9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 622 - AT - Income TaxMAT applicability of provisions of section 115JB - GTI and total income of the assessee are Nil - HELD THAT - As in a recent decision in the case of The United Provinces Sugar Co. Ltd. ( 2021 (4) TMI 633 - ITAT KOLKATA has dealt with the identical issue by holding that the issue whether book profits can be computed u/s 115JB when the GTI and total income of the assessee are Nil and no taxes payable , is adjudicated in favour of the assessee, respectfully following the decision of Hon ble Jurisdictional High Court on this issue. Considering the facts on record and respectfully following the binding judicial precedents including that in the assessee s own case all of which referred above, we hold that provisions of section 115JB are not applicable in the case of the assessee when the GTI and total income of the assessee are Nil and no taxes payable. Accordingly, the ground of appeal of the assessee is allowed. Assessee has claimed that it is not a dividend paying company and, therefore, for this reason also section 115JB is not applicable - As assessee placed reliance on the decision in the case of Neeraj Vanijya Pvt. Ltd. 2008 (10) TMI 723 - ITAT KOLKATA - We find that the contention of the assessee is covered by the said decision and respectfully following the same, we allow this ground in favour of the assessee. Contribution to molasses reserve while arriving at book profit u/s 115JB - HELD THAT - Since we have already dealt with the issue relating to applicability of section 115JB in the case of assessee whereby we have held that it is not applicable, this ground become infructuous and accordingly is disposed off as infructuous. Small contributions to local people and institution on request of employees and business associates - allowable as business expenses u/s 37(1) or not? - Counsel submitted that inadvertently these were accounted under the head charity and donation in the books of account which cannot be the basis for their disallowance - HELD THAT - We note that the expenses are towards the community and social welfare activities which have taken place in the vicinity of work area of the assessee but the ld. AO is of the view that this expenditure is not related to the business and disallowed this claim. Section 37 of the Act contemplates that any expenditure not being expenditure of the nature described in sections 32 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly and exclusively for the purpose of the business or profession shall be allowed in computing the income chargeable under the Head Profits Gains of Business or Profession . AO failed to appreciate the nature of business of the assessee and the surrounding social environment where it has been carrying out its business. From the details tabulated above, giving particulars for each of the payments Depreciation on Molasses Tanks - HELD THAT - We direct the AO to allow the claim of the assessee on depreciation on molasses tanks by making the correct computation in respect of new assets and the correct written down value (WDV) of the molasses tanks, considering the submissions placed on record. The assessee is already directed to furnish all the details and documentary evidences in support of its claim for due verification by the ld. AO to assist him in arriving at the correct amount of depreciation allowable on the molasses tanks. Accordingly, this ground of the assessee is allowed for statistical purposes
Issues Involved:
1. Deletion of addition in respect of liabilities for business expenses. 2. Applicability of Section 115JB of the Income-tax Act, 1961. 3. Addition of statutory contribution to Molasses Reserve in book profit under Section 115JB. 4. Deduction of value of stock of molasses. 5. Disallowance of petty contributions to local institutions and people. 6. Depreciation allowance on new assets and correct WDV of molasses tanks. Detailed Analysis: 1. Deletion of Addition in Respect of Liabilities for Business Expenses: The assessee supported the order of the CIT(A) which deleted the addition of Rs. 69,54,123/- related to business expenses liabilities. The Tribunal confirmed the order of the CIT(A) on this issue. 2. Applicability of Section 115JB of the Income-tax Act, 1961: The assessee argued that Section 115JB was not applicable as there was no computation of gross total income (GTI), deductions, total income, and tax payable. The Tribunal noted that the preconditions for invoking Section 115JB were not met since the assessee reported a loss of Rs. 49,75,164/- and claimed it as carry forward to be set off in subsequent years. The Tribunal relied on the precedent set by the Coordinate Bench of ITAT, Kolkata in the assessee's own case for AY 2003-04 and other similar cases, concluding that Section 115JB was not applicable when the GTI and total income were nil, and no tax was payable. 3. Addition of Statutory Contribution to Molasses Reserve in Book Profit Under Section 115JB: Since the Tribunal held that Section 115JB was not applicable to the assessee, the ground relating to the addition of Rs. 46,60,000/- as statutory contribution to Molasses Reserve became infructuous and was disposed of accordingly. 4. Deduction of Value of Stock of Molasses: The assessee sought a deduction of Rs. 60,30,936/- being 1/3 of the value of stock of molasses credited in the P&L account. The Tribunal did not specifically address this issue in the detailed analysis, implying that it was not pressed or was covered under the broader applicability of Section 115JB. 5. Disallowance of Petty Contributions to Local Institutions and People: The assessee claimed that Rs. 34,000/- spent on small contributions to local people and institutions were business expenses allowable under Section 37(1). The Tribunal found that these expenses were for community and social welfare activities in the vicinity of the assessee's work area and were inadvertently accounted under 'charity and donation.' The Tribunal allowed this ground, deleting the addition and recognizing the expenses as business-related. 6. Depreciation Allowance on New Assets and Correct WDV of Molasses Tanks: The CIT(A) had directed the AO to allow depreciation after verifying the use of new plant and machinery. The assessee sought clarity on this direction and provided detailed submissions on the claim. The Tribunal directed the AO to allow the claim of depreciation on molasses tanks by making correct computations, considering the correct WDV and new assets. The assessee was directed to furnish all necessary details and documentary evidence to support its claim. Conclusion: The Tribunal allowed the cross-objection of the assessee partly, confirming the deletion of the addition for business expenses liabilities, holding Section 115JB inapplicable, deleting the disallowance of petty contributions, and directing the AO to allow the correct depreciation on molasses tanks. The appeal was disposed of with specific directions for the AO to verify and compute the allowable claims accurately.
|
