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TMI Blog2015 (7) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... Book Profit u/s 115J had been deleted by the Tribunal in assessee's own case in AY. 1990-91 as relied upon the cases of National Hydro Electric Power Corporation(2010 (7) TMI 969 - PUNJAB AND HARYANA HIGH COURT),Hewlett Packard India (P.) Ltd.(2008 (3) TMI 23 - HIGH COURT OF DELHI ),Bechtel India (P) Ltd.(2007 (11) TMI 2 - HIGH COURT , DELHI)and Dresser Valve India (P) Ltd.(2009 (4) TMI 535 - ITAT MUMBAI)- Decided in favour of assessee. Computing of Book Profit u/s.115JB with regard to expenditure incurred by the assessee on Voluntary Retirement - Held that:- FAA is based on the judgment of the Hon’ble Supreme Court and the Tribunal has in the case of Nicholas Piramal India Ltd.(2013 (11) TMI 934 - ITAT MUMBAI) has decided the issue of VRS in favour of the assessee.So,in our opinion,his order does not suffer from any legal infirmity.- Decided in favour of assessee. Addition made in respect of Capital Expenditure debited to P&L account in computing book profit u/s 115JB - CIT(A) deleted addition - Held that:- Expenditure had been disclosed in Clause 17(a) of the tax Audit Report and same were added to total income while computing income under the normal provisions of the Act.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessee. Subsidy received from Government of West Bengal - Whether the amount received by the assessee was not allocable towards any capital asset and was in the nature of incentive which was a taxable receipt? - Held that:- FAA had relied upon various case laws and decided the issue without examining the whole scheme.On a query by the Bench the AR informed that the matter of Reliance Industries Ltd. [2003 (10) TMI 255 - ITAT BOMBAY-J ] was sent back by the Hon’ble Supreme Court to the Hon’ble Bombay High Court to decide afresh after considering the provisions of the scheme.In our opinion,any scheme in itself cannot be treated revenue or capital in nature-to arrive at a definite conclusion one has to consider the scheme in entirety.We feel that the issue needs further investigation.Therefore,in the interest of justice,the issue is restored back to the file of the AO who would decide the matter after affording a reasonable opportunity of hearing to the assessee and after analysing the scheme - Decided in favour of revenue for statistical purposes. Provision for deferred tax - Held that:- FAA had,after verifying the fact,deleted the addition and therefore in our opinion the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any provision for exclusion of capital gains exempted in the computation of book profit under the provisions contained in Explanation to s. 115JB of the Act, the assessee is not entitled to the exclusion thereof as claimed. We, therefore, answer the question referred to us against the assessee and hold that in the absence of any provision for exclusion of exempted capital gain in the computation of book profit under the provisions contained in Explanation to s. 115JB of the Act, the assessee is not entitled to the exclusion thereof as claimed - Decided in favour of revenue. Claim of additional gratuity on provision basis - Held that:- The issue was decided in favour of the assessee in the earlier AY.s - Decided against revenue. Interest u/s.234B on short payment of advance tax over assessed tax - CIT(A) deleted addition - Held that:- AR correctly relied upon the case of Jupiter Bio-Science Ltd.(2011 (8) TMI 268 - KARNATAKA HIGH COURT ) and argued that the amendment with retrospective effect became part of the Act after the assessee had filed its return of income,that at the time of filing of return the assessee was not liable to pay advance tax.- Decided against revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have not taken place.- Decided against revenue. Non exclusion of profit on sale of investments in computing Book Profit u/s.115JB - Held that:- The Tribunal decided the issue against the assessee while adjudicating the appeals for the AY.s.1998-99,99-2000,2001-01.We find that the Hon’ble Bombay High Court has dealt the issue of non exclusion of profit on sale of investments in computing Book Profit u/s.115JB of the Act,in the case of Veekaylal Investment Co. P. Ltd. (2001 (2) TMI 117 - BOMBAY High Court) wherein held while computing the book profits under the Companies Act, the assessee has to include capital gains for computing the book profits under section 115J . Even under clause 3(xii)(b) of Part II of Schedule VI to the Companies Act, 1956, profits or losses in respect of transactions or transactions of an exceptional or nonrecurring nature are to be disclosed. This shows clearly that capital gains should be included for the purposes of computing book profits - Decided against assessee. Written off insurance and railways claims - Held that:- The matteR is covered in favour of the assessee by the judgment of Morgan Securities & Creditors(P.)Ltd. [2006 (12) TMI 106 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k profit u/s 115JB of the I T Act. 5.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made in respect of Expenses Capital expenditure debited to P L account of ₹ 30,17,77,030/in computation of book profit u/s 115JB of the I T Act. 6.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made in respect of Revenue generated from trial run production at ₹ 73,48,69,876/in computation of book profit u/s 115JB of the I T Act. 7) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made in respect of revenue expenditure on temporary structures at customer's site of ₹ 49,94,501/. 8) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made in respect of Section 43B of ₹ 5,01,292/ . 9) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made on account of capital investment of ₹ 12,10,000/received from the Govt. of West Benga1. 10) On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting to ₹ 1,53,00,536/; The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the A.O. be restored. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. ADDITIONAL GROUNDS OF APPEAL 1. On the facts and in the circumstances of the case and in view of the Supreme Court decision in the case of Goetz India, the Ld. CIT(A) erred in giving such a direction to the Assessing Officer, the effect of which had reduced the Total Income to less than the Returned Income. 2 On the facts and in the circumstances of the case and in view of the decision of the Apex Court in the case of M/ s Appollo Tyres Ltd. Vs. CIT [2002] [255 ITR 273] [SC] , the Ld. CIT(A) erred in directing to deduct exempted sales tax for computation of Book Profit u/s 115JB of the Act. 3. On the facts and in the circumstances of the case the Ld. CIT(A) ought not to have granted the relief on the basis of the decision in the case of Reliance Industries Ltd. as the facts of the appellant case is different from that of the facts of the case relied on by the Ld. CIT(A) as the case : of Reliance Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the same on Straight line method. 8. That on the facts and in the circumstances of the case, the Ld. err (Appeals) erred in disallowing the dividend charged to the Profit and Loss Account of ₹ 51,23,59,905/ in computing total income under normal provisions of the Act. 9. That the appellant craves leave to add, to amend, modify, rescind, supplement or alter any of the Grounds stated hereinabove, either before or at the time of hearing of this appeal. Assessee-company,engaged in the business of manufacturing and sale of cement,filed its return of income on 31.10.2002,declaring its income at Rs.(-)99.48Crores.The Assessing Officer (AO) finalised the assessment on u/s.143(3)of the Act on determining its income at Rs.(-)8,11,61,032/- under the normal provisions and at ₹ 2,95,81,62,995/-under the provisions of section 115JB of the Act. 2.First ground of appeal is about deletion of addition in respect of provision for bad and doubtful debts in computing book profit u/s.115IB of the Act,amounting to ₹ 11,91,81,266/-.While computing the income u/s.143(3)of the Act the AO added the provision in normal computation. He also made the addition on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions for doubtful debts, gratuity, bonus and amounts debited to the profit and loss account in respect of foreign exchange rate difference, on the ground that the above items were to be added back to the net profit as shown in the profit and loss account under the Explanation to section 115J(1A) .The Tribunal held that the disallowances made by the Department under section 115J were impermissible.Deciding the appeal filed by the department,the Hon ble Court held as under: (i)that since clause (a) of the Explanation does not contemplate wealthtax, the net profits could not be increased by the amount of wealthtax paid by the assessee. (ii)That there was no material before the court in support of the conclusions drawn by the Assessing Officer that the provision for doubtful debts made by the assessee was in respect of an unascertained liability,nor had the Department disputed the assessee s claim that it was an ascertained liability. The amount could not be included in the net profits. (iii) That since the provision for gratuity was made on the basis of actuarial calculations, it was an ascertained liability and the said amounts could not be added to the net prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure on Voluntary Retirement Scheme for the AY.s. 2001-02 2002-03 debited to the profit and loss account in computing total income under normal provisions.Since it was added in normal computation,the addition was also made by the AO while computing the Book Profit. Relying on the decision of the Apex Court,delivered in the case of Apollo Tyres Ltd.(255 ITR 273),the FAA deleted the addition made by the AO. 4.1.Before us,the AR relied upon the case that find place in the earlier paragraphs of our order.He also referred to the matters of Usha Martin Industries Ltd. (104 ITD 249) and Nicholas Piramal India Ltd.(147 ITD 675). We find that the order of the FAA is based on the judgment of the Hon ble Supreme Court and the Tribunal has in the case of Nicholas Piramal India Ltd.(supra)has decided the issue of VRS in favour of the assessee.So,in our opinion,his order does not suffer from any legal infirmity.Upholding his order,we decide ground no.3 against the AO. 5.Deleting the addition made in respect of VRS expenditure pertaining to earlier years in computing Book Profit u/s.115IB of the Act of ₹ 17.97 Crores is the next ground of appeal filed by the AO.The assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Institute of Chartered Accountants of India,that same was not disputed by the AO,that the addition made by him was not tenable in view of the decision of the Apex Court in the case of Apollo Tyres Ltd. (supra). We find that the addition made by the AO does not fall under any of the clauses specified under the Explanation to section 115JB of the Act.Therefore, in view of the decision of the Apollo Tyres Ltd.(supra),we dismiss the ground raised by the AO. 8.Next ground deals with Allowance of expenditure on temporary structures at customer s site , amounting to ₹ 49,94,501/-.During the assessment proceedings,the AO found that the assessee had incurred expenditure in setting up temporary structures at client site for manufacture of Ready Mix Concrete (RMC),that the expenditure is charged off in the books proportionate to the number of m3 produced to the total no.of m3 awarded in the contract,that the amount debited was claimed as allowable expenditure.He held that the expenditure of RMC plants represented capital expense and was eligible for depreciation. 8.1.In the appellate proceedings the FAA held that the expenditure had been incurred for setting up temporary arrang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-.During the assessment proceedings,the AO found that the assessee had deposited Employee's Contribution to ESIC of ₹ 502/ -for the month of March'02 with a delay of 12 days,that it had deposited Employer's Contribution to Pension fund of ₹ 5,00,790/- for the month of April 0l on 14-05-2001 and that the cheque was realized on 09-06-2001.Considering these facts the made a disallowance of the disputed sum on the ground that there had been delay in payment of the amount by the assessee. 9.1.In the appellate proceedings,the FAA deleted the disallowance of Employer's Contribution to Pension fund of ₹ 5,00,790/ - in view of See. 43B.However, disallowance on account of delay in Employee's Contribution to ESIC was confirmed. 9.2.Before us,the DR supported the order of the AO.The AR contended that the second proviso to Sec.43B,which provided for disallowance of employer's contribution to any fund for the welfwere of employees if not paid before the due date specified in Sec.36(1)(va)was deleted by the Finance Ac, 2003,that the issue was favourably covered by the decision of Hon'ble Apex Court delivered in the case of Alom Extrusions Ltd.( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order,the FAA held that the subsidy so received was on capital account and was an incentive for industrialisation. The said contention is also supported by the decision in the case of P.I. Chemicals Ltd. (Sura) Reliance Industries Ltd. (Supra) and M/s Ambuja Cement Eastern Ltd.(supra).Further,similar issue has been allowed in favour of the appellant by my own order in appeal no.CIT(A)-I/IT/87/04-05 for AY.2001-02.Hence, the addition made by the A.O. is deleted and this ground of appeal is allowed. 10.2.The DR supported the order of the AO and stated that nature of the subsidy was not looked in to properly by the FAA. .The AR stated that the AO s appeal on identical issue had been rejected by the ITAT, while deciding the appeal for the AY.2001-02(ITA No.4562/M/07).He also relied upon the order of the Kolkata ITAT delivered in the case of Ankit India Limited [ITA/ 330/Kol/2010)wherein sales tax remission granted under the same scheme of state of West Bengal had been held to be capital in nature,that the Hon ble Kolkata High Court had dismissed the appeal of the Revenue and had held that incentive of sales tax remission granted under the scheme is capital in nature. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO is rejected. 12.Next ground deals with deletion of the disallowance of discarded capital assets and Cost of dismantling(Rs.1,33,95,494/-).The AO found that the assessee had offered the receipts from scraped old and unserviceable assets to tax and had claimed the expenditure incurred to facilitate such earnings.He disallowed the expenditure claimed by the assessee.Following the order of earlier years, FAA deleted the additions made by the AO. 12.1.Before us,representatives of both the sides agreed that the identical claim for earlier years in Assessee s own case had been allowed by ITAT in AY.s.1991-92-(ITA/1105/Mum/97),1992- 93-(ITA/3961/Mum/97),1996-(ITA/3783/Mum/00),1997-98(ITA/3298/M/0l)and1999-00, (ITA 7594/M/04)and that the decisions of the ITAT in AY.s. 91-92 to 92-93,96-97,97-98 99-00 had not been challenged before the Hon ble High Court. As the orders for the earlier AY.s.of the Tribunal have attained finality,so,respectfully following the same,we decide ground no.11agaisnt the AO. 13.Ground no.12pertains to deletion of interest levied u/s.234D of the Act(Rs.52.74lakhs). While completing the assessment order,the AO levied interest u/s.234D of the Act.In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncompetition agreement was a capital receipt, not taxable under the 1961 Act. It became taxable only with effect from April 1, 2003. It is well settled that a liability cannot be created retrospectively. In the present case, compensation received under the noncompetition agreement became taxable as a capital receipt and not as a revenue receipt by specific legislative mandate vide section 28(va) and that too with effect from April 1, 2003. Hence, the said section 28(va) is amendatory and not clarificatory. Respectfully,following the above decisions,we decide the of non compete fee against the AO. Now,we would take up the issue of Compensation for termination of the contract.Before us, the AR stated that the compensation for termination of contract was akin to consideration received for transfer of right to carry on the business,that right to carry on any business was taxable as capital gain w.e.f A.Y. 2003-04,that the above receipt should be treated as capital receipt.He relied upon the cases of H.L.Taneja (7SOT387),T.S.Manocha(5SOT277),N. Sandeep Reddy(95ITD 33).We find that the provisions of section 55(2)(a)and section 28(va) were not applicable during the year under app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : (1) If it is discovered that P L a/c is not drawn up in accordance with Part II and Part III of Sch. VI of the Companies Act. However, the AO cannot disturb the net profit as shown by the assessee where there are no such allegations, fraud or misrepresentation but only a difference of opinion as to whether a particular amount should be properly shown in the P L a/c or in the balance sheet, (2) If accounting policies, Accounting Standards are not adopted for preparing such accounts and method, rates of depreciation which has been incorrectly adopted for preparation of P L a/c laid before the annual general meeting. Except for the above two cases, the AO has no power to alter the net profit shown by the companies for the purpose of computing the book profit. Thus it is clear that under MAT, the AO should take the net profit as computed by the assessee and then make the adjustments under s. 115JB of the Act. It is common that some companies follow an accounting year under the Companies Act, 1956 which is different from the financial year under IT Act, 1961. These companies generally prepare two sets of accounts'one for Companies Act and another for IT Act. The reason being diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by the Companies Act and the same to be scrutinized and certified by the statutory auditors and will have to be approved by the company in its general meeting and thereafter to be filed before the RoC which has a statutory obligation also to examine and satisfy that the accounts of the company are maintained in accordance with the requirements of the Companies Act. It was held that if these procedures were complied with, it was not open to the AO to rescrutinize this account and satisfy himself that these accounts have been maintained in accordance with the provisions of the Companies Act. The same view was reiterated in the case of Malayala Manorama Co. Ltd. vs. CIT (2008) 216 CTR (SC) 102: (2008) 6 DTR (SC) 1: (2008) 300 ITR 251(SC) by the apex Court. xxxxxxxxxxxx 24. It is undisputed fact that the longterm capital gain earned by the assessee is included in the net profit determined as per P L a/c prepared as per Part II and Part III of Sch. VI to the Companies Act. In other words, it is not the case of the assessee that the capital gain earned by the assessee was not included in the net profit determined as per P L a/c of the assessee prepared under the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputing book profits under s. 115JB. Capital gains on sale of shares were included in computing the profits presented before the shareholders and the same should also be included in computing book profits under s. 115JB. The Kerala High Court in the case of N.J. Jose Co. (P) Ltd. vs. Asstt. CIT (supra) has held that capital gains, even though exempt under the normal provisions of incometax under s. 54E cannot be excluded while computing book profits. They have observed : .. We are unable to accept the contention of the assessee, because the assessment under Chapter XIIB on book profits is a selfcontained code. The scheme thereunder is to adopt the P L a/c of the assessee prepared in accordance with the provisions of Parts II and III of Sch. VI to the Companies Act, 1956 and to treat the net profit shown therein as book profit. The permissible adjustments in the form of additions and deductions are provided under Explanation to s. 115J(1A) of the Act. No more deductions, rebates or allowances other than what is stated in the said Explanation are available for the computation of book profit. In fact, it is very clear from the non obstante clause in s. 115J(1) tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t II of Sch. VI to the Companies Act to give information with regard to depreciation which has not been provided for, along with the quantum of arrears'Once this information is disclosed in the notes to the accounts, it would clearly fall within the ambit of the Explanation to s. 115J'Notes to the accounts form part of the P L a/c by virtue of subs. (6) of s. 211 of the Companies Act and thus the depreciation which is not charged to P L a/c but is disclosed in the notes to the accounts would come within the ambit of the expression 'show in the P L a/c' occurring in Explanation to s. 115J'Further, the net profit of a company cannot be determined till all the items of income and expenses as well as depreciation are taken into account'Depreciation, even if not debited to the P L a/c has to be taken into account while determining 'book profit' under s. 115J as long as it forms part of the prescribed accounts'That apart, s. 205(1), proviso (b) of the Companies Act r/w cl. (iv) of Explanation to s. 115J permits reduction of net profit to the extent of past losses or unabsorbed depreciation, whichever is less'If unabsorbed depreciation can be reduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (supra). In that case, it is noted by the Tribunal in para 3.2 of its order that the capital gain earned by the assessee being exempt under s. 50 of the Act will not form part of the normal taxable income, and when the receipt is not in the nature of taxable income, it cannot be taxed as income under s. 115JA of the Act. The Tribunal applied the provisions of subs. (4) of s. 115JA, which provides that save as otherwise provided in this section (s. 115JA), all other provisions of the Act shall apply , in taking a view that all other provisions of the Act would continue to operate and, therefore, the exempt income under s. 50 would remain exempted as per the provisions of subs. (4) of s. 115JA. The Tribunal further observed that in s. 115JA, a new subs. (4) has been brought on the statute, which was not there in s. 115J, and subs. (4) has been introduced first time in s. 115JA. The Tribunal, therefore, had taken a view that the operation of non obstante clause is now limited only to determine book profits and the book profits so determined have to be taxed taking into consideration the other provisions of the Act. In other words, the Tribunal held that s. 115JA is a part of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal in the case of ITO vs. Frigsales (India) Ltd. (supra) has not applied the ratio of decision of Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (supra) and Hon'ble Bombay High Court in the case of CIT vs. Veekaylal Investment Co. (P) Ltd. (supra) for the reason that these decisions were rendered in the context of provisions of s. 115J of the Act, but the fact remains that the propositions laid down by Hon'ble Supreme Court in the case of Apollo Tyres (supra) have been reiterated and relied upon by the Hon'ble Supreme Court in the case of CIT vs. HCL Comnet Systems Services Ltd. (supra) which has been rendered in the context of s. 115JA of the Act. As per subs. (5) of s. 115JB of the Act, which reads as save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being a company, mentioned in this section . Having regard to expression save as otherwise provided in this section used in this subs. (5) of s. 115JB of the Act, we are of the considered opinion that the expression save as otherwise provided in this s. 115JB clearly means that what is provided in s. 115JB should be religiously followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the power of examining whether the books of account are certified by the authorities under the Companies Act as having being properly maintained in accordance with the Companies Act, and the AO thereafter has the limited power of making increases and reductions as provided for in the Explanation to s. 115J of the Act. The capital gain in question is exempt under s. 47(iv) of the Act but the same is not covered by any of the cls. (i) to (vii) of Expln. (1) to s. 115JB of the Act. xxxxxxxxxxxxx 29. The next issue for consideration is the character of exemption granted under ss. 47(iv), 47(v) and 50. These are not total exemptions but in the nature of deferment of tax. The exemption granted under s. 47(iv)/47(v), in respect of transfer from/to holding company to/from its wholly owned subsidiary is not a complete exemption from taxation but only a deferment. For example, if within 7 years of transfer, the holding company ceases to hold 100 per cent of shares of subsidiary, then the capital gains not taxed in view of s. 47(iv)/ 47(v) get taxed under s. 47A. Further when the transferee sells the asset, the cost of acquisition is taken as the cost of acquisition of the transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons, we upheld the order of learned CIT in holding that the longterm capital gain is to be included in the net profit prepared under the Companies Act and the same is not deductible from the net profit for the purpose of computing book profit under s. 115JB of the Act. We further hold that merely because the longterm capital gain is exempt under s. 47(iv) of the Act under the normal provision of the Act, it is not correct to say that it is also to be reduced from the net profit for the purpose of computing book profit under s. 115JB of the Act when the Explanation to s. 115JB does not provide for any deduction in terms of s. 47(iv) of the Act. In other words, we hold that s. 47(iv) of the Act has no application in the computation of book profit under s. 115JB of the Act. Thus from a reading of the s. 115JB as well as the analyses of various High Courts and Supreme Court decisions, the inescapable conclusion is that the book profits have to be calculated on the net profits computed as per Parts II and III of Sch. VI to the Companies Act, 1956 and as adjusted by the amounts mentioned in the Explanation. No further rebates or deductions after such adjustments, notwithstanding the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he identical ground(AY.90-91-ITA/2361/M/95,AY.92-93-ITA/ 3961/M/97,AY.93-94-ITA/6901/M/97,AY.96-97-ITA/3783/M/00,AY.97-8/ITA/3298/ /0l,AY.1998-99,ITA/6289/M/03,AY.99-00-ITA/7594/M/04,AY.00-01-ITA/9613/M/04).It is also found that the decisions of the ITAT in AYs 90-91 to 93-94, AYs 96-97,AY.1998- 99,AY.1999-00 AY.2000-01were not challenged before the High Court and hence same attained fainalty.Considering the above,we decide ground no.16 against the AO. 18.Ground no.17 is deals with deletion of interest levied u/s 234B of the Act.The AO had levied interest u/s.234B on short payment of advance tax over assessed tax.The FAA,in the appellate proceedings,granted relief to the assessee. Before us,the DR stated that issue could be decided on merits.The AR relied upon the case of Jupiter Bio-Science Ltd.(352ITR113) of the Hon ble Karnataka High Court and argued that the amendment with retrospective effect became part of the Act after the assessee had filed its return of income,that at the time of filing of return the assessee was not liable to pay advance tax. We find that the identical issue has been dealt and decided by the Karnataka High Court in the case of Jupitor Bio Science in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon and adjudicated by the Hon ble Apex Court in the case of Bharat Earth Movers and it was held that if a business liability had definitely arisen in the accounting year and was capable of being estimated with reasonable certainty, the deduction should be allowed although the liability may have to be quantified and discharged at a future date.Following the principle laid down by the Apex court in the above case and the decision of the Tribunal delivered for the AY.1990-91,we decide ground no.18 against the AO. 20.Next ground of appeal about Sales Tax Subsidy in computation of book profit u/s 115JB as well as in computing total income under normal provisions of the Act and the amount involved is ₹ 84,73,17,391/-. During the assessment proceedings,the AO found that the following units of the assessee had received various incentives: Sl No. Unit State Incentive Policy Amount (Rs.) 1. Tikaria Uttar Pradesh 15,29,63,561 2. Sindri Bihar /Jharkhand 11,04,03,555 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended that the claim was duly made in AY.2001-02 to 2005-06 except for the AY.2002-03,that due to inadvertent mistake it could not make the claim.Considering the above facts the FAA allowed the claim. 21.1.Before us,the DR argued that the assessee itself had admitted that claim was not made in the original return filed.The AR stated that by way of an additional ground the assessee had requested the FAA to allow the deduction that was otherwise allowable. There is no doubt that the assessee was entitled to the deduction and it had not claimed the same in the return.It is also a fact that before the FAA it lodged its claim.The Hon ble jurisdictional High Court in the case of Pruthivi Brokers and Shareholders P.Ltd.(349ITR336)has held as under: An assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them. The appellate authorities have the discretion to permit such additional claims to be raised. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 143(1)(a) of the Act after making some prima facie adjustment on 07.10.1997. Thereafter, notices under sections 143(1) and 142(2) of the Act came to be issued and the petitioner came to be assessed under section 143(3) of the Act by order dated 31.03.1999. The AO by his order held that though the total income of the assessee was ₹ 2,11,81,620, the assessee was liable to pay tax on the total income of ₹ 5,13,86,320 on the ground that in accordance with Circular No. 549, para. 5.12,dated 31.10.1989 the assessed income shall not be less than the returned income.The assessee challenged the order before the Hon ble High Court.Deciding the writ petition the Hon ble Court held as under: the circular in question refers to assessments which are to be made under section 143(3) of the Act. The circular directs that in a particular type of cases, i.e., in scrutiny cases under section 143(3) of the Act, the income can neither be assessed at a figure lower than the returned income nor the loss assessed at a figure higher than the loss nor further refund given except what was due on the basis of the returned income. Thus, by issuance of the circular, the quasijudicial office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciding the appeal for AY 1999-00.Considering the above facts we decide the last additional ground against the AO. ITA NO./3787/Mum/2009: 26.Effective ground is about deletion of unutilised MODVAT credit added to the closing stock without making similar addition in opening stock.While passing order u/s.143(3)of the Act,the AO added back the MODVAT credit attributeable to the closing stock of ₹ 8, 88,04,704/-by applying the provisions of section 145A of the Act.He also increased the opening stock by ₹ 9,34,67,023/-.In the appellate proceedings,the FAA directed the AO to delete the addition of closing MODVAT of ₹ 8.88 Crores.In appeal against the said order,the department did not challenge the direction given by the FAA to the AO,while filing appeal before the Tribunal.the AO did not grant relief to the assessee,while giving effect to the order FAA,in respect of issue of MODVAT.The assessee challenged the order of the AO again before the FAA.Considering the facts of the case the FAA again directed the AO to delete the addition of MODVAT attributable to closing stock.In the present appeal before us,the AO has challenged the direction of the FAA given in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... average transport charges per maund from the purchasing centres to the assessee's factory and to add it to the rate of ₹ 1-4-6 per maund in order to ascertain the market value and give any relief that may be due to the assessee. An application under section 66(1) for a reference was made but it was withdrawn and the order of the Tribunal became final. The assessee applied to the AO to give effect to the directions of the Tribunal, but the officer in his letter dated 24.03.1955, held that no relief could be given to it. Ignoring the clear directions of the Tribunal,the AO did not ascertain the cost of transportation from the farms to the factory instead of the average transport charges from the centres to the factory.The assessee applied to the Judicial Commissioner of Bhopal for the issue of a writ to compel the officer to carry out the directions of the Appellate Tribunal. The Judicial Commissioner found that the officer had acted arbitrarily and in clear violation of the directions given by the Tribunal, but proceeded to consider the correctness of the Tribunal's order and held that there was no manifest injustice done to the assessee. On appeal to the Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while passing a consequential order.If he is not satisfied with the order of an appellate authority,he must raise the issue in the higher forum under the provisions of the law,but he cannot refuse to/follow the directions.Considering the above facts,we are of the opinion that the appeal filed by the AO is devoid of any merit and he has taken undue advantage of the judicial process. We are also of the opinion that there was utter failure on the part of the supervisory authorities in whole episode.Registry is directed to forward a copy of the order to the Principle Chief Commissioner of Income tax,Mumbai,so that the directions of the FAA are given due respect by the officers of the field formation and that such frivolous appeals are not filed in future. ITA No./4987Mum/2009: During the course of hearing before us,the AR did not press grounds no.1,3,4,6,7 and 8.Hence, same stand dismissed. 27.Ground no 2.deals with non exclusion of profit on sale of investments in computing Book Profit u/s.115JB of the Act,amounting to ₹ 9.12 Crores.During the year under appeal the assessee had earned net profit on sale of investment and had credited it to P L A/c.It raised an a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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