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TMI Blog2017 (11) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... ile of the Assessing Officer with the direction to examine the items covered by section 43B of the Act in accordance with the said section. MAT computation - addition of outstanding expenses while computing book profit under the provisions of section 115JB treating the same as unascertained liability - Held that:- Since we have held that the liabilities are accrued liabilities, the same would fall under the category of ascertained liabilities. Hence the same is not required to be added u/s. 115JB of the Act. Accordingly, we set aside the order passed by the tax authorities on this issue. Addition of modvat credit - Held that:- We notice that the assessee has given workings relating to modvat in page No. 30 of the paper book, wherein it has computed the modvat amount under inclusive method. The assessee has demonstrated that there is no impact on the profit if modvat is accounted under inclusive method. Further identical issue in assessee’s own case relating to A.Y. 2007-08 has deleted identical disallowance made in that year. Since the assessee has demonstrated that there is no impact on profit if inclusive method of accounting is followed, we do not find any substance in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Revenue has filed the appeal for A.Y. 2009-10. All of them are directed against the orders passed by the learned CIT(A)-5, Mumbai. All these appeals were heard together and are being disposed of by this common order, for the sake of convenience. 2. The assessee is engaged in the business of manufacturing and trading in electromechanical tools and parts. 3. We shall take up the appeal filed by the assessee for A.Y. 2009-10. First issue urged therein relates to disallowance of Provision for outstanding expense of ₹ 7,85,811/- claimed by the assessee as deduction. The Assessing Officer noticed that the assessee had created a provision of ₹ 7,85,811/- towards certain expenses as at the year end and claimed the same as deduction. The assessee submitted that the liability in respect of those expenses has accrued during the year and hence they have been accounted for in the books of account on estimated basis. Since the assessee could not quantify the actual amount of expenditure precisely and further documentary evidences supporting the claim of expenses were not available with the assessee, the Assessing Officer took the view that this claim is not admissible and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s covered by the provisions of sec. 43B of the Act like leave encashment, excise duty etc. In respect of expenses attracted by the provisions of section 43B, the AO is required to examine them in terms of sec. 43B only. In this view of the matter, we are of the view that this issue requires fresh examination at the end of the Assessing Officer. Accordingly we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer with the direction to examine the items covered by section 43B of the Act in accordance with the said section. In respect of other time of expenses, the AO examine the same in the light of discussions made supra. 7. Next issue contested by the assessee relates to addition of outstanding expenses of ₹ 7,85,811/- while computing book profit under the provisions of section 115JB of the Act, treating the same as unascertained liability. Since we have held that the liabilities are accrued liabilities, the same would fall under the category of ascertained liabilities. Hence the same is not required to be added u/s. 115JB of the Act. Accordingly, we set aside the order passed by the tax authorities on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrent year depreciation would equally apply to brought forward depreciation and accordingly unabsorbed depreciation can be set off against capital gain. 11. We have heard learned Departmental Representative and perused the record. We noticed that the Coordinate Bench has rendered following decision in the case of M/s. Amforge Industries Ltd.(supra) on an identical issue. 11. The next issue relates to claim of set off of brought forward unabsorbed deprecation against the current year's capital gain. The AO disallowed the said claim on the reasoning that unabsorbed depreciation, though gets merged with the current depreciation, can be carried forward indefinitely and can be set off only against profit and gains and not against any other income. The ld. CIT(A) also confirmed the view so taken by the AO. At the time of hearing, the ld. Counsel for the assessee placed reliance on the following decisions : a) Suresh Industries (P) Ltd V/s ACIT (2012) 54 SOT 450 (Mum) b) DCIT V/s Akay Flavours and Aromatics (P) Ltd (2011) 130 ITD 41 (Cochin) (TM ) In both the cases cited above, it has been held that unabsorbed depreciation can be set off against the Business In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d fences and hence the learned CIT(A) was justified in deleting the disallowance on WDV value of asset. 16. We have heard the rival contentions on this issue and perused the record. In our view, there is merit in the contentions of Ld DR that the sale value of land should include cost of walls and fences, even it is not separately mentioned in the conveyance deed, since normally the sale consideration is fixed by considering all the aspects. We noticed that the WDV value of said asset was ₹ 7,64,689/-. Since the sale consideration was not bifurcated between the sale value of land and sale value of walls fences, we are of the view that the amount equivalent to the WDV can be taken as sale consideration of Walls fences. It has to be reduced from the WDV of Buildings. Accordingly we agree with the view so taken by the learned CIT(A) and accordingly he was justified in disallowing depreciation claimed to the extent of ₹ 76,468/-. 17. Learned AR submitted that, if WDV value of ₹ 7,64,689/- is taken as value pertaining to walls and fences, the same is required to be excluded from the sale value of land for the purpose of computing long term capital gain. We fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restore this issue to the file of the AO with similar directions. 21. The second issue contested by the assessee relates to the addition of Provision of expenses while computing book profit u/s 115JB treating the same as unascertained liability. In AY 2009-10, we have considered an identical issue and held that the provision for expenses is ascertained liability and the same is not required to be added while computing book profit u/s 115JB of the Act. Consistent with the view taken therein, we set aside the orders passed by the tax authorities on this issue. 22. The next issue relates to the charging of interest u/s 234A of the Act. The Ld A.R submitted that the due date for filing return of income was extended during the year under consideration upto 15th October, 2010 and the assessee has filed the return of income on 11th October, 2010. Accordingly she submitted that the interest u/s 234A is not chargeable. We restore this issue to the file of the AO for examining the claim of the assessee. We direct him not to levy interest u/s 234A of the Act, if the assessee had filed return of income within extended time limit. 23. In the result, both the appeals of the assessee are ..... 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