TMI Blog2015 (1) TMI 1504X X X X Extracts X X X X X X X X Extracts X X X X ..... a sum lease equalization account is in the nature of a reserve and the same had to be added back when computing the Book Profits as per Explanation u/s 115JA(2) of the Act.? HELD THAT:- The lease equalization charges is not one of the amounts which is covered under any of the clauses to Explanation to Section 115JA(2). It cannot be treated as a reserve. As the name suggest, this lease equalization charges is nothing but the difference between the statutory depreciation on rentals and the recovery of cost of capital. Therefore, merely because the said amount entered in the P L account, in effect, makes no difference. At any rate, it cannot be treated as a reserve. Therefore, both the Appellate Authorities were justified in directin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted out that assessee had credited an amount of Rs.57,70,000/- as lease rental after reducing an amount of Rs.55,56,947/- as Lease Equalization Account . According to the Assessing Authority, the lease equalization is in the nature of reserve, he added back the said amount while computing Book Profits and accordingly framed the assessment order. Aggrieved by the same, the assessee preferred an appeal to the Commissioner of Income Tax (Appeals). 4. The Commissioner after carefully considering the entire material on record as well as the submissions, held that the provisions made for lease equalization charges could not be regarded as amount transferred to reserve as envisaged in Explanation (b) to Section 115JA(2). Therefore, the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore it has to be added back when computing the book profits as per Explanation under Section 115JA(2) of the Act. Therefore he submits that a case for interference is made out. 8. Per contra, the learned Counsel appearing for the assessee supported the impugned order. 9. The Assessing Authoirty has added a sum of Rs.55,56,937/- to the Book Profits of the assessee on the ground that the transfer of lease equalization account was in the nature of reserve and hence needed to be adjusted to the Book Profits as per the requirement of Explanation to Section 115JA of the Act. 10. The lease equalization charges is not one of the amounts which is covered under any of the clauses to Explanation to Section 115JA(2). It cannot be t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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