TMI Blog2018 (6) TMI 1450X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Ld.CIT(A) fell in error in relying on a wrong clause for giving relief to the assessee. Accordingly, we set aside the order of the Ld.CIT(A) and reinstate the addition made by the AO. - Decided in favour of revenue. - ITA No.2833/Chny/2017 - - - Dated:- 26-6-2018 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER For The Department : Mr. N. Gopikrishna, JCIT For The Assessee : None ORDER PER ABRAHAM P.GEORGE, ACCOUNTANT MEMBER: This appeal of the Revenue is filed with a delay of two days. Condonation petition has been filed. Delay is condoned and appeal admitted. 2. Revenue assails an order dated 19.09.2017 of CIT(A)-6, Chennai. Out of the three grounds taken by the Revenue, Ground Nos.1 3 are general needing no adjudication. Through its Ground No.2, grievance raised by the Department is on the deletion of an addition for share of loss from two firms, made by the Ld.AO, while computing the profit of the assessee for the purpose of applying Sec.115JB of the Income Tax Act, 1961 (in short Act ). 3. Assessee had computed its profit for the purpose of computing the tax u/s.115JB of the Act, without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Add : Share of loss from Walker Grieg : 2,11,346 Share of loss from Fixit Co. : : 68,564 2,79,910 Assessed Book Profit : : 9,66,375 7. Share of loss from the two firms were debited by the assessee in its Profit Loss A/c and the profit shown in the P L A/c was after these debits. What can be added to the profit as shown in the Profit Loss A/c and what can be deducted from such profits are given in the Explanations to Sec.115JB of the Act. Sec.115JB is reproduced hereunder: ( 1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2012, is less than eighteen and one-half per cent of its book profit, such book profit shall be deemed to be the total income of the assessee and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by- ( a) the amount of income-tax paid or payable, and the provision therefor; or ( b) the amounts carried to any reserves, by whatever name called, other than a reserve specified under section 33AC; or ( c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or ( d) the amount by way of provision for losses of subsidiary companies; or ( e) the amount or amounts of dividends paid or proposed ; or ( f) the amount or amounts of expenditure relatable to any income to which section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply; or ( fa) the amount or amounts of expenditure relatable to income, being share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86; or ( fb) the amount or amounts of expenditure relatable to income accruing or arising to an assessee, being a foreign company, from,- ( A) the capital gains arising on transactions in securities; or ( B) the interest, royalty or fees for te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; or ( ii) the amount of income to which any of the provisions of section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply, if any such amount is credited to the 80[statement of profit and loss]; or ( iia) the amount of depreciation debited to the 80[statement of profit and loss] (excluding the depreciation on account of revaluation of assets); or ( iib) the amount withdrawn from revaluation reserve and credited to the 80[statement of profit and loss], to the extent it does not exceed the amount of depreciation on account of revaluation of assets referred to in clause (iia); or ( iic) the amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86, if any, such amount is credited to the 80[statement of profit and loss]; or ( iid) the amount of income accruing or aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not include depreciation; ( b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil; or ( iv) to (vi) [***] ( vii) the amount of profits of sick industrial company for the assessment year commencing on and from the assessment year relevant to the previous year in which the said company has become a sick industrial company under sub-section (1) of section 17 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and ending with the assessment year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses. Explanation.-For the purposes of this clause, net worth shall have the meaning assigned to it in clause (ga) of sub-section (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986); or 85[(viii) the amount of deferred tax, if any such amount is credited to the 85[statement of profit and loss]. Explanation 2.-For the purposes of clause (a) of Explanation 1, the amount of income-tax shall include- ( i) any tax on distributed profits under section 115-O or on distributed inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the same meaning as assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956). 92[(2A) For a company whose financial statements are drawn up in compliance to the Indian Accounting Standards specified in Annexure to the Companies (Indian Accounting Standards) Rules, 2015, the book profit as computed in accordance with Explanation 1 to sub-section (2) shall be further- ( a) increased by all amounts credited to other comprehensive income in the statement of profit and loss under the head Items that will not be re-classified to profit or loss ; ( b) decreased by all amounts debited to other comprehensive income in the statement of profit and loss under the head Items that will not be re-classified to profit or loss ; ( c) increased by amounts or aggregate of the amounts debited to the statement of profit and loss on distribution of non-cash assets to shareholders in a demerger in accordance with Appendix A of the Indian Accounting Standards 10; ( d) decreased by all amounts or aggregate of the amounts credited to the statement of profit and loss on distribution of non-cash assets to shareholders in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gregate of the amounts referred to in the said sub-clause relatable to such foreign operations. Explanation.-For the purposes of this sub-section, the expression- ( i) year of convergence means the previous year within which the convergence date falls; ( ii) convergence date means the first day of the first Indian Accounting Standards reporting period as defined in the Indian Accounting Standards 101; ( iii) transition amount means the amount or the aggregate of the amounts adjusted in the other equity (excluding capital reserve and securities premium reserve) on the convergence date but not including the following:- ( A) amount or aggregate of the amounts adjusted in the other comprehensive income on the convergence date which shall be subsequently re-classified to the profit or loss; ( B) revaluation surplus for assets in accordance with the Indian Accounting Standards 16 and Indian Accounting Standards 38 adjusted on the convergence date; ( C) gains or losses from investments in equity instruments designated at fair value through other comprehensive income in accordance with the Indian Accounting Standards 109 adjusted on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing contained in sub-section (1), where the assessee referred to therein, is a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, the provisions of sub-section (1) shall have the effect as if for the words eighteen and one-half per cent wherever occurring in that sub-section, the words nine per cent had been substituted. Explanation.-For the purposes of this sub-section,- ( a) International Financial Services Centre shall have the same meaning as assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005); ( b) unit means a unit established in an International Financial Services Centre; ( c) convertible foreign exchange means a foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Management Act, 1999 (42 of 1999) and the rules made thereunder.] 8. The Ld.CIT(A) had deleted the addition made by the AO relying on Clause (f) of Explanation-1 treating the share of loss from firms as not expenditure relatable to any income u/s.10 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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