11. For the above reasons, the writ petition is allowed and the impugned notices dated 26.03.2012 and 09.08.2012 are hereby set aside. 5.3. The ld.counsel for the assessee also placed reliance on the judgement of Hon ble Bombay High Court rendered in the case of Rallis India Ltd. vs. ACIT and The Union of India in Writ Petition No.2514 of 2009, wherein the Hon ble High Court has held as under:- 19. .....

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een taken by the Assessing Officer, while re-opening the assessment. The validity of the notice issued by the Assessing Officer in seeking to re-open the assessment must be determined with reference to the reasons which are found in support of the reopening of the assessment. These reasons cannot be allowed to be supplemented on a basis which was not present to the mind of the Officer and could not have been so present on the date on which the power to re-open the assessment was exercised. We, t .....

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as it always stood. In any event, as we have noted, the view of the Assessing Officer was supported by the interpretation placed even .contemporaneously in the judgment of this Court in Echjay (supra) and in the judgments of the Delhi High Court in Etcher and HCL (supra). In the circumstances, there was no warrant for re-opening the assessment in exercise of the power conferred under Section 147. 5.4. In the light of law laid down in the judgements referred hereinbefore and in view of the fact .....

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not to consider the same. This Act of the AO is not justified, he ought to have considered the decisions relied upon by the assessee and, in case, the decisions as relied upon by the assessee were not applicable, he ought to have recorded so. It is not permissible under law that the decisions of Higher Forum is not considered on the whims and fancies of the lower authorities. Under these facts, in our considered view, the AO was not justified in re-opening the assessment, reassessment so framed .....

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The ld.counsel for the assessee placed reliance on the judgement(s) of Hon ble High Court of Karnataka in the case of CIT vs. Kirloskar System Ltd. reported at (2014) 220 Taxman 1 (Karnataka) and of CIT vs. Yokogawa India Ltd. reported at (2012) 204 Taxman 305(Karnataka). He also placed reliance on the decision of Coordinate Bench (ITAT A Bench Ahmedabad) in the case of ACIT vs. Vodafone Essar Gujarat Ltd. in ITA No.1999/Ahd/2008 for AY 2003-04, dated 11/05/2012. 6.1. On the contrary, ld.CIT-DR .....

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to book profit can be made u/s.115JB only if the item strictly falls under explanation to any of the clause (a) to (f) of 115JB(2). This view is settled by the Supreme Court in the case of Apollo Tyres referred above. Therefore the only issue to be seen is whether the action of the AO in adding back about amount can fall under any of the clauses (a) to (f). The details of provisions have been discussed in earlier part of this order and the details enclosed as per Annexure-A. 2.7. My observation .....

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e income accruing to the appellant company and cannot be taken as liability as referred in 115JB(2) clause(c). I would therefore hold that items of such nature are based on actual accounting practice followed by the appellant company and also with reference to the PPA for discount for prompt payment are not covered in clause(c) of Explanation to 115JB(2). Accordingly, such items considered in the above amount of ₹ 21.80 crores cannot be added back to the book profit u/s.115JB. (B) This rel .....

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while those for later months have been received as on 31.03.2001. Therefore having regard to the fact that the amounts debited are being received from GEB there cannot be any reason that the amounts for the months of June to Sept.2000 are also not receivable by the appellant company. The same is therefore held to be a provision which is not ascertained liability falling under explanation(c) to section 115JB(2) and the action of the AO in adding the same to the book profit is upheld. (C) This re .....

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of the following amounts are upheld while working out income u/s.115JB. (i) ₹ 48,12,701/- & (ii) ₹ 1,16,25,712/- totalling to ₹ 1,64,38,413/- and the appellant company gets relief of ₹ 20,16,19,831/- accordingly out of the additions made of ₹ 21,80,58,244/-. 7.1. The ld.counsel for the assessee has relied on the judgement of Hon ble Karnataka High Court rendered in the case of CIT vs. Yokogawa India Ltd. reported at (2012) 17 taxmann.com 15 (Kar.):: (2012) 204 .....

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he debt which is doubtful or bad should satisfy the requirement contemplated in Item (c) of the Explanation. It is the amount or amounts set aside as provisions made for meeting the liability other than the ascertained liabilities. In the instant case also the bad and doubtful debt for which a provision Is made which is in the nature of diminution in the value of any asset would not fall within item (c) of Explanation (i). It is in that context the appellate Commissioner as well as the Tribunal .....

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gument on behalf of the Revenue to the effect that the explanation makes it very clear that there is a dichotomy between actual write off on the one hand and provision for bad and doubtful debt on the other. A mere debit to the profit and loss account would constitute a bad and doubtful debt, but it would not constitute actual write off and that was the very reason why the explanation stood inserted. Prior to the Finance Act, 2001 many assessees used to take the benefit of deduction under Sectio .....

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ondingly/simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from loans and advances/debtors on the assets side of the balance sheet and, consequentially, at the end of the year, the figure in the loans and advances or the debtors on the assets side of the balance sheet was shown as net of the provision for the impugned bad debt. Then the said amount representing bad debt or doubtful debt cannot be added in order to compute book profit. Therefore, .....

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rs from the assets side of the balance sheet the Explanation to Section 115JA or JB is not at all attracted. In that context even if amendment which is made retrospective the benefit given by the Tribunal and the appellate Commissioner to the assessee is in no way affected. In that view of the matter, we do not see any merit in this appeal. 7.2. This judgement of the Hon ble High Court of Karnataka has been followed by the Hon ble Karnataka High Court in the case of CIT vs. Kirloskar Systems Ltd .....

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012] 204 Taxman 305/17 taxmann.com 15 (Kar.) has held adjustment of provision for bad and doubtful debts is reduced from the loans and advances or the debtors from the assets side of the balance sheet, the Explanation to Section 115JA and JB is not at all attracted. Therefore, after the Explanation the assessee is now required not only to debit the P and L account but simultaneously also reduce the loans and advances or the debtors from the assets side of the balance sheet to the extent of the c .....

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s. However, he has not paid the advance tax as per the provisions existing prior to the amendment. Hence, he is liable to pay interest on the said amount deducting the difference of the tax paid. The Apex Court in the case of Bharat Earth Movers v. CIT [2000] 245 ITR 428/112 Taxman 61 (SC) has held that an assessee who is maintaining the accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits .....

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ision thereof is deducted. In the light of the settled principles laid down by the Apex Court, no substantial questions of law arise for consideration in this appeal. Accordingly, the appeal is dismissed. 7.3. We find that the Coordinate Bench rendered in the case of ACIT vs. Vodafone Essar Gujarat Ltd. in ITA No.1999/Ahd/2008(supra), has held as under:- 11. We have considered the rival contentions, the case laws cited and perused the documents on record. It is an a fact that the assessee had ma .....

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alue of asset. In view of the aforesaid facts, we are of the view that the facts in the present case are identical to that of the case of Yokogwa India Ltd. (supra). We therefore, respectfully following the decision of Hon'ble High Court in the case of CIT vs. Yokogwa India Ltd., (supra) we do not find any infirmity in the order of CIT(A). Accordingly the appeal-of the Revenue is dismissed. 12. Since the assessee's submission dated 9th August, 2010 regarding the ground stating "The .....

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any contrary binding precedent on record against the aforesaid judgements relied upon by the ld.counsel for the assessee. The authorities below have not given any finding that the assessee has not reduced the debtors from the asset side of the balanceITA sheet to the extent to the corresponding amount so that, at the end of the year, the amount of debtors is shown as net of the provision for the impugned bad debt. In the absence of the same therefore, respectfully following the ratio laid down b .....

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claimed by the assessee. The ld.counsel for the assessee submitted that the issue is now squarely covered in favour of assessee by the judgement of Hon ble Jurisdictional High Court rendered in the case of DCIT vs. Sun Pharmaceuticals Ind.Ltd. in Tax Appeal No.93 of 2000, dated 17/12/2014. The ld.counsel for the assessee submitted that earlier the Hon ble Bombay High Court in the case of Plastiblends India Ltd. vs. Addl.CIT and Others reported at (2009) 318 ITR 352 (Bom)[FB], dated 16/10/2009, .....

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ve heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the Hon ble Bombay High Court in the case of Plastiblends India Ltd. vs. Addl.CIT and Others (supra) has held as under:- 47. Thus, the common thread passing through the above decisions of the apex Court as well as the decisions of this Court including the decision in the case of Indian Rayon Ltd. (supra) is that the deductions under Chapter VI-A are linked t .....

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epreciation to the assessee. 9.1. However, the Hon ble Jurisdictional High Court in the case of Dy.CIT vs. Sun Pharmaceuticals Ind.Ltd. has formulated the substantial question of law, which reads as under:- Whether, the Appellate Tribunal is right in law and on facts in holding that depreciation not claimed for by the assessee, cannot be allowed as a deduction despite the introduction of the concept of block assets? 9.2. We find that the Hon ble Gujarat High Court in the case of Dy.CIT vs. Sun P .....

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nclusive of income from other sources. As far as newly added question is concerned, there also we hold that the the Appellate Tribunal is right in law and on facts in holding that depreciation not claimed for by the assessee, cannot be allowed as a deduction despite the introduction of the concept of block assets. The questions are answered in favour of assessee and against the Revenue. The Tax Appeal stands dismissed. 9.3. Respectfully following the aforesaid binding precedent of the Hon ble Ju .....

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n charging the interest and confirming the same u/s.234-A, 234-B & 234-C of the Act. The ld.counsel for the assessee placed reliance on the following judgements:- 1. Emami Ltd. vs. CIT reported at (2011)337 ITR 470 (Cal.). 2. Prime Securities Ltd. vs. ACIT reported at (2011) 333 ITR 464 (Bom). 3. ITAT B Ahmedabad decision in the case of Intas Exports vs. ACIT in ITA Nos.1819 & 1820/Ahd/2008 for AYs 2003-04 & 2004-95, dated 30/07/2010. 11.1. On the contrary, the CIT-DR supported the o .....

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ve allowed ground No.2 of assessee s appeal(supra) this ground has become academic. Hence,we are not adjudicating the same. 14. Now, we take up the Revenue s appeal in ITA No.1055/Ahd/2005 for AY 2001-02. The Revenue has raised the following grounds of appeal:- 1. The Ld.CIT(A) erred in law and on facts of the case in deleting the addition of ₹ 20,16,16,831/- out of the addition of ₹ 21,80,58,244/- made to the book profit of the assessee u/s.115JB of the I.T.Act. 2. On the facts and .....

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Court and also the Apollo Tyres Ltd.case. It is evident that addition to book profit can be made u/s.115JB only if the item strictly falls under explanation to any of the clause (a) to (f) of 115JB(2). This view is settled by the Supreme Court in the case of Apollo Tyres referred above. Therefore the only issue to be seen is whether the action of the AO in adding back about amount can fall under any of the clauses (a) to (f). The details of provisions have been discussed in earlier part of this .....

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nts payable by GEB are reduced, obviously the same cannot be said to be income accruing to the appellant company and cannot be taken as liability as referred in 115JB(2) clause(c). I would therefore hold that items of such nature are based on actual accounting practice followed by the appellant company and also with reference to the PPA for discount for prompt payment are not covered in clause(c) of Explanation to 115JB(2). Accordingly, such items considered in the above amount of ₹ 21.80 .....

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amounts of debit notes raised till May, 2000 have been accepted by GEB while those for later months have been received as on 31.03.2001. Therefore having regard to the fact that the amounts debited are being received from GEB there cannot be any reason that the amounts for the months of June to Sept.2000 are also not receivable by the appellant company. The same is therefore held to be a provision which is not ascertained liability falling under explanation(c) to section 115JB(2) and the action .....

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