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TMI Blog2021 (6) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the provisions have been declared as invalid there was no liability of making provisions year after year and provision in the year under consideration was made for all the year as per direction of Hon'ble Supreme Court 2. That the learned CIT(A) is wrong and unjustified in not adjudicating on the decision of Hon'ble Supreme Court in the case of Apolo Tyres Ltd vs.CIT(2002) 255 ITR 223 wherein it has been held that AO must accept authenticity of amount certified by the Statutory Auditor. 3. That Learned CIT(A) is wrong and unjustified in directing to follow the decision of his predecessor in assessee's own case for A.Y. 2009-10 and in directing to adopt the generation of Scrap @10% after reducing the amount on which no scrap is generated. 4. That the Assessment order and appellate order are against the law and facts of the case." 3. At the time of hearing, the ld. Counsel for the assessee did not press the ground of appeal No.3 for which the ld. DR has no objection. Accordingly ground of appeal No.3 is dismissed as 'not pressed.' Ground of appeal No.4 being general in nature, is dismissed. 4. So far as grounds of appeal No.1 and 2 are concerned, the facts of the case, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 20-05-2011 held that the provisions for charging of administrative charges by the Excise Department were invalid. The Excise Department filed an SLP before the Hon'ble Supreme Court and the Hon'ble Supreme Court vide its interim order dated 30.9.2011 directed the assessee to file an undertaking within 4 weeks stating that the assessee shall continue to maintain complete account of molasses transferred to their own distillery and shall file an undertaking to make the payment of the entire amount as may be due to the State in case the assessee fails in the petition within 30 days from the date of the decision. Therefore, the assessee made necessary provisions during the F.Y. 2011-12 in the books of account for the provisions of administrative charges w.e.f. 1.8.2007. The assessee has made provisions in compliance of the directions of Hon'ble Supreme Court. The assessee relied upon the decision of Hon'ble Supreme Court in the case of Apollo Tyres in its support that the A.O. must accept the account certified by the Auditors as maintained in a manner provided by the Companies Act, approved by the Company in the AGM and filed before the ROC. 7. However, the ld.CIT(A) was not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant previous year in accordance with the provisions of part-II and part-III of schedule-VI of the Companies Act. He noted that the appellant has not prepared its account accordingly and, therefore, the A.O. was justified to compute book profit in accordance with the provisions of the Companies Act read with section 115 JB of the I.T. Act, 1961. He accordingly upheld the action of the AO in computing the book profit u/s 115 JB of the Act by increasing the same by Rs. l,03,42,904/-on account of provisions relating to the prior years. 9. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 10. The ld. counsel for the assessee submitted that the assessee company is running a sugar mill which became operational in the month of October, 1999. Referring to page 20 of the paper book, he submitted that return of Income with audited Balance sheet/ P&L a/c etc. for the assessment year 2012-13 was filed on 25.09.2012 declaring book profit of Rs. 3,30,05,823/- after providing for liability of excise deptt. Administrative charges on mollases of Rs. 1,39,18,374/- which is part of 'rates & taxes' sch.21 out of which a sum of Rs. 1,03,42,904/- is related to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rs. 2,07,36,601/- and book profit of Rs. 3,30,05,823/-, after providing for liability of Excise Department, administrative charges of molasses of Rs. 1,39,18,374/- which is part of rates & taxes. A sum of Rs. 1,03,42,904/- is related to the two earlier assessment years i.e., A.Y. 2007-08 and 2008-09. We find, the submissions of the assessee before the AO was that the administrative charges of transfer of molasses to distillery were being charged by the Excise Department @ 11 per quintal w.e.f. 01.08.2007 onwards and the administrative charges were not paid by the assessee as a Writ Petition was filed and the realization of administrative charges on transfer of molasses to distillery was stayed by the Hon'ble High Court. Accordingly, no provision was being made in respect of administrative charges. The assessee ultimately won the case and the Hon'ble Allahabad High Court has held that the provision for charging the administrative charges was invalid. The Petition of the assessee was allowed and the amount paid by other sugar mills was refunded to them. However, the Hon'ble Allahabad High Court directed to maintain the accounts year after year. The assessee has maintained the accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tober, 2011 of the Hon'ble Supreme Court. We find, a somewhat identical issue had come up before the Hon'ble Allahabad High Court in the case of CIT, Kanpur vs. J.K. Synthetics Ltd., 143 ITR 771. In that case, the assessee made provision for payment of Excise Department in a year 1967-68. It however disputed the liability before the High Court, which decided the issue in favour of the assessee. The Excise Department went in appeal before the Hon'ble Supreme Court and the depute was pending before the Supreme Court at the time of assessment of assessee's income of assessment year 1967-68. The ITO held that it had been decided by the Court that the assessee was not liable for payment in respect of Excise duty no deduction was allowable in respect of said provision made for payment of Excise duty in computing its income. In appeal before the AAC the assessee contended that as the Excise Authority had taken the matter in appeal before the Hon'ble Supreme Court the assessee was entitled to claim the deduction or in respect of provision so made in the assessment year 1967-68. The AAC accepted the contention of the assessee and allowed its appeal. On further appeal the Tribunal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue contested the claim of the assessee for reducing the prior period expenses on the ground that such expenses did not find mention in any of the clauses (i) to (ix) of the Explanation to 115JA(2) of the Companies Act. Dealing with such contention, the Hon'ble High Court pointed to Accounting Standards AS-5 and stated that Accounting Standards clearly stipulates that prior period items are income or expenses which arrives in the 'current period' as a result of errors or omissions in the preparation of the financial statement of one or more prior periods. Referring to para 7 of AS-5, it pointed out that no profit or gains comprises of extraordinary items and the same should be disclosed in the face of the statement of profit and loss. The Hon'ble High Court further held as follows:- "......from this, it is clear that both prior period items as well as extraordinary items are to be included in the determination of net profit or loss. If a prior item is an expense, it is obvious that it will go towards reducing the net profit or increasing the loss, as the case may be. On the other hand, if the prior period item is an income, it would go towards increasing the net profit or reduci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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