2017 (9) TMI 474

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..... rovision for leave encashment, and adjustment on account of accumulated losses on account of profit of sick industrial company was deleted. 2. The revenue has taken the following two grounds of appeal before us. "1. That the Commissioner of Income Tax (appeals) has erred in law and facts of the case in deleting the addition of Rs. 350631/- on account of provisions for gratuity and Rs. 118353/- on account of provisions of leave encashment made u/s 115JB of the Act to the book profit, as they were in the nature of unascertained liabilities. 2. That the Commissioner of Income Tax (Appeals) has erred in law and facts of the case in deleting the addition of Rs. 95827635/- on account of accumulated losses on account of profit of sick industrial .....

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..... is against the addition of Rs. 350631/- on account of provision for gratuity and Rs. 118353/- on account of provision for leave encashment paid under section 115 JB of the Income Tax Act to the book profit by the Ld. Assessing Officer deleted by the Ld. CIT(A). 5. The Ld. departmental representative relied upon the orders of the Ld. AO and Ld. authorised representative relied upon the order of the Ld. CIT(A). 6. We have carefully considered the rival contentions. The Ld. CIT(A) has deleted the above addition because of the reason that the provision of leave encashment as well as the provision of the gratuity are meant on the actuarial valuation as per the accounting standard 15 of Ministry of Corporate Affairs and both the liabilities ar .....

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..... the said company has become sick industrial company under subsection (1) of section 17 of the sick industrial companies (special provisions) act, 1985 and ending with the assessment year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses was required to be reduced from the profit under section hundred and 115JB of the Act. Therefore, apparently, if the assessee's net worth has become positive during the year then assessee is eligible for the deduction of the profits of sick industrial companies which Ld. CIT(A) is granted. However, the Ld. CIT(A) has noted that there are certain errors in noting of the figures of the profit, net worth of the assessee company. Therefore, in the interest of Ju .....

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