TMI Blog2011 (8) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... d clarity, we dispose of both these appeals and cross objections by this consolidated order as issues are common. 2. The first common issue in revenue s appeal in ITA No 1470/K/2009 for Assessment Year 2006-07 and assessee s appeal in ITA No.1275/K/2010 for Assessment Year 2007-08 is as regards to computation of income u/s. 115JB of the Act for both years. For this, assessee as well as revenue have raised following grounds: Grounds in Assessee s appeal in ITA No 1275/K/2010 : 1.0. Confirming the action of Assessing Officer in determining the Book Profit u/s. 115JB of the Act for the year under appeal at ₹ 1823380456 as against Rs. Nil declared in the return on the alleged ground that there was no Brought Forward Business loss Depreciation as per books of account available for reducing from the net profit as shown in the profit and loss account under clause (iii) of Explanation 1 to Sec. 115JB(1). 1.1. Holding that the adjustment of ₹ 381.55 cr. being the loss incurred by the appellant company in the earlier years, against the Share Premium account/Revaluation Reserve, pursuant to scheme sanctioned by the High Courts is not in contravention to the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act and assessee replied vide letter dated 12.11.2008 as under: The net profit of the company for the year as per P L A/c is ₹ 56,25,04,996/-. In the return vide Schedule-15, an equal amount has been deducted as adjustment vide explanation to Section 115JB and both the Book profit and the tax payable thereof have been shown at NIL . The Assessing Officer gone through clause (iii) of Explanation 1 to section 115JB of the Act, as amended and effective from 1.4.2001, and noted that audited accounts of assessee reveals that balance brought forward is ₹ 34.90 cr. which is unabsorbed depreciation. According to AO, as per books of account, brought forward unabsorbed depreciation is ₹ 34.90 cr. and brought forward losses are NIL, therefore, as per clause (iii) of Explanation 1 to section 115JB of the Act no amount is required to be reduced for the purpose of computing book profit on this account. The Assessing Officer computed the book profit at ₹ 56,24,31,715/- by giving following finding: It is apparent from the submission of the assessee that the assessee s claim is to reverse the adjustments of loss with the Revaluation Reserve and share premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, or members, or class of members as the case may be, present and voting either in person or, where proxies are allowed [under the rules made under section 643], by proxy, at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Court, be binding on all the creditors, all the creditors of the class, all the members, or all the members of the class, as the case may he, and also on the company, or, in the case of a company which is being wound up, on the liquidator and contributories of the company: The High Court has approved a scheme of compromise arrived at with the creditors and equity shareholders. Article 9 of the scheme has the following sentence. The debit balance in the Profit and Loss Account as on 30 9 2000 of JKCL shall stand adjusted against the Share Premium Account and/or Revaluation Reserve Account of JKCL It is in terms of this agreement that the normal accounting of brought forward loss of ₹ 391 crore is given the extra-ordinary treatment of set off against the balance in the Share Premium A/c and Revaluation Reserve Account. 6.3. While giving effect to this debt re-structuring exerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law provisions of Parts II III of Schedule VI of Companies Act was different from the net profit in consequence of giving effect in F Y 99-2000 to the order of the High Court under Sec. 391(2) of the Companies Act. Debit balance of ₹ 381.55 crores in the Profit Loss Account for financial year 1999-2000 would not be adjustable against Share Premium and Revaluation Reserve according to the generally accepted accounting practices. It had to be done on account of the overriding effect of the High Court orders. Nevertheless the debit balance according to the principles of the theory of real income, continues to exist as real loss. Its adjustment by the order of the Court is a notional adjustment in the speciality of the situation. The appellant s claims about the reality of the loss adjusted notionally against Revaluation Reserve A/c and Share Premium A/c is not a claim to reverse the adjustment but to acknowledge the continued existence of brought forward loss in accounts in line with generally accepted accounting practices. The argument of the Assessing Officer is that the audited profit and loss account does not refer to brought forward loss. Audited Accounts cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t against real profit also has to b considered on merits. While the Assessing Officer cannot say that certain entries in the audited accounts are not in accordance with Parts II II of Schedule VI of Companies Act, the auditors themselves can certainly say so and have said so. And when they say so, the Assessing Officer must deal with those observations. 7.1. The book profit u/s 115JB is computed in the following manner in A.Y. 2005-06. BOOK PROFIT U/S 115JB 1. Net profit as per P L A/c (Rs. 256l9886 + ₹ 4263000) 260461886 2. Add: (a) Unascertained Liabilities (Net) Provision for Doubtful debts 31300193 Impairment of assets 6272114 Diminution in value of Investments (35713560) 3. Less: (a) Dividend Income 10870255 (b) Deferred Tax 4263000 (c) Lower of loss B/F (Rs.27215 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61.81 175.83 1999-00 2000-01 - 63.99 63.99 2000-01 2001-02 111.22 48.62 159.84 2001-02 2002-03 12.84 50.36 63.20 2002-03 2003-04 - 36.39 36.39 2003-04 2004-05 - 24.68 24.68 272.15 331.43 603.58 For Lodha Co. Chartered Accountants while principle of res judcata is not applicable to the decisions of the assessing officers, there are certain obvious .. to the operation of this doctrine. According to Bombay High Court judgment in Shah C (H.A) vs CIT (30 ITR 618, 624-26) tax authorities would not be entitled to unsettle the earlier finding where the earlier finding is not arbitrary or perverse, and is arrived at after making due enquiries, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss Account in the earlier assessment year incorrectly removed the debit balance from the profit loss account. It was necessary for the purpose implementing the High Court Order. But it need not determine the loss to be carried forward to the following assessment years. The losses to brought forward year after year for the purpose of the MAT provisions, should disregard the set off of debit balance in the P L Accounts of FY. 99 - 2000 as it was for a specific purpose. Now this is the view of the statutory auditors. If the ratio of the Apollo Tyres is to be followed, the auditors view should prevail should not be challengeable by the assessing officer. 7.4. The case of Apollo Tyres supports the finality of the auditors opinion and consequently the case of the appellant. As a result, the assessing officer s only reason for making a departure from the earlier assessment year is not supported by the reasoning of the Supreme Court judgment as argued in the assessment order. 7.5. But more important than this technical argument is the need to acknowledge that real loss incurred by the appellant company in A.Y 2000-01 was artificially removed from the profit loss A/c and ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eet and P L a/c subsequently prepared on the basis of the relevant books of accounts. 8.1 The decision of the Apex Court relied by the assessee is not applicable as the fact of the case is totally different. Moreover the principle laid in the case that neither any fresh enquiry can be made in regard to the entries made in the books of the accounts of the company nor the audited accounts certified by statutory auditors and approved by the Registrar of the Companies can be recasted for the purpose of calculating Book Profit of the company is against the claim of the Company. In the case of the assessee company, it has been duly certified by the auditors that the books of accounts have been maintained as per requirement of the Company Law and the Company does not have accumulated losses at the end of the financial year. 8.2 The submission made by the Ld. A.r that, since the A.O has quantified the Loss in the assessment order for A.Y 2005-06, hence the same should be followed in the subsequent years was considered and found to have no merit. Under the provisions of the Income Tax Act 1961, the A.O is only required to quantify the Loss as per provision of section 72 of the Act. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1998-99 34.07 45.58 79.65 1998-99 1999-00 114.02 61.81 175.83 1999-00 2000-01 - 63.99 63.99 2000-01 2001-02 111.22 48.62 159.84 2001-02 2002-03 12.84 50.36 63.20 2002-03 2003-04 - 36.39 36.39 2003-04 2004-05 - 24.68 24.68 272.15 331.43 603.58 8.3. From the perusal of the said letter it is clear, that it has not been issued by the statutory Auditors under requirement of any statutory Act or rule. It is a general calculation of status of losses and unabsorbed depreciation as on 30.09.2000 made by a accountant on instruction of the client. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of ₹ 381.55 crore in assessee s Profit and Loss Account as on September 30, 2000 was adjusted to the extent of ₹ 281.55 crore against Share Premium Account and remaining ₹ 100 crore was adjusted against Revaluation Reserve with appropriate disclosure in the accounts including by way of Notes on Accounts. In final accounts of assessee company in respect of said adjustment, statutory auditors in their report dated September 29, 2001 to the shareholders of the assessee, stated as under:- Regarding adjustment of debit balance in Profit and Loss Account, attention is invited to Note 1 - Schedule 20, according to which the debit balance in Profit and Loss Account has been adjusted against Share Premium and Revaluation Reserve amounting to ₹ 281.55 crores and ₹ 100.00 crores respectively pursuant to the sanction of Scheme of Compromise and/or Arrangement by Hon ble High Courts of Orissa and Gujarat which though not in line with the generally accepted accounting practices has been carried out as per the Orders of the said High Courts, implementation whereof is binding on the Company . (emphasis added) The assessee during assessment proceedings fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uditor s certificate dated December 3, 2007, which is to the effect, that without considering adjustment made on September 30, 2000 of debit balance in the Profit and Loss Account against Share Premium Account and Revaluation Reserve, brought forward loss as on March 31, 2004 was ₹ 272.15 crore and unabsorbed depreciation was ₹ 331.43 crore. For assessment year 2006-07 issue involved herein, that assessee persisted with same stand and in its computation of book profit, adjusted the profit after depreciation of ₹ 56.25 crore by identical amount claiming it to be an adjustment in terms of clause (iii) of Explanation to section 115JB(2) of the Act on account of brought forward loss. The assessee claimed that brought forward loss was ₹ 246.53 crore which was lower than the amount of unabsorbed depreciation and as such the profit of ₹ 56.25 crore for the assessment year 2006-07 was correctly reduced by brought forward loss. In support of its stand, assessee drew attention of AO to qualified auditors report in respect of accounts as on September 30, 2000 with regard to adjustment made in terms of sanctioned scheme and explained reasons for statutory auditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctioned by Hon ble High Courts and was binding on all concerned and book profit under section 115JB of the Act could not be computed contrary to orders passed by Hon ble High Courts as that would amount to contempt of court. He further stated that books of account did not show any brought forward loss and no adjustment in terms of clause (iii) of the Explanation to section 115JB(2) of the Act was called for. He heavily relied on decisions of Hon ble Supreme Court in the case of Apollo Tyres (supra) and also in the case of Malayala Manorama Co. Ltd. Vs. CIT (2008) 300 ITR 251 (SC) and stated that AO had only power of examining whether the books of account were certified by the authorities under Companies Act as having been properly maintained in accordance with Companies Act. He stated that in instant case, books of account were so certified and as such, AO had no jurisdiction to go beyond the net profit shown in Profit and Loss Account or to make any adjustment not provided for by Explanation to section 115JB(2) of the Act. Ld. Counsel Shri M. P. Agarwal cited several decisions in support of proposition that res judicata was not applicable in taxation matters and determination made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eholders that the adjustment, though made as per orders of Hon ble High Courts, was not in accordance with generally accepted accounting practices. He argued that accounting standards did not permit adjustment of debit balance in Profit and Loss Account against Revaluation Reserve or Share Premium Account. For this argument Ld. Counsel drew attention to Guidance Notes issued by Institute of Chartered Accountants of India on treatment of reserve created on revaluation of fixed assets and Accounting Standard 10 relating to Accounting for Fixed Assets . He elaborated that according to sub-section (1) of section 78 of Companies Act, 1956, provisions relating to reduction of share capital were applicable in respect of Share Premium Account as if Share Premium Account were paid up share capital of the company. According to him, scheme of arrangement neither provides for reduction of share capital of assessee nor provisions of Companies Act, 1956 in that behalf followed and further, assessee s case did not fall within any of exceptions specified in sub-section (2) of section 78 of Companies Act, 1956. Thus, adjustment of debit balance in Profit and Loss Account against Share Premium Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s/depreciation for past period, it was incumbent upon AO to take into consideration accounts for the past period. If any adjustment in the accounts of an earlier year affecting the amount of loss or depreciation had been stated to be not as per generally accepted accounting practices by the statutory auditors, it was incumbent upon AO to determine correct amount of loss/depreciation for the purposes of reduction in terms of clause (iii) of Explanation on the basis of statutory auditors opinion. In terms of sub-section (6) of section 211 of the Companies, 1956, the Balance Sheet and Profit and Loss Account included notes thereon and documents annexed thereto and such notes and documents could not be ignored by AO in computing book profit under section 115JB. Ld. Counsel Sh J.P. Kaithan placed reliance on judgment of Hon ble Delhi High Court in CIT v Sain Processing and Weaving Mills P Ltd (2010) 325 ITR 565 (Del) and on the decision of Mumbai Bench of Tribunal in DCIT v Bombay Diamond Company Ltd (2010) 33 DTR 59(Mumbai) (Trib) in support of proposition that where accounts were not prepared in accordance with Parts II and III of Schedule VI to the Companies Act, 1956, AO had powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought forward losses for the purpose of computation of book profit u/s. 115JB of the Act in relevant assessment year 2006-07 as adjusted by AO in assessment year 2005-06, even though the losses have been liquidated by adjusting debit balance against share premium and revaluation reserve pursuant to scheme of compromise sanctioned by Hon ble High Courts of Orissa and Gujarat as on September 30, 2000 in the normal computation of profit as per Profit and Loss Account of assessee. (ii) Whether, in the given facts and circumstances of the case, for the purpose of computation of book profit adjustment under Explanation (iii) of section 115JB of the Act books of account are to be adjusted as per additional information in accordance with the provisions of Part II III of Schedule VI of Companies Act, 1956. The provisions enacted in Chapter XII-B i.e special provisions relating to certain companies are that if the assessee be a company and its total income determined under the Act in respect of previous year is less than specified book profit, fictionally it will be deemed that the total income is chargeable to tax will be such book profit. This new Chapter XII-B, containing secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aturally mention the fact since such accounting would be contrary to generally accepted accounting practices. We are of the view that assessee would be fully within provision of law to take note of auditors report and adjust book figures so that they are in conformity with the accounting standards and provisions of Companies Act and to determine the correct amount of loss. Even Hon ble Supreme Court in the case of Apollo Tyres (supra), has laid down the principle that whether books of accounts are certified by authorities under Companies Act as having been properly maintained in accordance with Companies Act. Hon ble Supreme Court in Apollo Tyres (supra) at page 280 of 255 ITR held as under: Therefore, we are of the opinion, the Assessing Officer while computing the income under section 115J has only the power of examining whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The Assessing Officer thereafter has the limited power of making increases and reductions as provided for in the Explanation to the said section. To put it differently, the Assessing Officer does not h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qualification is not repeated in their reports in respect of accounts for relevant previous years under consideration before the AO cannot be a reason for ignoring it particularly when it reflects upon the correctness of the amount of loss/unabsorbed depreciation appearing in books of account for relevant previous years. No doubt, in the instant case, assessee wants the AO to take into account the auditors opinion in the earlier year for obtaining a tax advantage for itself. That however cannot make the principle to be applied any different irrespective of who stands to gain, if auditors opinion in an earlier year reflects upon correctness of amount of loss/unabsorbed depreciation appearing in the books of account of a subsequent year, the AO must take into consideration such opinion and determine correct amount of brought forward loss/unabsorbed depreciation in computing the book profit of such subsequent year. 12. Another facet of argument is as regards the effect of orders of Hon ble High Courts sanctioning the scheme of compromise/arrangement which provided for adjustment. In our view, Company Court whilst sanctioning scheme under sections 391 and 394 of Companies Act, 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and by interplay of Balance Sheet items with P L Account items, assessee had sought to project the loss as profit. Hence, Hon ble Court ruled that as the amount of revaluation reserve had not gone to increase the book profit at the time it was created, reduction sought by assessee under clause (i) to Explanation u/s. 115JB(2) of the Act in respect of depreciation had rightly been rejected by AO. Hon ble Supreme Court in Indo Rama Synthetics (I) Ltd (supra) held as under:- We agree with the Assessing Officer. Under the provisions, as they then existed, certain adjustments were required to be made to the net profit as shown in the profit and loss account. One such adjustment stipulated that the net profit shall be reduced by the amount(s) withdrawn from any reserves, if any such amount is credited to the profit and loss account. Thus, if the reserves created had gone to increase the book profits in any year when the provisions of section 115JB were applicable, the assessee became entitled to reduce the amount withdrawn from such reserves if such withdrawal is credited to the profit and loss account. Now, from the above facts, it is clear that neither the said amount of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premium and revaluation reserve in accordance with provisions of Part II III of Schedule VI of Companies Act, 1956. Tribunal in the case of Bombay Diamond Co. Ltd. (Supra) in similar circumstances has held as under: 16. We have considered the rival submissions made by both the sides, perused the orders of the AO and the C1T(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the assessee in the impugned assessment year has earned gross profit of ₹ 10,38,13,765 on account of sale of its rights in an immovable property. There is also no dispute to the fact that this income has not been passed through the P L a/c but has directly been taken to the balance sheet as capital reserve. According to the AO since the assessee has not prepared its accounts in the manner provided in Part II and Part III of Sch. VI to the Companies Act, therefore, the amount of ₹ 10,38,13,765 having not routed through the P L a/c has to be added to the book profit for the purpose of provisions of s. 115JB. It is the submission of the learned counsel for the assessee that in view of the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing credits or receipts and debits or expenses in respect of non-recurring transactions or transactions of exceptional nature also. Further the company is also required to set out the various items relating to the income and expenditure of the company arranged under most convenient heads and disclosing profit or loss in respect of transactions of a kind not usually undertaken by the company or undertaken in circumstances of exceptional or non-recurring nature in amount. 19. However, in the instant case we find although the assessee has earned a profit of ₹ 10,38,13,765 from the sale of rights in an immovable property the same has not been routed through the P L a/c and has directly been credited to the balance sheet. Therefore, in our opinion, accounts are not prepared in accordance with the manner provided in Part II and Part III of VI to the Companies Act. 20. The various decisions relied on by the learned counsel for the assessee are not applicable to the facts of the present case. In the case of Apollo Tyres Ltd. (supra) the question No. (i) before the Hon ble Supreme Court was as under: (i) Can an AO while assessing a company for income-tax under s. 115J of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has bypassed the provisions of Part II and Part III of Sch. VI of the Companies Act and directly credited the profit to the reserve account. Therefore, the decision of the jurisdictional High Court is also not applicable to the facts of the present case. Similarly the decision of the Co-ordinate Bench of the Tribunal in the case of Orson Trading (P) Ltd. (supra) is also distinguishable and not applicable to the facts of the present case since it relates to the provisions of s. 115JA and it has not been held that even if the accounts are not prepared in the manner prescribed as per Part II and Part III of Sch. VI of the Companies Act, 1956, the AO has no power to disturb the book profit declared by the assessee. 24. The various other decisions relied on by the learned CIT(A) in his order are also not applicable. In none of the case it has been held that even where the accounts are not prepared in the manner provided as per Part II and Part III of Sch. VI to the Companies Act, 1956 the AO has no power to go beyond the book profit as per the audited accounts. In our opinion, the AO cannot go beyond the book profits as per the audited accounts provided they are prepared as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. ii) That the Ld. CIT(A) has not considered that the assessee intended to diverse its profit by making such donation to school and the schools are run by the same group for making profit. 16. Since facts are identical and grounds are common except variance in amount, we deal the issue by taking the facts in Assessment Year 2006-07. The brief facts leading to the above issue are that assessee made contribution to clubs and also contributed to school funds in running school which was included in employee s welfare expenses. The details of such expenses are as under: 1. Expenses Subsidy to Staff Workers Club at Jaykaypura ₹ 1,35,170 2. Expenses subsidy to Ladies Club at Jaykaypuram, Sirohi ₹ 32,105 3. Expenses for running school at Jaykaypuram Rs.10,25,370 Rs.11,92,645 17. The assessee before Assessing Officer contended that major payment to school was in the nature of subsidy to employees as the school is run being near to assessee s cement manufacturing unit at Jaykaypuram, Rajasthan. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Years is allowed for statistical purposes. 19. First issue in assessee s C.O. for Assessment Year 2006-07 is as regards to the order of CIT(A) upholding the action of Assessing Officer in adding notional interest. For this, assessee has raised the following ground no.1: 1. On the facts and in the circumstances of the case Ld. CIT(A) erred in upholding Ld. Assessing Officer s unjustified action in adding notional interest of ₹ 3,82,500 and ₹ 5,00,000 and treating it as income of the appellant. 20. We have heard rival contentions and gone through facts and circumstances of the case. We find that Assessing Officer while making addition of notional interest of ₹ 3,82,500/- and ₹ 5,00,000/- have listed following facts and reasons: The Assessee Company had made deposit of ₹ 40 lacs. The assessee has submitted that this represents deposit of ₹ 1500000 given to M/s Oswal Food Limited which carried interest rate of 25.5% and ₹ 2500000 to M/s HMG Financial Services Limited which carried interest rate of 20%. The two parties defaulted in repayment of the amount deposited and the legal case was filed by us. In view of the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AS-9 which provides that where the ability to assess the ultimate collection with reasonable certainty is lacking at the time of any receipt, revenue recognition is to be postponed to the extent of uncertainty involved. The case facts clearly demonstrate that in view of legal cases pending it was uncertain whether the interest on the said inter- corporate deposits would ultimately be received or not. Therefore, there is no justification for bringing to the tax the notional interest as an income for the previous year relevant to the Assessment year 2006-07. Since the assessee follows mercantile system of accounts the interest of ₹ 382500/- on ICD of ₹ 15 lacs given to M/s Oswal Food Products Ltd. and ₹ 500000/- on ICD of ₹ 25 lacs given to M/s H.M.G.financial Services Pvt. Ltd. definitely accrued at the year end especially because assessee had legal right in enforcing the collection of accrued amount. As such interest of ₹ 882500/- is treated as income on accrual basis. We find that this issue is squarely covered in favour of assessee and against the revenue by Tribunal s decision in earlier four years in assessee s appeal starting from Assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been preferred by the assessee company. Consequential to such treatment, Assessing Officer has consistently allowed depreciation on such expenditure as per Rules upto Assessment Year 2005-06 in orders passed u/s 143(3) of the Act. However, for AY 2006-07, instead of allowing depreciation on W.D.V as on 31.03.2005 as per assessment order for AY 2005-06, Assessing Officer erred in allowing depreciation as per return which does not factor the above mentioned treatment of interest capitalization. Hence, Ld. Counsel stated that suitable directions may be given to the Assessing Officer to rectify the depreciation amount in assessment order for AY 2006-07. We are of the view that opening WDV for A.Y 2006-07 (i.e. as on 31.03.06) has necessarily to be the closing WDV of the immediately preceding year (i.e. As on 01.04.06) which the A.O. in his order dated 19,12,2007 for A.Y 2005-06 has recorded at ₹ 1557645289. The A.O will recompute the depreciation allowable for A.Y 2006-07 by adopting the opening WDV at ₹ 1557645289. Accordingly, this issue of the assessee s appeal is allowed for statistical purposes. 23. The next common issue in this C.O. and ITA No.1275/K/2010 of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on regular assessment which means the tax determined on the application of section 115J / 115JA of the Act in the regular assessment and interest under section 234B of the Act of the Act is payable on failure to pay advance tax in respect of tax payable under section 115JA of the Act. Similar is the view in respect to chargeability of interest u/s. 234C of the Act. Respectfully following the aforesaid decision of Hon ble Apex Court in the case of Rolta India Ltd. (supra), we do find infirmity in the order of CIT(A) and the same is hereby upheld. Grounds of Appeal and C.O. of assessee are dismissed. 25. The next issue in this CO of assessee is against the order of CIT(A) in not allowing credit available for earlier years u/s. 115JAA of the Act. For this, the assessee has raised following ground no.4: 4. On the facts and in the circumstances of the case Ld. CIT(A) erred in not directing the Assessing Officer that the tax computed as payable u/s. 115JB in the impugned order dt. 05.12.2008 passed u/s. 143(3) should have been quantified as available for credit u/s. 115JAA of the Act and is to be carried forward/set off in accordance with provisions of Sec. 115JAA of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the simple reason that the debtor-companies had run into financial straits and the debtorcompanies had also stopped claiming deduction of interest. Further, the fact that the assessee had been paid interest by the debtor-companies for a few years could not by itself and without anything more justify the inference that there was some agreement between the parties for payment of interest. Hence, the Tribunal was justified in holding that no interest accrued to the assessee in the assessment year 1974-75. Hon ble Rajasthan High Court in the case of CIT vs. Banswara Fabrics Ltd. [267 ITR 398] confirmed the order of the Tribunal in which C.I.T.(A) found in favour of the assessee that both the parties, in whose names the debit b lances were shown in the books of account of the assessee, had incurred losses and cases were pending before the BIFR suggesting that both the parties had negative net worth of capital. The Ld. Commissioner (Appeals) came to the conclusion that when the recovery of principal itself was in doubt, the waiver of interest could be considered to be in the interest of business and not conferring any favour by transferring profits to the debtors. The departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of loans as well as interest to the assessee not only in the assessment year in question but in subsequent assessment year also, therefore, assessee was justified in not declaring interest income in the assessment year in question having regard to principle of real income. Our findings are supported by various decisions referred to above. 8. In this view of the matter, we do not justify action of the authorities below in sustaining the additions in the hands of the assessee. We, accordingly, set aside the orders of authorities below and delete the entire addition on this issue. As a result, ITA No.1759 (Kol)/2007 is allowed. Since the issue is covered by Tribunal s order exactly on same facts, we confirm the order of CIT(A) deleting the addition of notional interest. This issue of revenue s appeal is dismissed. 29. The next issue in this appeal of revenue in ITA No.1417/K/2010 is regarding the order of CIT(A) allowing deduction u/s. 35(1)(ii). For this, revenue has raised following ground no.3: 3.i) That, the Ld. CIT(A),C-1, Kol has erred in allowing deduction claimed u/s. 35(1)(ii) by the assessee on account of donation made to Pushpawati Singhania Research Institu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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