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TMI Blog2017 (9) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... the about disallowance. Adjustment on account of accumulated losses on account of profit of sick industrial company - Held that:- Clause (vii) of explanation 1 of section hundred and 15 JB of the income tax act provides that the amount of profits of sick industrial company for the assessment year commencing on and from the assessment year relevant to the previous year in which 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the Commissioner of Income Tax (appeals) has erred in law and facts of the case in deleting the addition of ₹ 350631/- on account of provisions for gratuity and ₹ 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 ₹ 95827635/- on account of accumulated losses on account of profit of sick industrial company to the book profit u/s 115JB of the Act. 3. The assessee is a limited company who filed its return of income showing Nil income and assessment under section 143(3) was passed on 30/11/2011 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 are ascertained liability and therefore they cannot be stated to be an understated liability. In view of this we do not find any infirmity in the order of the Ld. CIT(A) in deleting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 Justice we set aside the issue to the file of the Ld. assessing officer to verify the figures that when the net worth of the company has become positive and acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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