9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (10) TMI 910 - AT - Income TaxMAT applicability on Debenture Redemption Reserve - deduction from the book profits of the appellant company computed as per section 115JB - HELD THAT - As the assessee has been claiming Rs.100 Cr. as Debenture Redemption Reserve for the purpose of redemption of debenture worth Rs.500 Cr. and after going through the judgment of Srei Infrastructure Finance Ltd. 2015 (2) TMI 545 - DELHI HIGH COURT wherein in the case National Rayon Corporation 1997 (7) TMI 113 - SUPREME COURT , Vazir Sultan Tobacco Company 1981 (9) TMI 105 - SUPREME COURT , Molasses Storage Fund DCM Ltd. 2004 (10) TMI 578 - DELHI HIGH COURT , Salem Co-operative Sugar Mills Ltd 1996 (9) TMI 40 - MADRAS HIGH COURT , Pandavapura Sahakara Sakkare Kharkane Ltd. 1991 (9) TMI 38 - KARNATAKA HIGH COURT , Somaiya Orgeno-Chemicals Ltd. 1993 (12) TMI 3 - BOMBAY HIGH COURT we hold that the provisions of Section 115JB(b) are applicable to the facts of the instant case. Addition u/s 41 - irrecoverably written off amount receivables from the assessee - assessee continued to claim the same as sundry creditors in their books of accounts - The facts proves that the assessee is absolved of their liability of Rs.16 .09 lacs and hence, we hold that the ld. CIT(A) has rightly confirmed the addition made by the AO.
Issues Involved:
1. Disallowance of Other Income for Computation of Profit Eligible for Deduction u/s 80IA of the Act. 2. Addition of Profit from Sale of Fixed Assets. 3. Claim of Debenture Redemption Reserve (DRR) created during the year. 4. Addition u/s 41 alleging cessation of liability. Summary: Disallowance of Other Income for Computation of Profit Eligible for Deduction u/s 80IA of the Act: The assessee contested the disallowance of "Other Income" for the purpose of computation of profit eligible for deduction under section 80IA of the Income Tax Act. The tribunal noted that the additional evidences submitted by the assessee were of seminal importance and were not presented before the authorities earlier. Consequently, in the interest of justice, the matter was remanded to the Assessing Officer (AO) to consider the additional evidences and pass an order in accordance with the Income Tax Act. Addition of Profit from Sale of Fixed Assets: The assessee challenged the addition of sales consideration as profit on the sale of fixed assets, arguing that it had already been considered in the turnover by the company. The tribunal found merit in the assessee's plea for additional evidences and remanded the matter to the AO for reconsideration, ensuring that the revenue had an opportunity to review the new evidences. Claim of Debenture Redemption Reserve (DRR): The assessee claimed a deduction for the Debenture Redemption Reserve (DRR) created during the year, arguing that it was a statutory requirement under the Companies Act, 1956. The tribunal, after reviewing the provisions of section 115JB of the Income Tax Act and relevant case laws, held that the amount transferred to the DRR was an appropriation of profits and not a charge against them. Consequently, the amount had to be added back for the purpose of computation of book profits under section 115JB. The tribunal upheld the CIT(A)'s decision, referencing the judgment in the case of Srei Infrastructure Finance Ltd. vs. Additional Commissioner Of Income Tax, which clarified that the DRR was not an ascertained liability and thus fell within the definition of a reserve. Addition u/s 41 alleging cessation of liability: The AO received information that the assessee had an irrecoverable write-off of Rs. 16.09 lakhs from M/s Wevin India Pvt. Ltd., which the assessee continued to claim as sundry creditors in their books. The tribunal upheld the CIT(A)'s confirmation of the addition made by the AO, concluding that the assessee was absolved of their liability of Rs. 16.09 lakhs. Conclusion: The tribunal partly allowed the appeals of the assessee for statistical purposes, remanding certain issues back to the AO for reconsideration based on additional evidences. The order was pronounced in the open court on 17/07/2023.
|
