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TMI Blog2014 (12) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be carried to the Balance Sheet and such income carried to Balance Sheet will form part of the ‘Reserve’. Since ‘AAD’ has been held by Supreme Court is not a reserve, this contention of the Revenue can’t be accepted – Decided against revenue. Computation of book profit u/s 115JB on provision for gratuity, leave encashment and post-retirement benefits – Held that:- In Bharat Earth Movers Versus Commissioner of Income-Tax [2000 (8) TMI 4 - SUPREME Court] it has been held that the liability incurred by the assessee under the Leave Encashment Scheme determined on actuarial valuation is an ascertained liability and cannot be considered as a contingent liability - the amount of such provision can be claimed as deduction only on actual payment and not on the simple creation of provision - in the computation of book profit u/s 115JB, deduction is available for such provision of ascertained liability – revenue has not drawn attention towards any part of the provisions of section 115JB, which makes the provisions of section 43B(f) applicable to the computation of book profits - if the income under the normal provisions of the Act turns out to be more than the book profit u/s 115JB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss appeals one by the assessee and other by the Revenue - for the assessment year 2006-07 and the only appeal by the Revenue for the assessment year 2008-09 involve some common issues. As such, we are proceeding to dispose them off by this consolidated order for the sake of convenience. Assessment year 2006-07 2. The first issue in the Revenue's appeal is against the deletion of addition of ₹ 51,80,00,000/- on account of Tariff adjustment u/s 115JB of the Act. Briefly stated the facts of this issue are that the assessee showed Tariff adjustment of ₹ 51.80 crore out of the sale of ₹ 1713.79 crore. On being called upon to explain the reason for this action, the assessee stated that it raised power bills during the year as per tariff fixed for the period 1.4.2001 to 31.3.2004 and it was required to submit its application before CERC for revision in tariff rates after the tariff period 2004-09. The assessee filed its revised tariff application for two projects to the tune of ₹ 51.80 crore. The AO held that the quantification of reduction in sales was based the on assessee's pending application before CERC and as such this was not an ascertained l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of Provision for gratuity, leave encashment and post retirement benefits. Briefly stated, the facts of this ground that the assessee claimed deduction towards Provision for gratuity and leave encashment etc. in the computation of 'Book profits' as per section 115JB of the Act. In support of its contention, the assessee relied on the judgment of the Hon'ble Supreme Court in the case of Bharat Earth Movers Vs. CIT (2000) 245 ITR 428 (SC) holding the liability incurred by the assessee under Leave Encashment Scheme etc. as an ascertained and not contingent liability. Not convinced with the assessee's submission, the Assessing Officer added back the amount of the provision while computing book profit u/s 115 JB of the Act. The ld. CIT(A) concurred with the submissions advanced on behalf of the assessee and restored the assessee's point of view. 7. After considering the rival submissions and perusing the relevant material on record, it is noticed that the Hon'ble Supreme Court in the aforenoted case of Bharat Earth Movers (supra) has held that the liability incurred by the assessee under the Leave Encashment Scheme determined on actuarial valuation is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the computation of book profit u/s 115JB of the Act. 9. We have heard the rival submissions and perused the relevant material on the record. It is noticed that similar issue has been decided by the Tribunal against the assessee in its own case for the A.Y. 2004-05. The ld. AR was fair enough to accept this position. Respectfully following the precedent, we overturn the impugned order on this issue and allow the ground taken by the Revenue. 10. The only ground taken by the assessee in its appeal is against the confirmation of addition of ₹ 47.88 crore on account of 'Advance against depreciation' in the computation of income under the normal provisions. The facts of this ground are that the assessee reduced the sales by claiming that the advance against depreciation to the tune of ₹ 47.88 crore, included in the sales, was not a revenue receipt. Relying on the decision rendered by the Authority for advance ruling against the assessee on this issue, the AO treated it as a revenue receipt and accordingly added the same to the total income. The ld. CIT(A) upheld the assessment order in this issue. The assessee is aggrieved against the action of the ld. CIT(A) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. As the facts and circumstances of this ground are similar to those of the Revenue's appeal for the A.Y. 2006-07, following the view taken hereinabove, we hold that there is no warrant for making any such addition in the computation of book profit u/s 115JB of the Act. However, it is made clear that in the computation of total income under the normal provisions of the Act, such provision can be allowed only to the extent of payment made before the due date as per section 139(1) of the Act. 15. The next ground taken by the Revenue is against the deletion of addition on account of 'Depreciation on land amortized' for the purposes of book profit u/s 115JB of the Act. 16. The facts of this ground are admittedly similar to those for the assessment year 2006-07. Following the view taken hereinabove, we uphold the impugned order and dismiss this ground of appeal. 17. The next ground is against the deletion of addition of ₹ 22,99,80,552/- on account of provision for loss in hedged transaction for the purposes of computation of book profit u/s 115JB of the Act and also the income under the normal provisions of the Act. 18. Briefly stated the facts of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s against deletion of disallowance of ₹ 7.01 crore u/s 14A of the Act in the computation of income under the normal provisions and also under the MAT provisions. Briefly, stated the facts of this ground are that the assessee made investments in certain securities yielding exempt income. This Investment, as per the Assessing Officer, stood at ₹ 1014.78 crores as at the end of the year, from which the assessee received exempt dividend income of ₹ 36.06 crore. The Assessing Officer computed disallowance u/s 14A by applying rule 8D. Such computation of disallowance as per rule 8D came to ₹ 24.90 crore. Since, the assessee had voluntarily made disallowance of ₹ 17.89 crore on this score, the Assessing Officer made, further disallowance of ₹ 7.01 crore under the normal provisions and also under section 115JB of the Act. The ld. CIT(A) deleted the disallowance. 21. After considering the rival submissions and perusing the relevant material on record it can be seen from the assessee's balance sheet as on 31.03.2008 that the amount of Share capital with Reserves and surplus stands at ₹ 17,275.83 crore. As against this, the Assessing officer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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