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TMI Blog2025 (5) TMI 1318X X X X Extracts X X X X X X X X Extracts X X X X ..... to be added back for computation of "book Profits" (as per clause (c) of explanation [1], for determining the MAT payable u/s 115JB of the Act or not? Assessment Year: 2016-17: 3. The grounds of appeal taken by the assessee in Form 36 are as follows: "1. Ld CIT(A) has erred in his judgment by ignoring the fact that the amount of Rs 5,99,44,405, being Provision for CSR of previous three years is not an ascertained liability and hence liable to be added in calculation of MAT as item (c) of the explanation to section 115JA of the Act. 2. LA CIT(A) has made an error in judgment by relying upon the judgment of the Honorable Supreme court in the case of CIT vs M/s HCL Comnet Systems & services Ltd (2008) 305 ITR 409(SC) as the facts of the case are not squarely same in the case of assessee. In the case of M/s HCL Comnet Systems & services Ltd, the Honorable supreme court has clearly highlighted the distinction by remarking that the underlying issue of provision for bad debts is a case of amount receivable by the assessee and not any liability payable by the assessee and hence does not qualify as provision for liability and as a corollary cannot be disallowed under the ambit of item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to addition of Rs. 5,99,44,405/- of CSR to MAT profits, during the course of assessment proceedings, it was noted by the AO that the Assessee has debited an expenditure of Rs. 5,99,44,405/- in Profit and Loss statement on Corporate Social Responsibility. The assessee submitted that it was provision of CSR expenditure as stipulated under the Provisions of the Companies Act 2013. As Per Clause (c) of the Explanation to Section 115JAB of the Act "the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities" should be added to the book profit. Since assessee hadn't produced any documentary evidence of the fact that the Provision created is ascertained. The provision can never be said to be an Ascertained Liability, the only issue to be considered for Invoking Clause 'c', of Explanation to Section 115JB is that the Liability is Unascertained. Therefore, the amount was added back and the AO accordingly reworked the MAT computation under Section 115JB. The appellant relied on by the decision of Hon'ble Supreme Court of India in CIT Vs HCL Comnet Systems and Services Ltd. (2008) 305 ITR 409 (SC) wherein it has been held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the word "ascertained" is "to make certain". In dictionary.com, the word "ascertain" has been described as "to make certain, clear or definitely known" In the present case, M/s. Pawan Hans Ltd. vs. DCIT how the amount earmarked for spending towards the CSR obligation will be spent is "not certain". "clear" or "definitely known". At best, it is just an amount which has been set aside for being spent towards Corporate Social Responsibility but without any further certainty of its end-use. Thus, in our considered opinion, it cannot be said that the liability is an ascertained liability. Although, the Ld. AR has placed reliance on numerous judicial precedents, the same are distinguishable on facts as in those cases the nature/mode of expenditure earmarked for Corporate Social Responsibility spending was very much determined and specified i.e. the nature/mode of expenditure was "ascertained". Therefore, on the peculiar facts of this case we are unable to agree to the contention of the Ld. AR that the impugned disallowance u/s 115JB was an ascertained liability. We dismiss the grounds raised by the assessee. 11. Relying on the above decision the Ld DR prays for upholding the addition a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of deduction of CSR expenditure, for the purpose of computing the taxable income of the company and there is nothing contained in the said circular relating to its applicability for computation of book profits as per provisions of section 115JB of the Act. 17. In the instant case there is nothing on record to show that the statement of profit and loss is not prepared as per the accounting standard or the assessee has not followed the accounting policies or the same is not in accordance with the provisions of the Companies Act 2013, and we are also of the same view that the AO has no power to recompute the book profits and has to rely on the statement of accounts of the company compiled as per the provisions of the Companies Act 2013. 18. On this issue we also refer to the decision of the Hon'ble Delhi High Court in the case of Pr. Commissioner of Income Tax -7, Delhi vs Sony India Pvt. Ltd, order dated 30th. September, 2024 [ITA 551/2023 & CM Nos. 49717/2023 & 49718/2023], where in an identical case the High Court while analyzing the provisions of section 115JB, has observed as follows: (relevant portion reproduced): "RE: EXPENDITURE ON CSR 28. The AO had deleted the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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