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2016 (3) TMI 731

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..... appellant has been assessed as per its submissions u/s 115JB in the assessment year 2002-03, 2003-04 and 2004-05. Therefore, since the said amounts have been taxed in the year of creation of provisions, therefore, the same cannot be added back in the assessment year 2005-06 when the addition has been written back. Therefore, the addition is hereby deleted. We find that the factual findings given by the Learned CIT(A) were not controverted by the revenue before us. Thus no infirmity in the order of the Learned CITA in this regard and hold that the assessee is entitled for reduction of provision for contingenciesvwhile computing book profits u/s 115JB in terms of clause (i) of Explanation 1 to section 115JB of the Act. - Decided against revenue Disallowance towards various advances and deposits written off - CIT (A) deleted the addition - Held that:- As find from the facts of the case that the deposits and advances were given in the ordinary course of business and were lying in the books of the assessee company for quite a long time. The same were considered irrecoverable by the assessee and had written off the same in Asst Year 2005-06 and hence the same is to be considered as a .....

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..... xchange gain of ₹ 4,20,26,250/-. Pursuant to this restatement, the balance of loan outstanding as on 31.3.2004 was arrived at ₹ 45,67,50,000/-. The assessee did not offer the notional gain of ₹ 4,20,26,250/- as income in Asst Year 2004-05 which was however, added to income by the Learned AO while completing the assessment for the Asst Year 2004-05 u/s 143(3)of the Act. The same was subjected to first appeal by the assessee who deleted the addition. On further appeal by the revenue before this tribunal, the tribunal had deleted the addition. However, this tribunal decision was rendered prior to the judgement rendered by the Hon'ble Supreme Court on the impugned issue in the case of Woodward Governor of India (P) Ltd reported in 312 ITR 254 (SC). At present, the tribunal order has been agitated by the revenue before the Hon'ble Calcutta High Court and the same is pending. Taking into account the restated loan outstanding value as on 31.3.2004 amounting to ₹ 45,67,50,000/-, the assessee made certain repayments of foreign currency loan as per the terms of the loan agreement during the financial year 2004-05 relevant to the assessment year under appeal .....

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..... before or at the hearing of the appeal. 3.2. The Learned AR fairly argued that the issue requires to be remanded back to the file of the Learned AO for redetermination as the lower authorities had not considered the decision of the Hon'ble Apex Court in the case of Woodward Governor (supra) which squarely covers the issue under appeal. In response to this, the Learned DR fairly conceded to the same. 3.3. We have heard the rival submissions and perused the materials available on record. The facts stated hereinabove remain undisputed and hence are not reiterated for the sake of brevity. We find that the foreign currency loan agreement has been filed by the assessee in the paper book before us and this has been filed before us for the first time. Accordingly the same is construed as Additional Evidence and is admitted herein. We find that this issue requires to be set aside to the file of the Learned AO who will have to give clear cut finding on the following matters:- (a) Whether the foreign currency loan was utilized for working capital purposes by the assessee. If so, the resultant foreign exchange gain or loss would be revenue in nature and would become taxable or a .....

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..... fairly agreed for condonation of the same. Hence we hold that the delay in filing the appeal by the revenue by 25 days is hereby condoned and the appeal of the revenue is admitted herein. 5. The only issue to be decided in the appeal of the revenue is as to whether while computing the book profits u/s 115JB of the Act, a sum of ₹ 18,86,02,604/- representing provision for contingencies is to be added back or not, as the same was offered to tax and assessed u/s 115JB of the Act in the years in which the provision was made. 6. The brief facts of this issue is that the assessee company had created provision for contingencies aggregating to ₹ 19,65,45,000/- by debiting its profit and loss account during the financial years 2001-02, 2002-03 and 2003-04 by ₹ 7,15,45,000/-, ₹ 6,73,00,000/- and ₹ 5,77,00,000/- respectively. Since such provisions were in the nature of unascertained liabilities, these provisions were duly added back by the assessee voluntarily in the computation of book profits as per clause (c) to Explantion 1 to section 115JB of the Act in the respective assessment years. Out of these provisions figure of ₹ 19,65,45,000/- which wer .....

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..... on 1 to section 115JB of the Act. Accordingly, the grounds raised by the revenue are dismissed. 6.3 In the result, the appeal of the revenue in ITA No. 930/Kol/2012 is dismissed. ITA No. 931/Kol/2012 - Department appeal against section 147 rws 143(3) order 7. At the outset, there is a delay in filing appeal by the revenue by 25 days and during the course of hearing, the Learned AR fairly agreed for condonation of the same. Hence we hold that the delay in filing the appeal by the revenue by 25 days is hereby condoned and the appeal of the revenue is admitted herein. 8. The first issue to be decided in this appeal is as to whether the Learned CIT(A) is justified in deleting the disallowance of ₹ 37,087/- towards various advances and deposits written off in the facts and circumstances of the case. 8.1. The brief facts of this issue are that the assessee had made certain deposits with certain parties including government bodies in the earlier years and the same were lying outstanding for a very long time and had chosen to write off the same as irrecoverable in Asst Year 2005-06 as below:- Security Agent Deposit 5,000 .....

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..... e a long time. The same were considered irrecoverable by the assessee and had written off the same in Asst Year 2005-06 and hence the same is to be considered as a trading loss u/s 28 of the Act. We hold that the Learned CIT(A) had rightly deleted the addition made in this regard. Accordingly, the ground no.1 raised by the revenue is dismissed. 9. The last ground to be decided in this appeal is as to whether the Learned CIT(A) is justified in disallowing the excess depreciation which was claimed by way of revised return in the earlier years having consequential impact, in the facts and circumstances of the case. 9.1. The brief facts of this issue are that the assessee while filing its original return of income for the Asst Year 1999-2000 had not claimed any income tax depreciation. This return was processed and accepted u/s 143(1) of the Act. Later the provisions of section 32 of the Act was amended and Explanation 5 was inserted with effect from 1.4.2002 empowering the Assessing officer to allow such claim even if the assessee has not claimed such deduction. In view of the said amendment to section 32, the assessee claimed the income tax depreciation through a petition u/s 1 .....

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..... ns of this tribunal in favour of the assessee for earlier years in ITA No. 2302, 2303 and 2356/Kol/2007 dated 29.2.2008 for the Asst years 2000-01, 2001-02 and 2002-03 respectively and held that the assessee is entitled for additional depreciation. The Learned CITA directed the Learned AO to verify the arithmetical correctness of the claim in the depreciation chart and directed to allow the claim of additional depreciation. Aggrieved, the revenue is in appeal before us on the following ground:- 2. That on the facts and circumstances of the case, Ld. CIT(A) erred in law as well as facts by deleting the disallowance of excess depreciation claim by way of revised return being relied upon the judgement of Hon'ble ITAT, Kolkata and Ld. CIT(A)-VI, Kolkata in assessee's own case of earlier year without going through the merit of the case. 9.3. We have heard the rival submissions and perused the materials available on record. We find that this issue is squarely covered by the orders of this tribunal in the earlier years as stated above and also by the decision of this tribunal in ITA No. 443/Kol/2011 dated 12.12.2011 and ITA No. 190/Kol/2011 dated 2.11.2011 for Asst Years 2 .....

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