TMI Blog2014 (5) TMI 1138X X X X Extracts X X X X X X X X Extracts X X X X ..... sset’s value, the corresponding and consequential effect is to reduce the profit of the assessee or increase the loss of the assessee by debiting to Profit & Loss account. As far as the credit entry is concerned, it can either be shown as a separate provision on the liability side of the balance sheet or reduce from the current asset’s value shown in the asset side of the balance sheet. This is only an accounting format. It does not change the character of the amount sought to be deducted by the assessee. It does not affect the accounting/financial result. It always affects the income or loss aspect of the assessee. Therefore, only for the reason that the assessee has not created a separate provision, but only reduced the diminution in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-5-2014 - Dr. O. K. Narayanan (Vice-President) And Vikas Awasthy (Judicial Member) For the Appellant : R. Vijayaraghavan, Advocate For the Respondent : Pramod Nangia, IRS, CIT ORDER Dr. O. K. Narayanan (Vice-President) This appeal is filed by the assessee. The relevant assessment year is 2007-08. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-III at Chennai, passed on 15.12.2011. The appeal arises out of the assessment completed under Section 143(3) read with Section 147 of the Income-tax Act, 1961. 2. This appeal was earlier heard and disposed of by the Tribunal through its order dated 19th July, 2012. The appeal was heard along with two other appeals in I.T.A. No. 430 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 14A and the third issue related to the levy of interest under Sections 234B and 234C of the Income-tax Act, 1961. 6. In the light of the above, the assessee filed a Miscellaneous Petition praying for rectification of mistake committed by the Tribunal in not considering and adjudicating the points raised by the assessee on merits. The said Miscellaneous Petition No.227/Mds/2012 was allowed by the Tribunal through its order passed on 1st February, 2013. We found that we dismissed the appeal of the assessee on the ground of jurisdiction but failed to adjudicate other grounds raised in the appeal. Accordingly, we recalled the order passed in I.T.A. No. 432/Mds/2012 dated 19th July, 2012 to hear and dispose of the appeal on merits. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision for diminution in the value of the asset and as such, the assessee has not claimed deduction of any such provision for computing the book profit under Section 115JB. It is the case of the learned counsel that the assessee has reduced the diminution in the value of the asset from the value of the current assets and this cannot be treated as a provision and therefore, on merits, the deduction needs to be allowed. He has placed reliance on certain judgments of the Courts. 9. We considered this issue in detail. We find that the amendment brought in by Finance Act, 2009 cannot be held to be prospective as the Act has made it clear that the amendment is to take retrospective effect from 1st April, 2001. It is seen in the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue from the current asset s value of the company, then also credit entries are passed in the account of the current assets to reduce the value and there also the corresponding debit is made to the Profit Loss account thereby reducing the profit or increase the loss of the company. Whether it is shown as a separate provision or it is reduced from the current asset s value, the corresponding and consequential effect is to reduce the profit of the assessee or increase the loss of the assessee by debiting to Profit Loss account. As far as the credit entry is concerned, it can either be shown as a separate provision on the liability side of the balance sheet or reduce from the current asset s value shown in the asset side of the balance shee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Ltd. (298 ITR 67) has held that when an assessee could not have foreseen liability caused on account of a subsequent legislative amendment, the assessee cannot be liable for interest on the differential amount of tax in the reason that the assessee could not have paid the differential amount of tax for the relevant previous year. Here also, the income escaping assessment was passed because of the retrospective amendment brought in by Finance Act, 2009. The additional liability has been generated only in the assessment. It was not possible for the assessee to foresee the retrospective amendment. So, it was not possible for the assessee to pay advance tax for the relevant previous year against the differential demand of tax that would aris ..... X X X X Extracts X X X X X X X X Extracts X X X X
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