TMI Blog2016 (3) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. (2001 (2) TMI 56 - BOMBAY High Court) and in the case of Apollo Tyres Ltd. Vs. CIT (2002 (5) TMI 5 - SUPREME Court ) has allowed the appeal of the assessee. Therefore, we do not find it necessary to interfere with the order of the learned Commissioner of Income Tax (Appeals) on this issue. - Decided against revenue Insurance claim received - Held that:- The assessee had received ₹ 1,40,29,209/- from the insurance company towards loss of its assets. The written down value of these assets which works out to ₹ 27,44,739/- has to be necessarily reduced from the amount of ₹ 1,40,29,209/- to compute the net income received from such claim which only is to be credited to the profit & loss account of the assessee. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed and the cross objections are admitted. Moreover, the cross objections filed by the assessee are only in support of the order passed by the learned Commissioner of Income Tax (Appeals). 3. Though the Revenue challenges the order of the Commissioner of Income Tax (Appeals) on several grounds, however the common effective two grounds are concised as under:- i) The learned Commissioner of Income Tax (Appeals) has erred by holding that the liability on account of gratuity for both the assessment years and bonus for the assessment year 2001-02 are ascertained liability and therefore allowable as deduction and addition cannot be made in the book profit for the purpose of computing tax under section 115JB of the Act. ii) The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit of the assessee. On appeal, the learned Commissioner of Income Tax (Appeals) deleted the addition by observing as under:- Provision for gratuity:- 4.2 I have carefully considered the facts of the case and the submission of the ld. AR. I have also gone through the decisions relied on by the Id.AR. As submitted by the Id.AR, the appellant follows mercantile system of accounting. The liability to pay gratuity is a statutory liability and the same has also been ascertained on an actuarial basis. The Hon'ble Bombay High Court in the case of Echjay Forgings Pvt. Ltd (supra) has held that where the assessee has made the provision for gratuity on the basis of actuarial calculations, the same cannot be said to be a provision for oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the learned Assessing Officer while as the learned Authorized Representative argued in support of the order of the learned Commissioner of Income Tax (Appeals). After hearing both the sides, we are in agreement with the view of the learned Commissioner of Income Tax (Appeals). As explained by learned Authorized Representative both provision for gratuity and bonus are statutory obligation which has been incurred by the assessee and since the assessee is following mercantile system of accounting the same has to be charged to the profit and loss account of the assessee during the relevant previous year in which such obligation has resulted. The learned Commissioner of Income Tax (Appeals) after placing reliance on the decisions cite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sum of ₹ 5.54 lakhs was accounted as reduction from raw material consumed since it related to raw material. Similarly, a sum of ₹ 3.43 lakhs being the written down value of building and a sum of ₹ 18.47 lakhs being the written down value of plant machinery were credited with the claim received. The balance amount of ₹ 112.85 lakhs was accounted as income in the books of account under the head other income in schedule 11 of the profit loss account. It was contended that the above treatment given in the books of account was based on actual figures and therefore the Assessing Officer was not correct in adding the sum of ₹ 27,44,789/- to tax. After considering the submissions of the assessee, learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). Accordingly, this ground is allowed. 8. After hearing both the sides, we do not find any infirmity in the order of the learned Commissioner of Income Tax (Appeals). The assessee had received ₹ 1,40,29,209/- from the insurance company towards loss of its assets. The written down value of these assets which works out to ₹ 27,44,739/- has to be necessarily reduced from the amount of ₹ 1,40,29,209/- to compute the net income received from such claim which only is to be credited to the profit loss account of the assessee. Accordingly, the assessee has rightly reduced such amount and the balance amount of ₹ 1,12,84,470/- is credited to its profit and loss account which is in order. Therefore, we do not find it n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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