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TMI Blog2011 (9) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... se appeals relate to the same assessee. Though they are not cross appeals, these appeals were argued together by both the parties, hence, for the sake of convenience both these appeals are disposed of by this consolidated order. ITA No.706/Del/2010 3. Grounds of appeal read as under:- (1) That the order U/S 250 passed by the Learned Commissioner of Income-Tax (Appeals) V, New Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned DCIT, Circle -2(1), New Delhi in computing the deduction u/s 80-IA after reducing a sum of ₹ 1,72,82,880/- on account of Synchronization Charges even though the liability for the same had yet not been fructified and that the same has not been debited to Profit and Loss Account. (2) That the order u/s 250 passed by the Learned Commissioner of Income- Tax (Appeals) V, New Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned DCIT, Circle -2(1), New Delhi in adding back a sum of ₹ 8,00,000/- under Section 14-A of the Income Tax Act, 1961 on account of expenditure incurred in relation to exempt income while computin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned orders of the Tribunal are also filed along with the chart. For the sake of convenience from the aforementioned decision dated 28th August, 2009 the relevant portion whereby the disallowance was upheld is reproduced:- 6.4 We have considered the rival contentions. The assessee s main contention that the Assessing Officer was not right in reducing synchronization charges from the profits of the eligible units for computation of exemption u/s 80-IA, cannot be accepted. The assessee is following mercantile system of accounting. The synchronization charges that were levied by the U.P. Power Corporation were not crystallized and consequently the accrual of liability has taken place during the relevant previous year. Although the assessee has not debited the same to the P L A/c the Assessing Officer is duty bound to reduce the said sum from the profits of the eligible unit for proper computation of deduction u/s 80-IA of the Act. The payability of these liabilities may depend upon the decision of the High Court but the liability itself has crystalised during the year in question. In our view the learned CIT (A) was right in rejecting the main contention of the assessee. We see no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the provisions of Explanation 1, the amount stated in clause (iv) was to be reduced for computation of the profit u/s 115JB and since the aforementioned clause has been omitted w.e.f. 1.4.2005, therefore, book profit cannot be reduced by profit eligible for deduction u/s 80HHC as computed under clause (a), (b) and (c) of subsection (3) or sub-Section (3A), as the case may be of that Section and subject to the conditions specified in the Section. Therefore, profits from export business under clause (a), (b) and (c) of sub-section (3) of 80HHC cannot be reduced for the purpose of computation of book profit u/s 115JB. Therefore, such claim of the assessee is decided against the assessee. 10. Now, coming to the second limb of the ground No.4, which is with respect to reduction of book profit for the purpose of calculating MAT u/s 115JB by an amount of Rs.1,17,68,617/- being the amount of provision for fringe benefit tax, it is the submission of the learned AR that this portion of the ground No.4 is covered in favour of the assessee by the decision of ITAT Delhi Bench in the case of ITO vs. Vitage Distillers Ltd. (2010) 130 TTJ 79 (Del) and he has produced before us copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax and super tax chargeable under the provisions of IT Act, 1961 FBT was also added payable under s. 115WA of the IT Act, 1961. This definition of the term tax proves beyond doubt that the term tax includes both income-tax as well as FBT and hence the term income-tax cannot include the term FBT . When there was amendment made in s. 2(43) by the Finance Act, 2005 w.e.f. 1st April, 2006, no amendment was made in cl. (a ) of Explanation to s. 115JB by either including the term FBT in addition to the term income-tax or by substituting the words income-tax by the term tax and thereby bringing FBT also within the purview of cl. ( a ) of Explanation to s. 115JB. The above discussion clearly proves that as per cl. ( a ) of Explanation to s. 115JB, payment or provision for FBT is not required to be added back for the purpose of computing book profit under s. 115JB of the IT Act, 1961. This is also important to note that there was controversy as to whether provision for deferred income-tax is required to be added back for computing book profit under s. 115JB. As per retrospective amendment w.e.f. 1st April, 2001 by the Finance Act, 2008, a new cl. ( h ) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this issue. 13. In the result, the appeal of the Revenue is dismissed 11. However, the learned DR relied upon the order of Assessing Officer and CIT (A). 12. After hearing both the parties, so as it relates to the amount of Rs.21,55,44,187/-, we decide the issue against the assessee in view of aforementioned retrospective amendment in the provisions of Section 115JB. For the remaining amount of Rs.1,17,68,617, we decide the issue in favour of the assessee respectfully following the aforementioned decision of coordinate Bench in the case of ITO vs. Vintage Distillers Ltd. (supra). It may be mentioned here that no contrary decision was brought to our notice. Therefore, ground No.4 is partly allowed in the manner aforesaid. 13. Apropos ground No.5, it was the submission of the learned AR that in view of amendment brought in Explanation 1 to Section 115JB in Clause (i), the issue with regard to provision for doubtful debt for the purpose of computing book profit has to be decided against the assessee. Clause (i) in Explanation 1 to Section 115JB prior to its substitution by the Finance (No.2) Act, 2009 with retrospective effect from 1.4.2001 read as under:- If any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty order is dated 29th June, 2009 in which a total concealment penalty was imposed on the assessee of an amount of Rs.14,20,593/- on the addition inter alia including an amount of Rs.13,02,257/- disallowed on account of EPF/ESI. The amount relate to employees contribution to Provident Fund and ESI, the chart of which has even been given in the impugned penalty order and, for the sake of convenience, the same is reproduced below:- Nature of payment Due Date Actual date of payment Amount (in rupees) EPF 15.05.2003 23.05.2003 3,70,020 EPF 15.10.2003 23.10.2003 3,85,049 EPF 15.01.2004 22.01.2004 4,04,200 EPF 21.05.2003 23.05.2003 40,305 EPF 21.05.2003 23.05.2003 5,816 EPF 21.10.2003 23.10.2003 48,546 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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