TMI Blog2019 (3) TMI 2041X X X X Extracts X X X X X X X X Extracts X X X X ..... addition can be raised except this according to special provision mentioned in the provision u/s 115JB of the Act, therefore, the finding of the CIT(A) is not justifiable, hence, by relying upon the law laid down in Apollo Tyres Ltd [ 2002 (5) TMI 5 - SUPREME COURT] and National Hydroelectric Power Corporation Ltd. [ 2010 (1) TMI 281 - SUPREME COURT] we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee. Addition in computing book profit u/s 115JB of the Act in respect of expenditure on computer software - Since the claim of the assessee nowhere falls within the purview of the Explanation of 115JB of the Act, therefore, the addition is not liable to be sustainable in the eyes of law. Accordingly, we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee. Non-exclusion of profit on sale of investments in computation of book profit u/s 115JB - Since, this issue has been decided against the assessee while deciding the issue in question in the assessee s own case for the A.Y. 2002-03 therefore, the present issue is hereby decided against the assessee and in favour of the revenue. Disallowance of Railw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the case of CIT Vs. PJ Chemicals Ltd. [ 1994 (9) TMI 1 - SUPREME COURT] and DCIT Vs. Reliance Industries Ltd. [ 2003 (10) TMI 255 - ITAT BOMBAY-J] . At the time of argument, the Ld. Representative of the assessee has also placed reliance upon the decision of CIT Vs. Shree Balaji Alloys [ 2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] in which such type of incentive held as capital receipt in the hands of industrial unit. No doubt, the issue has been remanded in the assessee s own case for the A.Y. 2001-02 and A.Y 2002-03 [ 2015 (10) TMI 172 - ITAT MUMBAI] , but, there is no need to remand the case being this issue has been settled. Nature of expenses - expenditure on Jukehi Road at Kymore in computing total income under normal provision of the Act - As per CIT(A) impugned expenditure did not result in creation of any asset of enduring nature to the appellant since the ownership vests with the Government of Madhya Pradesh, thus deleted addition - HELD THAT:- Since the matter of controversy has duly been covered and decided in favour of the assessee in the assessee s own case and L.H. Sugar Factory and oil Mills (P) Ltd. [ 1980 (8) TMI 1 - SUPREME COURT] therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said circumstances, the CIT(A) has rightly deleted the said addition, hence, allowed the claim of the assessee. The facts are not distinguishable at this stage also. No contrary law to the law relied by the assessee has been produced before us. Provision for Director s Retirement Benefit in computing Book Profit U/s 115JB - HELD THAT:- As decided in assessee own case CIT(A) correctly concluded provision for director s retirement benefit cannot be considered as unascertained liability since the same has been calculated on the basis of actuarial valuation and is squarely covered by the decision of Hon ble Apex Court in the case of Bharat Earth Movers [ 2000 (8) TMI 4 - SUPREME COURT] . Therefore, provision for director s retirement is an allowable deduction in computing profits and gains of business or profession. Further, in my view additions made in computing book profit u/s 115JB on the ground that the same has been added back in the computing total income under normal provisions of the Act is not tenable. Addition made in respect of VRS expenditure pertaining to earlier years, Capital expenditure, Deferred revenue expenditure , debited to P L Account in computing Boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, the same is not added back in computing book profit u/s 115JB of the Act. So far as the refund of sales tax is concerned, the same has been added to the profit and loss account and accordingly, the deduction was given. The interest income in connection with deposit with ARV Society and in sum Deposited with MSEB has been disallowed being income of the assessee. The claim of the assessee was partly allowed. Provision of Wealth Tax in computing book profit u/s 115JB is to be allowed in view of the decision of Echjay Forgings (P) Ltd. [ 2001 (2) TMI 56 - BOMBAY HIGH COURT] and JCIT Vs. Usha Martin Industries Ltd. [ 2006 (12) TMI 171 - ITAT CALCUTTA] Provision for additional gratuity in computing book profit u/s 115JB is to be allowed. Allowance of claim of exclusion of write back of excess provision made in earlier years in computing book profit u/s 115JB - Mineral Right Tax and Cess on Coal and Limestone written back in the assessment year was created prior to 01.04.1997, therefore, falls under the provision of clause (i) of Explanation to Section 115JB(2) of the Act. So far as the provision for employees incentive is concerned, the same is not required to be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That on the facts and in the circumstances of the case, the Ld, CIT (Appeals) erred in confirming the addition of corporate tax paid at Saudi Arabia amounting lo Rs.2,05,75,346/- in the computation of Book Profit u/s 135JB. 3. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) erred in confirming the addition of Deferred Tax Liability of Rs,4,71,00,000/-in the computation of Book Profit u/s 115JB. 4. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) erred in confirming the addition of dividend distribution tax of Rs.5,48,00,000/- in computing Book Profit u/s 115JB. 5. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) erred in not allowing exclusion of provision for employees incentive written back amounting to Rs.46,00,000/- in the computation of Book Profit u/5115JB. 6. That on die facts and in the circumstances of the case, the Ld CIT (Appeals) erred confirming the addition of expenditure on computer software of Rs.39,00,000/- in the computation of Book Profit u/s 115JB. 7. That on the facts and in the circumstances of the case, the Ld CIT (Appeals) erred in not excl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income on 31.03.2005 and offered interest on income tax refund of Rs.4,26,95,068/- and sum of Rs.12,50,000/- being subsidy received which was not offered as income and offered certain adjustments. Thereafter, the notice u/s 143(2) 142(1) of the Act were issued and served upon the assessee. Thereafter, the assessment of the assessee was completed by assessing the loss to the tune of Rs.65,84,52,848/- and book profit u/s 115JB of the Act to the tune of Rs.1,89,56,60,483/- and tax @ 7.5% of the book profits and Surcharge @ 5% total to the tune of Rs.14,92,83,263/- was assessed. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who partly allowed the claim of the assessee but the assessee was not satisfied on the grounds mentioned above, therefore, the assessee has filed the present appeal before us. ISSUE NO. 1:- 5. At the time of argument, this issue has not been pressed by the assessee, therefore, this issue is being decided in favour of the revenue against the assessee being not pressed. ISSUE NO. 2:- 6. Under these issues the assessee has challenged the confirmation of the addition of Corporate Tax paid at Saudi Arabia in computing boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable, hence, by relying upon the law mentioned above i.e., Apollo Tyres Ltd. Vs. CIT (2002) ITR 273 (SC) and National Hydroelectric Power Corporation Ltd. Vs. CIT (2010) 187 Taxman 193 (SC), we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee. ISSUE Nos. 3,4, 5:- 7. At the time of argument, issue nos. 3, 4, 5 have not been pressed by the assessee, therefore, these issues are being decided in favour of the revenue against the assessee being not pressed. ISSUE NO. 6:- 8. Under this issue, the assessee has raised the addition in computing book profit u/s 115JB of the Act in respect of expenditure on computer software in sum of Rs.39,00,000/-. On this issue the assessee has raised the similar contention which he raised while arguing the issue no. 2 and also relying upon the case titled as Apollo Tyres Ltd. Vs. CIT (2002) ITR 273 (SC) and National Hydroelectric Power Corporation Ltd. Vs. CIT (2010) 187 Taxman 193 (SC). Since the claim of the assessee nowhere falls within the purview of the Explanation of 115JB of the Act, therefore, the addition is not liable to be sustainable in the eyes of law. Accodingly, we set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The CIT(A) has also declined the claim of the assessee on the basis of this fact that Section 71 deals with inter head adjustment and have precedence over section 74 of the Act. Nothing seems to contrary to the law. No law in support of the claim of assessee has been produced before us, therefore, taking into account, all the facts and circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. ISSUE NO. 11:- 13. At the time of argument, this issue has not been pressed by the assessee, therefore, this issue is being decided in favour of the revenue against the assessee being not pressed. ISSUE NO. 12:- 14. Under this issue the assessee has challenged the treatment of interest on tax refund as income from other sources. The Ld. Representative of the assessee has argued that the interest received on the income tax refund is liable to be treated as income from business or profession in view of the law settled in Donnald Mirada (1961) 42 ITR 166 (SC). However, on the other hand, the Ld. Representative of the Department has refuted the said cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case and in law, the Ld. CIT(A) erred in allowing assessee's claim of long term capital gain in respect of sales of land at Kaza mines and Nimabur at Kaza South, 7. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made in respect of provision for bad and doubtful debts at Rs.8,64,03,258/- in computation of book profit u/s 115JB of the I T Act/' 8. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made in respect of provision for Director's Retirement Benefit at Rs.46,27,200/- in computation of book profit u/s 115JB of the Act. 9. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made in respect of Expenses on VRS pertaining to earlier years of Rs.18,69,64,996/- in computation of book profit u/s 115JB of the I T Act. 10- On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made in respect of Expenses Capital expenditure debited to P fit L account of Rs. 15,02,74,405/- in computation of book profit u/s 115J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the levied u/s 234D of the I T Act. 22. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the assessee's claim of additional gratuity amounting to Rs.1,21,90,817/-. 23. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made in respect of provision for Director's Retirement Benefit at Rs.46,27,200/-. 24. On the facts and in the circumstances of the case and in law. the Ld. CIT(A) erred in deleting the interest levied u/s 234B of the IT Act, 18. The facts of the present case are that quite similar to the facts of the case as narrated above in ITA. No.4242/M/2007. However, the figure is different, therefore, there is no need to repeat the same. ISSUE NO. 1:- 19. Under this issue the revenue has challenged the deletion of addition of PF and Labour Welfare fund made u/s 43B of the Act an amounting to Rs.10,42,169/-. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - 12. I have considered the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industrialization. The said contention is also supported by the decision in the case of P.J. Chemical (supra), Reliance Industries Ltd. (supra) and M/s. Ambuja Cement Eastern Ltd. (supra). Further, similar issue has been allowed in favour of the appellant bymy own order in appeal no. CIT(A)-1/IT/87/04-05 for AY 2001-02 and in appeal no. CIT(A)-1/IT/07/05-06 for AY 2002-03. Hence the addition made by the AO is deleted and this ground of appeal is allowed. 22. On appraisal of the above mentioned finding, we noticed that the CIT(A) has allowed the claim of the assessee on the basis of the decision in the case of CIT Vs. PJ Chemicals Ltd. (1994) 210 ITR 830 (SC) and DCIT Vs. Reliance Industries Ltd. (2004) 88 ITD 273 (Mum). At the time of argument, the Ld. Representative of the assessee has also placed reliance upon the decision of CIT Vs. Shree Balaji Alloys (2011) 335 (J K High Court) in which such type of incentive held as capital receipt in the hands of industrial unit. No doubt, the issue has been remanded in the assessee s own case for the A.Y. 2001-02 in ITA. No.4562/M/2007 and A.Y 2002-03 in ITA. No.4240/M/2007 dated 29.07.2015, but, there is no need to remand the case b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in the assessee s own case reported in CIT Vs. Associated Cement Companies Ltd. (1988) 172 ITR 257 (SC). The facts are not distinguishable at this stage also. Since the matter of controversy has duly been covered and decided in favour of the assessee in the assessee s own case and L.H. Sugar Factory and oil Mills (P) Ltd. V CIT (1980) 125 ITR 293 (SC), therefore, in the said circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. ISSUE NO. 5:- 26. Under this issue the revenue has challenged the deletion of Sales Tax Subsidy in computation of book profit u/s 115JB as well as in computing total income under normal provisions of the Act. The revenue has also raised the additional ground nos. 2 3 in this regard. The Ld. Representative of the revenue has argued that the claim of the assessee has wrongly been allowed by the CIT(A), therefore, the finding of the CIT(A) is not liable to be sustainable in the eyes of law and is liable to be set aside. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king into account all the facts and circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. ISSUE NO. 6:- 28. Under this issue the revenue has challenged the allowance of claim of Long Term Capital Gain in respect of sales of land at Kaza mines and Nimabur at Kaza South. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - 21.3 I have considered the submissions made on behalf of the appellant. In my view, as per provisions of section 55(2)(b) of the Act, the appellant has an option to consider fair market value of the land as on 1.4.1981 as the cost of acquisition for the purpose of computing long term capital gain. Further, the appellant is also entitled to reduce indexed cost of improvement as per provisions of second proviso to section 48 of the Act in computing long term capital gain. Thus, in the light of the aforesaid discussions the AO is directed to recompute the long term capital gain on sale of land by cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) has allowed the claim of the assessee on the basis of decision CIT Vs. Usha Martin Industries Ltd. (2007) 288 (AT) ITR 63 (Kol) (SB) and CIT Vs. Echjay Forgings P. Ltd. (2001) 251 ITR 15 (Bom). The addition can only be raised in view of the provision u/s 115JB of the Act and in Explanation to sub section 2. The case of the assessee nowhere fall within the ambit of the said section, therefore, in the said circumstances, the CIT(A) has rightly deleted the said addition, hence, allowed the claim of the assessee. The facts are not distinguishable at this stage also. No contrary law to the law relied by the assessee has been produced before us. Therefore, in the said circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. ISSUE NO. 8:- 32. Under this issue the revenue has challenged the deletion of addition in respect of provision for Director s Retirement Benefit in computing Book Profit U/s 115JB of the Act amounting to Rs.46,27,200/-. Before going further, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed the claim of the assessee rightly, hence, the finding of the CIT(A) is not liable to be disturbed at this stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. ISSUE NO. 10:- 35. Under this issue the revenue has challenged the deletion of the addition made in respect of Capital expenditure debited to P L Account in computing book profit u/s 115JB of the Act in sum of Rs.15,02,74,405/-. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - 28.2 I have considered the submission made on behalf of the appellant. In my view additions made in computing total income under normal provisions of the Act has nothing to do with computation of book profit u/s 115JB and respectfully following the decisions of Hon ble Apex Court in the case of Apollo Tyres Ltd. (supra), Max Well Dyes Chemicals P. Ltd. (supra) as well as my own order for AY 1998-99 and 2002-03 in appeal no CIT(A)-I/IT/232/4-5 and CIT(A)-I/IT/7/5-6 respectively discussed herein above and for the reasons stated therein the addition made by the AO is deleted. Hence the ground of appeal is allowed. 36. On appraisal of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in-above, the addition made by the AO is deleted and this ground of appeal is allowed. 39. On appraisal of the above said finding, we noticed that the CIT(A) has allowed the claim of the assessee on the basis of the decision of Apex Court in the case of Apollo Tyres Ltd. Vs. CIT (2002) 255 ITR 273 (SC). It is specifically held that the computation of income under the normal provision of the Act has nothing to do with computation of book profit u/s 115JB of the Act in which specifically adjustment has been given in Explanation to Section 115JB(2) of the Act. No doubt, the addition which nowhere fall within the provision of Section 115JB of the Act and Explanation (2) of the Act is not required to be added to the income of Assessee, therefore, in the said circumstances, the same is not required to be added while computing the book profit u/s 115JB of the Act. Since the matter of controversy has been adjudicated by the CIT(A) judiciously and correctly, therefore, the finding of the CIT(A) is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. ISSUE NO. 13:- 40. Under this issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed towards purchase of assets of Rs.1,13,605/- have already been adjusted against the cost of the fixed assets in terms of the provision of section 43A and Explanation 10 to section 43(1) respectively. Thus the same cannot be added back in computing book profit. Further, State Capital Investment Subsidy received from WBIDC of Rs.26,90,000/- constitute capital receipt in the hands of the appellant and hence not taxable, as decided in ground no. 7(a) here-in-above and thus cannot be added back in computing book profit u/s 115JB. As regards, refund of sales tax of Rs.54,88,396/- is concerned, as discussed in ground no, 8(a) 8(b) here-in-above, the said amount needs to be added back to the profit and loss account and at the same time a corresponding deduction for equivalent amount has to be granted since the said refund has been adjusted against sales tax demand for the period 01-04-1994 to 31-03-1995 As regards, interest received on deposit with ARV Society and MSEB of Rs.85,479/- and Rs.5,250/- respectively, is concerned, since the said receipt constitute income in the hands of the appellant, the same needs to be added back in computing book profit u/s 115JB, Thus, the ground of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the decision of Bombay High Court in the case of CIT Vs. Echjay Forgings (P) Ltd. (2001) 251 ITR 15 (Bom) and JCIT Vs. Usha Martin Industries Ltd. (2007) 104 ITD 249 (Kolkata Tribunal) SB. We also noticed that the matter of controversy has been adjudicated by CIT(A) for the A.Y. 1998-99 also and against the said decision, the revenue is not in appeal. It is reiterated that the adjustment can only be made in view of Section 115JB of the Act which has been specified in Explanation to Section 115JB of the Act. In view of the said circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. ISSUE NO. 16:- 46. Under this issue the revenue has challenged the allowance of claim of provision for additional gratuity in computing book profit u/s 115JB of the Act amounting to Rs.1,21,90,817/-. The proposition is the same which has been discussed above while deciding the issue no. 15. The finding of the CIT(A) in this regard is hereby reproduced as under.: - 38.2 I h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JB(2) of the Act. So far as the provision for employees incentive is concerned, the same is not required to be deducted in computing book profit u/s 115JB(2) of the Act. Accordingly, the deduction was partly allowed. The CIT(A) has also relied upon the case cited as Hitkari Fibres Ltd. Vs. JCIT (2004) 90 ITD 654 (Mum). The facts are not distinguishable at this stage also. We nowhere found any irregularity and infirmity in the order, we uphold the finding of the CIT(A) on this issue and decide this issue in favour of the assessee against the revenue. ISSUE NO. 18:- 50. Under this issue the revenue has challenged the deletion of addition made in respect of amount withdrawn from share premium account in computation of book profit u/s 115JB of the Act. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - 40.3 I have considered the submissions made on behalf of the appellant. In my view write back of share premium account is an allowable deduction in view of clause (i) of Explanation to Section 115JB(2). Therefore, respectfully following the decision of the Hon ble ITAT for A.Y. 1990-91 as well as the orders of my predecessor for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn case in ITA. No.4241/M/2007 dated 29.07.2015. Accordingly, we set aside the finding of the CIT(A) on this issue and restored the issue before the AO to decide the issue afresh by giving an opportunity of being heard to the Assessee in accordance with law . Accordingly, we decide this issue in favour of the revenue against the assessee. ISSUE NO. 21:- 54. Issue no. 21 is in connection with the interest levied u/s 234D of the Act which is consequent in nature and nowhere required for any specific direction. ISSUE NO. 22:- 55. Under this issue the revenue has challenged the allowance of claim additional gratuity on provisional basis under normal provisions in sum of Rs.1,21,90,817/-. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - 52.3 I have considered the submission made on behalf of the appellant. Respectfully, following the decision of Hon ble Tribunal in the appellants own case in A.Y. 1990-91 in ITA. No. 2361/M/1995 vide order dated 18.1.2007 as well as my own order for A.Y. 2001-02 and A.Y. 2002-03 in appeal no. CIT(A)- I/IT/87/2004-05 and CIT(A)-I/IT/07/2005-06, respectively, discussed here in above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own orders for A.Y. 1998- 99 and for A.Y. 2002-03 as discussed here-in-above, the addition made by the AO is deleted and this ground of appeal is allowed. 59. On appraisal of the above said finding ,we find that CIT(A) has decided the issue on the basis of the decision of the case titled as Bharat Earth Movers and Echjay Forgings P. Ltd. (supra). Furthermore, we noticed that the issue has been squarely covered by assessee s own case in ITA. No.4987/M/2007.The relevant finding has been given in para no. 19 which is hereby reproduced as under.: - 19.Deletion of addition in respect of provision for Director's Retirement Benefit in computing income under normal provisions of the Act of Rs.2,84,53,850/ is the subject matter of the next ground.During the assessment proceedings,the AO found that the assessee had created provision for director's retirement benefit on the basis of actuarial valuation and it was added in computing total income.Subsequently,exclusion was claimed before the FAA. As the similar addition was deleted in MAT computation,so,he allowed the claim made by the assessee. 19.1.Before us,the DR argued that the FAA allowed the claim that was not b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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