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TMI Blog2012 (7) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... k profits for an amount as the net profit had already been computed as per provisions of the Companies Act. The said amount does not fall under any of the specific items given in clause (a) to (i) of explanation (1) to section 115JB, which can be added back to the book profits for the purposes of taxation - in favour of assessee. Addition made in the book profit u/s 115JB - creation of provision for employee benefits resulting in increasing the value of current liabilities equivalent to the diminution of the value of current assets - retrospective amendment made by Finance Act 2009 applicable w.e.f. 1.4.2001 to specifically include any amount, set aside as provision for diminution in the value of any asset - Held that:- The AO has based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the current year and added back to the book profit for computation of tax under MAT in order to prevent double deduction. 2. That the Ld. CIT (A) has erred in law in deleting the addition of Rs.2,1 1,33,8897- made in the book profit u/s 1 15JB by the A.O. as the creation of provision for employee benefits amounting to Rs.2,11,33,889/- has resulted in increasing the value of current liabilities equivalent to the diminution of the value of current assets with reference to retrospective amendment made by Finance Act 2009 applicable w.e.f. 1.4.2001 according to which the amount of provision for diminution in the value of assets is to be added back to the book profits of the company. 3. The order of the Ld. CIT(A) be set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this year. Consequently, the company itself, in the course of assessment proceedings, asked the AO to disallow the said amount while computing income of the appellate company. The AO, in doing so also, added same amount to the book profits for the computation of tax u/s 115JB of the Act. Ld. 'AR' contended that Section 115JB(2) is a code in itself. The said Section requires that the company shall, for the purpose of Section, prepare its profit and loss account for the relevant year, in accordance with the provisions of Part II and III Schedule VI to the Companies Act. The assessee, has also referred to the Explanation to the abovesaid Section. The assessee further placed reliance on the decision of the Hon'ble Supreme Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the specific items given in clause (a) to (i) of explanation (1) to section 115JB of the Act., which can be added back to the book profits for the purposes of taxation. As such the disallowance made by the AO is deleted." 7. In view of the above discussions, ground of appeal raised by the revenue is dismissed. 8. In Ground No.2, revenue contended that CIT(A) erred in law in deleting the addition of Rs. 2,1 1,33,8897- made in the book profit u/s 115JB by the A.O. as the creation of provision for employee benefits amounting to Rs. 2,11,33,889/- has resulted in increasing the value of current liabilities equivalent to the diminution of the value of current assets with reference to retrospective amendment made by Finance Act 2009 applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 322/[2009] 179 Taxman 55 (Delhi) and decision of the jurisdictional High Court in the case of CIT v National Hydroelectric Power Corporation Ltd. [2011] 201 Taxman 67 (Punj. Har.) (Mag.)/12 taxmann.com 406 (Punj. Har.). The CIT(A) deleted the impugned addition. 11. Ld. CIT(A) also considered other decisions in the matter, which are enlisted in para 5.4 of his order. 12. Section 115JB of the Act was amended by Finance Act (2009) by insertion of clause (1) w.e.f. 1.4.2001 to specifically include any amount, set aside as provision for diminution in the value of any asset. Prior to this amendment, the issue relating to the provision for bad and doubtful debt, was covered in favour of the assessee, by the decision in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO is accepted then every creation of provision will lead to dilution/reduction in the value of assets as a general class and therefore would not be deductible from book profit. This would mean that the deduction available for ascertained liabilities as per clause (c) would have no meaning. The judgement quoted by the AO is in fact in favour of the appellant as the Hon'ble Court has clearly held that the provision for gratuity being ascertainable liability on actuarial valuation is deductible while computing book profits and the provision for doubtful debts result in the diminution of value of debtors and the same was liable to be added back. Therefore, I do not see any logic in AO's view on this issue. The addition made is therefore d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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