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2022 (2) TMI 25 - ITAT BANGALORERevision u/s 263 by CIT - CIT directed the A.O. to redo the assessment for the purpose of computation of book profits u/s 115JB - Depreciation on Investment Portfolio - CIT rejected the claim of the assessee that such net depreciation on investment is a valuation loss and cannot be considered for computation of book profit u/s 115JB - HELD THAT:- As decided in M/S. TORRENT PRIVATE LIMITED [2019 (6) TMI 709 - GUJARAT HIGH COURT] issue decided in favour of the assessee and against the revenue. It is hereby held that the Income Tax Appellate Tribunal was justified in deleting the disallowance of provision for diminution in value of investment while computing book profit under section 115JB of the Income Tax Act, 1961. Also see M/S. RELIANCE WELFARE ASSOCIATION CIRCLE, MUMBAI [2018 (1) TMI 855 - ITAT MUMBAI] A.O. is directed to verify whether depreciation / diminution of value of investment to the extent of ₹ 3028.32 crore is concerned, the same has actually been reduced from the assets side of the balance sheet, and is in the nature of write off. Therefore, de hors the observation of the CIT, the AO is directed to complete the assessment in the light of the dictum laid down in the above cited judicial pronouncements. It is ordered accordingly. Hence, ground 3 is allowed for statistical purposes Disallowance u/s 14A for computation of book profit u/s 115JB - As per AO assessee had voluntarily disallowed expenses relatable to exempt income u/s 14A of the I.T.Act to the extent of 5% of income on adhoc basis - HELD THAT:- As relying on GUJARAT FLUOROCHEMICALS LTD [2019 (7) TMI 541 - GUJARAT HIGH COURT],VIREET INVESTMENT (P.) LTD. [2017 (6) TMI 1124 - ITAT DELHI] and TATA SONS LIMITED [2018 (12) TMI 916 - ITAT MUMBAI] disallowance u/s 14A of the I.T.Act cannot be incorporated in the computation of book profits u/s 115JB of the I.T.Act, we hold that the assessment order is neither erroneous nor prejudicial to the interest of the revenue on this point. It is ordered accordingly. Therefore, ground 4 is allowed. Provision created in Non Performing Assets - as submitted before the CIT that provision for NPA as per RBI Prudential norms is not covered by item (i) to Explanation to section 115JB(2) since it is not a provision but a write off, therefore, it was contended that it has to be treated as write off and not a provision - HELD THAT:- As relying on YOKOGAWA INDIA LTD. [2011 (8) TMI 766 - KARNATAKA HIGH COURT] A.O. is directed to verify de hors the observations of the CIT whether provisions created for NPA is reduced from the assets side of the balance sheet. If so, the same is to be treated as write off. With these observations, we dispose of ground 5.
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