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2016 (7) TMI 1088 - CALCUTTA HIGH COURT

2016 (7) TMI 1088 - CALCUTTA HIGH COURT - [2016] 385 ITR 542 - Computation of book profit under section 115JB - write back of the provision for diminution in the value of investment - Held that:- Deduction, as we read the section, can only be claimed provided the book profit has actually been increased by the aforesaid sum of ₹ 7,05,73,000/-. Since book profit was never increased, the question of any deduction on account of any credit from the supposed provision does not arise. Therefore, .....

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rora, JJ. For the Petitioner : Mr. R.K. Murarka, Sr. Adv. Appears with Ms. S. Roy Chowdhury, Adv For the Respondent : Mr. A. Mitra, Adv. Appears ORDER The Court : The appeal is directed against a judgment and order dated January 7, 2011, passed by the learned Income Tax Appellate Tribunal, B Bench, Kolkata in ITA No.1254/Kol/2010, pertaining to the assessment year 2006- 07, by which the learned Tribunal allowed an appeal preferred by the revenue. The aggrieved assessee has come up in appeal. The .....

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the light of Clause (i) of Explanation to Section 115JB, the amount of ₹ 1,30,53,000/- withdrawn from the provision of diminution in value of investment was required to be released from the net profit to arrive at book of profit under Section 115JB assessing it to be based on incorrect facts. (ii) The assessing officer not having allowed deduction for provision for diminution in value of investment amounting to ₹ 7,05,73,000/- in the Profit & Loss Account for the year ended 31.0 .....

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ofit under section 115JB at ₹ 6,62,77,000/-. Upon scrutiny, it was noticed that the computation of income under normal provisions was started with the net profit of ₹ 8,70,11,000/- for the year ended on March 31, 2006. But the computation of book profit under section 115JB was started with an amount of ₹ 7,39,58,000/- after excluding a sum of ₹ 1,30,53,000/- relating to a write back of the provision for diminution in the value of investment. Notice under section 148 of th .....

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2 no deduction was allowed in respect of provisions made for diminution in the value of investment. Out of the said provision made in the assessment year 2001-02 the assessee wrote back ₹ 1,30,53,000/- in the accounts for the year ended 31.03.2006. clause - (i) of explanation u/s. 115JB(2) provides that the Book Profit shall be reduced by the amount withdrawn from any reserve or provisions, if any such amount is credited to the P&L A/C. In the present case, the assessee created the pro .....

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the Finance Act, 2009 amended Section - 115JB with retrospective effect. As per new proviso, provision for diminution in the value of investment is not to be allowed as such provision is also not included in the Book Profit. As such there is no mistake in computation of Book Profit u/s. 115JB for the assessment year 2006-07. The Assessing Officer did not accept the explanation. He added the sum of ₹ 1,30,53,000/- in computing the book profit. In an appeal, the CIT(A) reversed the order pa .....

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B, the book profit is required to be increased by the amount or amounts set aside as provision for diminution in the value of any asset . He does not dispute that during the year 2000-01 corresponding to the assessment year 2001- 02, the assessee had filed a return showing loss of ₹ 93,17,054/-. He does not also dispute that during the year 2000-01 corresponding to the assessment year 2001-02, the book profit of the assessee was not increased by the sum of ₹ 7,05,73,000/-. But he is .....

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ves created or provisions made in a previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation or Explanation below the second proviso to section 115JA, as the case may be; This submission of Mr. Murarka is plainly fallacious. The deduction can be claimed provided t .....

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