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TMI Blog2014 (1) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... lating the present value of the asset in comparison to its purchase value, taking into consideration the depreciation in its value with the use and passage of time - For this purpose, neither there can be any requirement of creating a fund, nor such type of fund can ever be required for its use at appropriate time. While interpreting a legal provision, a single word cannot be taken out to interpret the provision, rather the whole of the provision as well the inter correlation of words used therein is to be seen. When we read the entire clause (i) of Explanation 1 to Section 115JB, the simple meaning of the word 'set aside' used therein comes out with reference to the amounts as 'reduced, on account of diminution in the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also in the book profit for the purpose of section 115JB of the I.T. Act. 4. In first appeal, the assessee submitted before the learned CIT(A) that, in its case, there was no provision made for liabilities. Only the value of certain assets had been reduced, hence the clause (c) of Section 115JB was not applicable to its case. Learned AR further submitted that even the clause (i), inserted in the Explanation 1 to section 115JB of the Act by the Finance Act (No. 2) Act, 2009 with retrospective effect from 01.04.2001 was not applicable, contending that mere making of provision for diminution in the value of any asset was not enough for disallowance, rather as per clause (i) an amount must be 'set aside' as a provision. While stressing u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to "the amount of deferred tax and the provision therefore". It does not refer to the amount set aside as provision therefore. The appellant emphasized that all the above clearly being out that clause (i) when it specifically refers to the words "set aside", envisages a fund kept aside, something that will become available in the further when required. 5.3.2 Further, the appellant pointed out that the Blacks Law Dictionary definition of "set aside" reads as "something (such as a percentage of funds) that is reserved or put aside for a specific purpose. Similarly, Webster's Dictionary defines "to set aside" as to set apart. It defines "to set apart" as to separate and keep for a purpose; to reserve. 5.3.3 The appellant submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation[1].-For the purposes of this section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by- (a) the amount of income-tax paid or payable, and the provision therefor; or (b) the amounts carried to any reserves, by whatever name called [other than a reserve specified under section 33AC]; or (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or (d) the amount by way of provision for losses of subsidiary companies; or (e) the amount or amounts of dividends paid or proposed; or (f) the amount or amounts of expenditure relatable to any income to which [section 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 115JB of the Act. 8. We are not satisfied with the reasoning and explanation given by the learned representative of the assessee regarding interpretation of clause (i) to Explanation 1 to Section 115JB of the Act. It may be observed that the word 'set aside' in clause (i) is followed by the word 'as' and not by the word 'to' as has been followed in clause (c). When the amount is claimed or earmarked for meeting a certain future liability then the word 'set aside' in that context will mean that the amount earmarked 'to' the provision made for future liability. The wording of clause (i) refers to the amounts appropriated 'as' a provision for the diminution of the value of the asset. So, there is a lot of differences 'for making a pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision for diminution in the value of any asset are to be included into the book profit. While interpreting a legal provision, a single word cannot be taken out to interpret the provision, rather the whole of the provision as well the inter correlation of words used therein is to be seen. When we read the entire clause (i) of Explanation 1 to Section 115JB, the simple meaning of the word 'set aside' used therein comes out with reference to the amounts as 'reduced, on account of diminution in the value of the asset. If the interpretation as put forward by the learned AR is to be given effect then the purpose of the inserting the clause (i) in the Explanation 1 will be defeated and the said clause (i) will become redundant as there will be no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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