TMI Blog2023 (2) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... duced the Net Profits as shown in the audited Profit Loss Account prepared as per the provisions of the Companies Act by the amount of Debenture Redemption Reserve created during the relevant previous year. Even if the Debenture Redemption Reserve is taken to be in the nature of a provision, the action of the Appellant was contrary to the law laid down by the Hon ble Supreme Court in the case of Apollo Tyres Ltd [ 2002 (5) TMI 5 - SUPREME COURT ] whereas the orders passed by the authorities below are in conformity with the aforesaid judgment of the Hon ble Supreme Court. Thus, we do not find any infirmity in the order passed by the CIT(A) which deserves to be upheld on this ground alone though the CIT(A) has given further reasoning in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. When the appeal was taken up for hearing, none appeared for the Appellant. A perusal of order-sheet showed that none has been appearing for the Appellant for last several hearings despite notice. A perusal of material on record showed that the Appellant had filed written submission dated 19.01.2022. Therefore, we proceeded to hear the Ld. Departmental Representative to decide the issue raised in the present appeal on merit after taking into consideration the material on record and the aforesaid written submission filed by the Appellant. 4. The relevant facts, in brief, are that Appellant filed return of income for the Assessment Year 2014-15 on 29.11.2014 declaring loss of INR 132,26,60,667/- under the normal provisions of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebenture Redemption Reserve is a provision for ascertained liability and not reserve. Therefore, Debenture Redemption Reserve of INR 11 Crores, should not have been added back for the computation of Book Profits under Section 115JB of the Act. Since the same does not fall under Clause (a) to (f) of Explanation 1 to Section 115JB of the Act. Per contra, the contention of the Revenue is that the Net Profits before Tax as per the audited accounts of the Appellant stood at INR 1519.86 Crores. While computing Book Profits under Section 115JB of the Act the Appellant had, in contravention of the provision of Section 115JB of the Act and the judgment of the Hon ble Supreme Court in the case of Apollo Tyres Ltd. Vs. CIT: 255 ITR 73 (SC), reduced th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer to debenture reserves. 12. The appellant in its computation of income has considered the net profit as Rs. 1519.86 lakhs (which is profit before tax) from which it has reduced Debenture Redemption Reserve of Rs. 1100 lakhs. This is not as per the literal reading of section 115JB. (Emphasis Supplied) 8. We note that the Appellant had placed reliance upon the judgment of Hon ble Supreme Court in the case of Apollo Tyres Ltd. (supra) in appellate proceedings before CIT(A). However, the aforesaid judgment supports the case of the Revenue. We note that the Hon ble Supreme Court in the case of Apollo Tyres Ltd. (supra), wherein the Hon ble Supreme Court has, while examining provisions Section 115J of the Act (pari materia to Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 115JB of the Act as under: Particular Amount (INR) Book Profits as per Companies Act (Profit Loss A/c) 15,19,86,406 Less: Deduction from Book Profits Income Exempt under Section 11 or 12 6,79,71,950/- Debenture Redemption Reserve 11,00,00,000/- Book Profit under Section 115JB (-) 2,59,85,544/- 11. The above adjustment made by the Appellant by reducing the Net Profits of INR 15,19,86,406/- by the amount of Debenture Redemption Reserve of INR 11,00,00,000/- does not fall within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt. Thus, we do not find any infirmity in the order passed by the CIT(A) which deserves to be upheld on this ground alone though the CIT(A) has given further reasoning in support of his decision to confirm the order passed by the Assessing Officer. 12. Before parting we would like to observe that the CIT(A) had, in effect, observed that the Debenture Redemption Reserve, though created for ascertained liability, does not pertain to a trading liability having impact on the determination of profits of the Appellant company but pertained to a capital liability. Creation of Debenture Redemption Reserve is not on account of charge on profits but on account of appropriation of profits. On the basis of the aforesaid, the CIT(A) has concluded th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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