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2018 (5) TMI 637 - HC - Income TaxMAT - making adjustments for working the book profit u/s 115JB by adding the Advance Against Depreciation (AAD) to the book profit? - Held that - We are of the considered view, which fact is not disputed, that the same are squarely covered by the judgment in National Hydroelectric Power Corporation Ltd. vs. Commissioner of Income Tax(2010 (1) TMI 281 - SUPREME COURT) as held AAD was an income received in advance. It was a timing difference. Therefore, clause (b) of Explanation 1 to section 115JB (2) of the act was not applicable to AAD. Provision for leave encashment - whether is an ascertained liability and hence not to be included to book profit? - Held that - The matter is squarely covered by the judgment rendered in Commissioner, Income tax vs. H.P. Tourism Development Corporation Ltd. 2013 (6) TMI 97 - HIMACHAL PRADESH HIGH COURT as held that the provision for meeting the liability for encashment of earned leave by the employee is an admissible deduction. Eligibility to claim deduction u/s 80IA - excess provisions for bonus and sundry balance written back treated as income derived from the eligible business of generation of power - Held that - No substantial question of law arise for consideration for the reason that the matter has been remanded back by the appellate authority to the Assessing Officer. As such, as mutually agreed on this limited question, the matter be considered by the appropriate authority now dealing with the issue pursuant to an order of remand. Allowance of deduction u/s 80IA - treating the interest income earned by the assessee from HPSEB as income from generation of power and hence eligible income - Held that - The matter is squarely covered by the judgment rendered in Commissioner of Income tax vs. Jai Prakash Hydro Power Ventures Ltd. 2017 (5) TMI 1560 - ALLAHABAD HIGH COURT
Issues:
1. Adjustment for working the book profit under Section 115JB of the Income Tax Act, 1961. 2. Diminution in assets due to Advance Against Depreciation (AAD). 3. Treatment of provision for leave encashment in book profit. 4. Excess provisions for bonus and sundry balance written back as income for deduction u/s 80IA. 5. Treatment of interest income from HPSEB as income for deduction u/s 80IA. Analysis: Issue 1: Adjustment for Book Profit The first issue revolves around the adjustment for working the book profit under Section 115JB of the Income Tax Act, 1961. The Hon'ble ITAT's decision was challenged, questioning the correctness of not adding Advance Against Depreciation (AAD) to the book profit. The court referred to the judgment in National Hydroelectric Power Corporation Ltd. vs. Commissioner of Income Tax, where a similar issue was addressed, and held that the matter is squarely covered by the said judgment. Issue 2: Diminution in Assets The second issue concerns the diminution in assets due to Advance Against Depreciation (AAD) and whether it should be added back to the book profit. The court relied on the judgment in Commissioner, Income tax vs. H.P. Tourism Development Corporation Ltd. and concluded that the matter is already settled by the said judgment, which was passed by the court in a previous case. Issue 3: Provision for Leave Encashment Regarding the treatment of provision for leave encashment in the book profit, the court found that it is an ascertained liability and therefore should not be included in the book profit. This conclusion aligns with the legal precedent established in a previous judgment by the court in a case involving H.P. Tourism Development Corporation Ltd. Issue 4: Excess Provisions for Bonus and Sundry Balance The fourth issue pertains to excess provisions for bonus and sundry balance written back as income eligible for deduction under section 80IA of the Income Tax Act, 1961. However, as the matter was remanded back to the Assessing Officer by the appellate authority, the court decided that this issue does not currently require consideration and should be addressed by the appropriate authority following the remand order. Issue 5: Treatment of Interest Income Lastly, the issue of treating interest income earned from HPSEB as income from generation of power for deduction under section 80IA was discussed. The court referred to the judgment in Commissioner of Income tax vs. Jai Prakash Hydro Power Ventures Ltd. and found that the matter is adequately addressed by the said judgment, which was decided in a previous case. In conclusion, the court provided detailed analysis and resolved the substantial questions of law raised in the appeal, disposing of the appeal accordingly along with any pending applications.
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