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TMI Blog2016 (5) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... llness of delay in filing of both the appeals by the Revenue. The Revenue has filed affidavits in this regard stating the reasons that the delay is occurred due to approval for filing of second appeal received followed with weekly holidays. Ld. AR for assessee submitted that considering the delay they should not be having any objection to the Bench for considering the delay of condonation. Thus, in our considered opinion, on the facts and circumstances, i.e. in this case deserves to be considered and same is condoned. We admit to hearing both the appeals. 3. Before carving out the specific issue of the case let us understand the brief history of the case. The assessee in the present case is a Limited Company and engaged in the business of transportation of goods and services with containers based logistics, manufacturer of specialty containers, and leasing of containers. For the assessment years 2008-09 and 2009-10, the assessee filed its original return of income declaring the profits which was duly signed by the chartered accountant and approved in the AGM of the company. The directors of the company received several anonymous complaints about the financial irregularities of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities were charged in the profit and loss account under the heading prior period adjustment in the books of accounts and the same was duly added back in filing the income tax return of the assessee for the assessment year 2010-11. 3.2 However the AO while framing the assessment for the assessment years 2008-09 and 2009-10 disregarded the deduction claimed in the revised return on the following grounds : 1. Losses on account of embezzlement are admissible only in the year in which such loss was detected and the amount crystallized on the basis of the final report submitted by the detective agency. 2. The claim of the assessee is based on the limited finding of the investigation report of KPMG and it does not give the Modus Operandi of the embezzlement. 3. The matter is sub-judice and has not reached to its finality. 4. It is not clear whether any recovery proceedings had been filed against the accused persons. 5. The assessee claimed the deduction of financial irregularities in the revised return of income without incorporating the same in the books of accounts. 6. The revised return of income has no legal basis and therefore not acceptable for the income tax purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irregularities, misconduct and falsification in the books of accounts. There was no embezzlement of cash or money but only the income was over stated by way of falsification of book entries. The learned CIT(A) accordingly and after considering the aforesaid facts of the case held that the loss claimed by the assessee is to be allowed under the normal provision of Income Tax Act. However regarding the income under Minimum Alternate Tax (MAT) Provisions / Section 115JB of the Act the Ld. CIT(A) held that the profit as declared by the assessee in the original return of income will be considered. The profit declared in the original return for the assessment years 2008-09 and 2009-10 have been approved in the AGM of the company which is as per the requirement of the Section 115JB of the Act. The book profit declared in the revised return cannot be accepted as it does not fulfill the conditions enumerated under Section 115JB of the Act. Being aggrieved by this order of the order of Ld CIT(A) Revenue is in appeal 7. Before us both the parties relied on the orders of Authorities Below as favourable to them. The Ld. AR before us has filed a paper book which running from pages 1 to 979. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be assessed and even if the results is to tax as profits what cannot be construed as profits, still the requirement of the Income-tax Act must be complied with. Where a deduction is necessary in order to ascertain the profits and gains, such deductions should be allowed. Profits should be computed after deducting the expenses incurred for business though such expenses may not be admissible expressly under the Act, unless such expenses are expressly disallowed by the Act [See : page 455 of The Law and Practice of Income Tax by Kanga and Palkhivala]..." From the aforesaid decision of Hon'ble Supreme Court in the case of Lakshmi Machine Works (supra) we find that income tax should be levied on the real profits. The real profit should be worked out on the basis of accounting principles and in the ordinary course of commercial trading. The accounting entries made in the books of accounts which are not in the conformity with accountancy principles cannot be regarded as conclusive evidence with regard to the actual profit or loss of the company. What is necessary to consider is the true nature of transaction whether resulting in profit or loss. In the instant case, we find that there we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income on the ground that the revised return of income was not supported with the Tax Audit Report. However, we further find that the AO did not point out any defect in the working of excess depreciation claimed by the assessee. Now in our view, it is not appropriate on the part of the AO to disallow the excess depreciation without giving any findings in the claim of the assessee. Accordingly, we find no infirmity in the order of the Ld CIT(A) and we uphold accordingly. Hence, this ground of Revenue's appeal is dismissed. 11. The 3rd issue raised by Revenue in this appeal is that the Ld CIT(A) erred in deleting the addition made by AO on account of provisions written back without having the supporting evidence. 12. The assessee has claimed in the computation of income a deduction of Rs. 28,56,345/- on account of provision written back but could not substantiate the same by producing the supporting evidence at the time of assessment. Therefore, the AO rejected the claim of the assessee and added the same to the total income of assessee. 13. Aggrieved, assessee preferred an appeal to Ld CIT(A) who deleted the addition made by AO by observing as under:- "28. The Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the effective grounds of appeal for under appeal against the Revenue. 20. In the result, Revenue's appeal is dismissed. Coming to assessee's COs No. 50/Kol/2013 for A.Y. 08-09. 21. Assessee has raised following effective grounds:- "1. That the learned CIT(A) has correctly allowed deduction of Rs. 28,56,345 under the heading "provision written back" as the respective provisions made in the earlier years were never allowed as a business deduction to the Assessee Company in any of the years whatsoever.. 2. That the learned CIT(A) has rightly allowed depreciation in the sum Rs. 8,46,662, which was claimed by the Assessee Company in its revised Return filed on 30th March 2010.. 3. That the learned Commissioner of Income Tax (Appeals), Circle-6, Kolkata erred in applying section 115JB while allowing the losses claimed under normal computation of the Income Tax Act based on result of books of accounts and additional documents filed at the time of filing revised return. 4. That the learned CIT(A) erred in ignoring the result of fraudulent / fictitious entries while applying section 115JB, in so far as these affected the taxable income for the assessment year 2008-09 merely be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the rival contentions, material on records and case laws relied upon by the parties. We have observed that Section 115JB starts with non-obstante clause that 'Notwithstanding anything contained in any other provisions of this Act...' which means that this Section has an overriding effect upon the other provisions of the Act and before we proceed it is important to see the relevant clauses of Section 115JB of the Act which reads as under: "Special provision for payment of tax by certain companies. 115JB (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1std day of April, 2012, is less than eighteen and one-half per cent of its book profit, such book profit shall be deemed to be the total income of the assessee and the tad payable by the assessee on such total income shall be the amount of incometax at the rate of eighteen and one-half percent. (2) Every assessee,- (a) being a company, other than a company referred to in clause (b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reduced by,- ** ** ** 25.1 We have observed hat Section 115JB of the Act starts with nonobstante clause 'Notwithstanding anything contained in any other provision in this act, meaning thereby that the Section 115JB shall be applicable notwithstanding anything contained in any other provision of the Act and shall have overriding effect upon other provisions of the Act. The Section 115JB stipulates payment of Minimum Alternate tax based upon the book profit computed as per provisions of Section 115JB(2) of the Act. Book Profit shall be computed as per Section 115JB(2) of the Act which stipulates that Book Profit means net profit as shown in Profit and Loss Account prepared for financial year in accordance with Part II and III of Schedule VI to the Companies Act, 1956, also complying with other conditions as stipulated in Section 115JB(2) of the Act. Such book profit has to be increased by item Nos. (a) to (k) of the Said Explanation 1 to Section 115JB of the Act if they are debited to the Profit and Loss Account and from such profit item Nos. (i) to (viii) of the Explanation are to be reduced. The figure arrived at after the above exercise is the book profit of the assessee fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 5 of assessee's CO. 26. Ground No.6 raised in assessee's CO is regarding the expenditure on debit card in regard to support of Revenue's appeal. We have already dismissed this issue in Revenue's appeal in ITA No. 694/Kol/2013 hence, same is dismissed as infructus. 27. In the result, assessee's CO is partly allowed. Coming to CO. 51/Kol/2013 for AY 09-10. 28. Assessee raised following grounds:- "1. That the learned CIT(A) has correctly allowed deduction of Rs. 22,73,347 under the heading "provision written back" even when the respective provisions made in the earlier years were never allowed as a business deduction to the Assessee Company in any of the years. 2. That the learned CIT(A) has rightly allowed the business expenditure in the sum of Rs. 3,87,65,172 (Rs.23,87,51,298 minus Rs. 19,99,86,126) on the ground that clarification in respect of such expenses has been provided.. 3. That the learned Commissioner of Income Tax (Appeals, Circle-6, Kolkata erred in applying section 115JB while allowing the losses claimed under normal computation of the Income Tax Act based on result of books of account and additional documents filed at the time of filing revised. 4. Tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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