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TMI Blog2011 (7) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... st year, arising out of separate Orders of even date (15.1.2009) by the Commissioner of Income-tax(Appeals)-I, Trivandrum ('CIT(A)' for short). 2. The appeals raising common issues, were heard together, and are being disposed of by a common, consolidated order. The first issue, common to all the appeals by the assessee, is the confirmation of the book profit u/s. 115JB of the Income-tax Act, 1961 ('the Act' hereinafter) as computed by the Assessing Officer (AO), by the ld. CIT(A). The AO, in arriving at the Rs.book profit' u/s. 115JB, adopted the figure of profit after tax (before additional provisions), relying on the definition of Rs.book profit' per Explanation to s. 115JB(2). The same defines it as inclusive of any amount carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iminution in the value of any asset, " Accordingly, the same would be taken into consideration; the assessee, rather, has itself only considered it the same as an additional provision. Though the ld. AR did raise an argument that the same represents an actual decline in the value of the relevant investments, we find no support to this assertion. Why would, if so, it rely on the guidelines issued by IDBI, i.e., to press for it claim for diminution in the value of the investment? Whether there has been an actual decline/fall in the value of the investment, is a matter of fact, and does not require any specific guidelines in the matter. Also, why would the assessee, in that case, create a provision in its respect, and not claim it by way of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has before us, however, raised another plea. That is, that the Rs.provision' under reference stands allowed to it on merits in the assessment of its income under the regular provisions of the Act, and toward which it adverts to its profit and loss account and the computation of income (return) for each of the relevant years. The allowance of the provision alters the situation completely inasmuch as it is only an acceptance by the Revenue that the same represents an actual loss consequent to the real decline/fall in the fair value of the relevant investments/s. As such, to the extent allowed, particularly considering that the same has been only after subjecting the returns to verification by the Revenue, followed by its review by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2004-05 and 2005-06. 4. The next and the only issue arising in the assessee's appeal for A.Y. 2004-05 and 2005-06 is the disallowance of proportionate administrative expenses as dividend income, being tax exempt u/s. 14A of the Act. We say 'administrative expenses', even as the assessment order/s does not qualify the expenditure disallowed in any manner, as it is the assessee's consistent stand, and which it has substantiated before the first appellate authority with details, that it had only employed interest-free funds for investment in shares, with the Revenue being not in appeal. The ld. CIT(A), adverting to Rule 8D notified w.e.f. 24.3.2008, has restricted the disallowance to 0.5% of the average value of the investment, i.e., as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of the assessee's claim qua the provision written back in accounts, at ₹ 182.20 lakhs. The assessee included the same in the computation of its regular income, relief in its respect was sought during the course of assessment proceedings per its letter dated 5.12.2007. This is as the provision when, i.e., for the preceding years, stood disallowed in assessment. Accordingly, the write back disallowed earlier, if added tothe total income for the year, would amount to double addition of the same amount/income. The ld. CIT(A) allowed the assessee relief on that basis. Aggrieved, the Revenue is in appeal. 6. We have heard the parties, and perused the material on record. 6.1 The assessee, as we understand, seeks relief qua t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year-end) at ₹ 379.46 lakhs, the ld. CIT(A) states the said value as with reference to the extent of provision relatable to the current year out of the total provision disallowed up to A.Y. 2004-05. There is no question of any provision for the current year, as it is only on the same having been found (with reference to the value of shares as at the year end) as made in excess, that the write back of the provision has been made in the accounts. 6.4 In view of the foregoing, subject to the verification of quantum, per a speaking order and after allowance of opportunity to the assessee, we allow the assessee's case, and confirm the impugned order. 7. In the result, the assesse's appeals are allowed and the Revenue's appeal is dism ..... X X X X Extracts X X X X X X X X Extracts X X X X
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