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TMI Blog2019 (6) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... determined the gross liability, which was not negotiated or finalized during this AY. Assessee follows this procedure regularly over the years. The gross liability of interest is adjusted in the subsequent year and the excess or short of liability are adjusted in the subsequent P L A/c, which has an impact in the subsequent AY. Similarly, current AY also, assessee makes similar adjustments. Considering the method of accounting adopted by the assessee and also the submission of ld. DR, in our view, assessee should disclose the above transactions in the manner in which the correct book profit is determined as per the provisions of section 115JB. AO has only disallowed the ascertained liability without giving effect to the actual settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer issued a notice u/s 154 but there was no response from the assessee. Therefore, the Assessing Officer passed order u/s 154 by rectifying the above by adding the provisions of ₹ 1,12,22,587/- to the net profit while computing the book profit u/s 115JB and assessed the Book profit at ₹ 15,37,37,886/-. 3. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A). 4. Before the CIT(A), the assessee submitted that interest liability is as per the terms of contract and the liability got accrued. However, discharge of such liability is for the payment of the accrued liability and does not affect the accrual liability in the current period. The company regularly reverses the excess provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts to suppliers' of ₹ 1,12,22,587/- under explanation 1(c) of section 115JB(2) of the Act. 2. The CIT(A) erred in holding that the mistake was not apparent from record. 3. The CIT(A) erred in holding that on merits also the addition was not warranted. 4. Any other ground that may be urged at the time of hearing. 7. Before us, the ld. DR filed written submissions which are as under: 3. In this regard, it is submitted that the computation of MAT income is required to be done by the assessee as per the provision of the 115JB and is to be reported in Form 29B as certified by the Chartered Accountant. The Form 29B submitted by the assessee for the Assessment year under consideration is attached in this paper bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DOW AGRO SCIENCES LLC 2,046,828 KRISHI RASA YAN EXPORTS PVT. LTD. 78,14,329 PARAS DYES CHEMICHALS PVT. LTD. 73,303 Whereas there is a lumsum provision of interest on delayed payments to suppliers of ₹ 1,12,22,587/- which is evidently an unascertained liability as it is a lumsum amount for which provision is created and not credited to the specific parties. Further, in the assessee's submissions to the A.O vide undated letter attached in this paper book as page Nos. 11 to 12 and which also forming part of the assessee's paper books submitted before the Hon'ble ITAT at page 90 91, at point No.3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper book dated 06.05.2019 only shows the break up of the provisions made during the year but in no way proves that interest is credited to the respective party account. Wherever the interest is credited to the respective party account as in the case of first 4 parties in page 10 of this paper book, the corresponding interest is not treated as ascertained liability and not added to the 115JB profit. The invoices attached at page 24 25 of the assessee's paper book correspond to the supplier DOW AGRO SCIENCES LLC and the interest credited to this party is in any case not added to the 115JB Profit. 6. On the issue whether wrong computation of book profit is a mistake apparent from record or not it is humbly submitted that during the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... system as per which, it negotiates with the suppliers and the issues which are settled before completion of financial statement, it is considered as ascertained liability and unnegotiated issues are carried forward to next year. This process is regularly followed by the assessee at the end of each year. In this regard, he brought to our notice three years delayed interest provision and its settlement, which is placed at pages 19-23 of the paper book. He prayed that the provision is nothing but ascertained liability and only adjustments are made in the subsequent year. 9. Considered the rival submissions and perused the material on record. We notice that assessee has made provision of interest on delayed payment, which has two segments, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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