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TMI Blog2014 (9) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... es IV & V of sub section 1 of section 36 read with section 43B speak of payments and not provisions. 3. That, on the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in treating the disallowance made in computation of 115JB as allowable liabilities u /s 43B whereas in the normal computation made under Chapter IV-D, the assessee itself had added these sums but has not added while calculating 'Book-Profit' under Chapter XIIB. 4. That, on the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in deleting the disallowance of Rs. 8,76,59,179/- made by the Assessing Officer in computing the book-profit u /s 115JB in respect of provisions for doubtful debts claimed by the assessee. 5. That, on the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in deleting disallowance of Rs. 6,12,00,000/- made by the Assessing Officer in computing the book-profit u /s 115JB in respect of depreciation claimed on land after amortization of land by the assessee because there is no depreciation allowable on land under Companies Act and no rate of depreciation is provided in sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in present though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain. In the case before us the liability on account of gratuity, leave encashment post retirement medical benefit have been estimated on actuarial basis. Therefore, the liability so estimated can be said to have been estimated with reasonable certainty and, therefore, such an estimate is not a contingent one. 25. Hon'ble Bombay High Court in the case of Echjay Forgings P. Ltd. (supra) has held that where the assessee has made a provision for gratuity on the basis of actuarial calculations, it cannot be said that provision for gratuity was not ascertained liability. Likewise in the case of Vinitech Corp. P. Ltd. (supra) Hon'ble jurisdictional High Court has held that where a liability which was capable of being construed in definite terms, which had arisen in the accounting year, although its actual quantification and discharge might be deferred to a future date. Once the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Chartered Accountants of India to point out that depreciable assets are assets which have a limited useful life. It was argued that since land does not have a limited useful life the same cannot be considered to be a depreciable asset and hence debit made to the profit and loss account by the assessee company is not in accordance with law as well as accounting standards and the addition made by the AO is correct. 6. As against this the Ld. AR submitted that the contention of the Revenue is not in accordance with the facts. In this regard, ld. AR invited our attention to the letter dated 28th December, 2006 submitted to the AO whereby a note was appended. Para 2.4 of the Notes to Accounts clarify the nature of the land which reads as under:- "Land taken for use from State Government (without transfer of title) and expenses on relief and rehabilitation as also on creation of alternate facilities for land evacuates or in lieu of existing facilities coming under submergence and where construction of such alternate facilities is a specified pre condition for the acquisition of land for the purpose of the project, are accounted for as "Land-unclassified" to be amortized over the us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 6.12 crores in the books and requires to no further adjustment in book profit." It was further submitted by the Ld. AR that this issue is also covered by the judgment of the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. vs CIT 255 ITR 273 (SC) whereby the Court has held that section 115J does not empower the AO to embark upon a fresh enquiry in regard to the entries made in the books of account. 7. We have heard both the parties. From the facts we notice, as pointed out by the Ld. AR that this land is not a land which is owned by the assessee company. This is a land taken for use from the State government without transferring the title for relief and rehabilitation for land evacuees because of submerges and where construction of such alternative facility is a condition for setting up a project. The cost so incurred by the assessee company is amortized over useful life of the project. The above policies have been approved by the auditors of the company as well as the C&AG. The accounts of the assessee company are subject to audit not only by the statutory auditors but also by the C&AG also. Further the accounts so prepared has been approved and adopted by the company ..... X X X X Extracts X X X X X X X X Extracts X X X X
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