Eastern India Powertech Ltd., New Delhi V. ACIT, New Delhi

ITA 192/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65777 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-01-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 13-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S KRISHNA
• Assessee Lawyers: ROHIT JAIN
• Keywords: Depreciation; Rule of consistency; Deemed to accrue or arise in india; Retrospective amendment; Bad and doubtful debts
• Section: 234B; 115JB; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMEBR AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.4463/DEL./2009 (ASSESSMENT YEAR : 2005-06) ITA NO.192/DEL./2010 (ASSESSMENT YEAR : 2006-07) ITA NO.4471/DEL./2010 (ASSESSMENT YEAR : 2007-08) EASTERN INDIA POWERTECH LTD., VS. ADDL. CIT, RAN GE 10, (EARLIER KNOWN AS DLF POWER LIMITED), NEW DELHI. DLF GALERIA, 12 TH FLOOR, DLF CITY, PHASE-IV, HARYANA (PAN : AAACD0187C) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI AJAY VOHRA & ROHIT JAIN, ADVO CATE REVENUE BY : SHRI S. KRISHNA, CIT DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER THESE THREE APPEALS EMANATE FROM THE THREE ORDERS OF CIT (A) DATED 02.09.2009 FOR ASSESSMENT YEAR 2005-06, DATED 03.11.2009 FOR ASSESSMENT YEAR 2006-07 AND DATED 10.08.2010 FOR AS SESSMENT YEAR 2007-08. GROUNDS OF APPEAL ARE SAME EXCEPT DIFFERE NCE IN FIGURES OF ADDITION, HENCE, BEING DECIDED BY THIS COMMON ORDER . 2. THE GROUNDS OF APPEAL IN ITA NO.4463/DEL/2009 FO R ASSESSMENT YEAR 2005-06 READ AS UNDER :- ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 2 1. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE ORDER OF THE ASSESSING OFFICER, ASSESSING THE I NCOME OF THE APPELLANT AT RS.19,25,37,634 UNDER SECTION 115JB OF THE INCOME- TAX ACT, 1961 (THE ACT), AGAINST INCOME OF RS.7,33, 22,716 DECLARED BY THE APPELLANT UNDER THAT SECTION. 2. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER MAKING ADDITION OF PROVISION FOR DOUBTFUL DEBTS AMOUNTING TO RS.11,92,14,918, WHILE COMPUTING 'BOOK PROFITS' UNDER SECTION 115JB OF THE ACT. 2.1 THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.11,92,14,918 WITHOUT APPRECIATIN G THAT CLAUSE (I) OF EXPLANATION 1 TO SECTION 115JB OF THE ACT WAS NO T APPLICABLE SINCE THE PROVISION MADE BY THE APPELLANT WAS NOT PROVISION FOR DIMINUTION IN VALUE OF ANY ASSET.' 2.2 THAT THE CIT(A) ERRED IN OBSERVING THAT THERE IS NO DISPUTE REGARDING CALCULATION OF BOOK PROFIT UNDER SECTIO N 115JB OF THE ACT. 3 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN CON FIRMING THE ACTION OF THE ASSESSING OFFICER IN CHARGING INTERES T UNDER SECTION 234B OF THE ACT. 3.1 THAT THE CIT(A) ERRED IN NOT DELETING INTEREST LEVIED UNDER SECTION 234B OF THE ACT, INSTEAD DIRECTING THAT THE APPELLANT SHOULD FILE WAIVER PETITION BEFORE CIT INSTEAD OF. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY FROM THE AFORESAID GROUNDS OF APPEAL AT OR BEFORE THE TIME O F HEARING. 3. IN ALL THESE APPEALS, COMMON ISSUE INVOLVED AGAI NST SUSTAINING ADDITION MADE ON ACCOUNT OF PROVISION FOR DOUBTFUL DEBTS U/S 115JB AND CHARGING THE INTEREST U/S 234B OF THE INCOME-TAX AC T, 1961. 4. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF GENERATION OF POWER AND EXECUTING TURNKEY POWER PLANTS AS AN ENGI NEERING, PROCUREMENT AND CONSTRUCTION (EPC) CONTRACTORS. TH E COMPANY HAS ENTERED INTO POWER PURCHASE AGREEMENTS WITH COAL IN DIA LTD. AND ASSAM ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 3 STATE ELECTRICITY BOARD TO BUILD, OWN, OPERATE AND MAINTAIN POWER PLANTS. THE ASSESSEE HAS MADE PROVISION FOR BAD AND DOUBTFU L DEBTS WHICH WAS NOT ADDED TO THE PROFIT AS PER THE PROFIT AND LOSS ACCOUNT FOR COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. IN ASSESSING OFF ICERS CONTENTION, THIS WAS A PROVISION FOR AN UNASCERTAINED LIABILITY AS L ITIGATION WAS GOING ON BETWEEN THE ASSESSEE AND CCL OVER THE POWER TARIFF. IT WAS ALSO HELD THAT PROVISION FOR DOUBTFUL DEBITS IS ALSO COVERED BY TH E AMENDMENT IN THE ACT BY THE FINANCE ACT, 2009 CLAUSE (I) OF EXPLANATION 1 TO SECTION 115JB WHICH HAS BEEN MADE EFFECTIVE FROM 01.04.2001. IN THE ASSESSMENT YEAR 2005-06, THE CIT (A) HAS DECIDED THE ISSUE AGAINST THE ASSESSEE BY HOLDING AS UNDER :- DURING THE APPELLANT PROCEEDINGS, THE APPELLANT CO MPANY, MADE THE WRITTEN SUBMISSIONS VIDE ITS LETTER DATED 27-8-2009 AS UNDE R: ' IN FAIRNESS, IT WAS FURTHER POINTED OUT DURING TH E COURSE OF HEARING ON 18-8-2009 AND ALSO IN THE SUPPLEMENTARY SUBMISSIONS FILED ON THAT DATE THAT IN VIEW OF RECENT INSERTION OF CLAUSE (I) IN EXPLAN ATION 1 TO SECTION 115JB OF THE ACT BY THE FINANCE (NO.2) ACT, 2009 W.R.E.F. 1- 4-2001 THE AFORESAID ISSUE IS PRIMA FACIE, COVERED AGAINST THE APPELLANT. IT MAY, IN THIS REGARD, BE FURTHER POINTED OUT THAT THE MANAGEMENT OF THE APPELLANT IS, HOWEVER, STILL ADVISED THAT DESPI TE THE AFORESAID AMENDMENT BY WAY OF INSERTION OF CLAUSE (I) IN EXPLANATION 1 TO SECTION 115JB OF THE ACT, PROVISIONS FOR BAD AND DOUBTFUL DEBTS DEBITED BY TH E APPELLANT TO THE PROFIT AND LOSS ACCOUNT CANNOT BE ADJUSTED SINCE THE SAME COULD NOT BE REGARDED AS PROVISIONS FOR DIMINUTION IN THE VALUE OF AN ASSET '. THE MANAGEMENT IS ALSO SEEKING FURTHER LEGAL ADVISE IN THE MATTER AND IS A LSO CONTEMPLATING CHALLENGING THE VALIDITY OF THE AFORESAID RETROSPEC TIVE AMENDMENT IN LAW. AFTER GOING THROUGH THE ASSESSMENT ORDER AND APPELL ANT'S WRITTEN SUBMISSIONS AND FINANCE ACT, 2009 WHICH BECOME PART OF I.T. ACT, 1961 IT IS QUITE CLEAR THAT ON ACCOUNT OF RETROSPECTIVE AMENDM ENTS TO SECTION 115JB, THERE IS NO DISPUTE REGARDING CALCULATION OF BOOK P ROFIT U/S 115JB AS FAR AS PROVISIONS FOR DOUBTFUL DEBTS ARE CONCERNED. FOR TH E SAKE OF C1ARITY THE AMENDMENT IS REPRODUCED AS BELOW ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 4 '(A) IN SUB SECTION (1), WITH EFFECT FROM THE 1ST D AY OF APRIL, 2010- (I) FOR THE WORDS, FIGURES AND LETTERS THE 1 ST DAY OF APRIL, 2007', THE WORDS, FIGURES AND LETTERS THE 1 5 TH DAY OF APRIL 2010' SHALL BE SUBSTITUTED; (II) FOR THE WORDS TEN PER CENT' AT BOTH THE PLACE S WHERE THEY OCCUR, THE WORDS FIFTEEN PER CENT SHALL BE S UBSTITUTED; (A) IN SUB-SECTION (2), AFTER THE SECOND PROVISO, I N EXPLANATION 1, AFTER CLAUSE (H), FOR THE WORDS, BRACKETS AND LETTE RS 'IF ANY AMOUNT REFERRED TO IN CLAUSES (A) TO (H) IS DEBITED TO THE PROFIT AND LOSS ACCOUNT, AND AS REDUCED BY-', THE FOLLOWING SHALL B E SUBSTITUTED AND SHALL BE DEEMED TO HAVE BEEN SUBSTITUTED WITH EFFEC T FROM THE 1ST DAY OF APRIL, 2001, NAMELY:- (I) THE AMOUNT OR AMOUNTS SET ASIDE AS PROVISION FO R DIMINUTION IN THE VALUE OF ANY ASSET, IF ANY AMOUNT REFERRED TO IN CLAUSES (A) TO (I) IS DEBITED TO THE PROFIT AND LOSS ACCOUNT, AND AS REDUCED BY,-'. THEREFORE, ON ACCOUNT OF ABOVE REASONS THIS GROUND OF APPEAL IS DISMISSED AND ISSUE IS DECIDED IN FAVOUR OF REVENUE. 5. WHILE PLEADING ON BEHALF OF THE ASSESSEE, LD. AR SUBMITTED THAT ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF GENERATION OF POWER AND EXECUTING TURNKEY PROJECTS. THE ASSESSEE HAD MADE PROVISION FOR THE FINANCIAL YEAR 2004-05 RELEV ANT TO ASSESSMENT YEAR 2005-06 FOR BAD AND DOUBTFUL DEBTS AMOUNTING T O RS.11,92,14,918/-. PROJECT-WISE DETAILS ARE AS UNDER :- CIL/CCL RAJRAPPA PROJECT RS.4,60,20,866 CIL/CCL GIDI PROJECT RS.4,89,03,120 ASEB PROJECT RS.2,42,90,932 TOTAL RS.11,92,14,918 LD. AR SUBMITTED THAT THE PROVISIONS WERE MADE ON A CCOUNT OF EXCESS INCOME RECOGNIZED BY THE ASSESSEE IN ITS AUDITED AC COUNTING STATEMENT AND WAS MADE IN RESPECT OF SPECIFIED AND ASCERTAINE D DEBT NOT LIKELY TO BE REALIZED BY THE ASSESSEE. THE LD. AR FURTHER SUBMI TTED THAT PROVISION WAS ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 5 MADE IN VIEW OF GENERAL ACCOUNTING PRINCIPLES AND P ARTS II AND III OF SCHEDULE VI OF THE COMPANIES ACT. THE PROVISIONS S O MADE ALSO ACCEPTED BY THE STATUTORY AUDITORS AND NO QUALIFICA TION / OBSERVATION WERE MADE IN RESPECT OF THEIR AUDIT REPORT. THE ASSESS ING OFFICER HAS NOT APPRECIATED THE FACTS JUDICIOUSLY WHILE HOLDING THA T IT WAS AN UNASCERTAINED LIABILITY. THE REASON FOR NON-ACCEPT ING THE BILLS RAISED BY THE COMPANY ON ASEB IS ON ACCOUNT OF DISPUTE REGARD ING DETERMINATION OF TARIFF AS PER THE POWER PURCHASE AGREEMENT (PPA) ENTERED INTO BETWEEN THE ASSESSEE AND ASEB. CLAUSE 3 OF PPA DEA LS WITH THE TARIFF OF SUPPLY OF POWER. AS PER CLAUSE 3.2, THE TARIFF FOR SALE OF ELECTRICITY HAS TWO COMPONENTS, VIZ. (A) FIXED PART; AND (B) VARIAB LE PART. THE RELEVANT PART OF CLAUSE 3.2 READ AS UNDER :- '3.2 THE TWO PART TARIFF OR SALE OF ELECTRICITY SH ALL CONSIST OF FOLLOWING: A) FIXED PART: THIS SHALL BE THE AMOUNT PAYABLE ANNUALLY BY THE BO ARD TO THE COMPANY ON THE BASIS OF 6Y8.49%(CONSISTING BOTH ACT UAL AND DEEMED GENERATION) FOR BANSKANDI AND P LF(CONSIDERI NG WITH BOTH ACTUAL AND DEEMED GENERATION) CORRESPONDI NG TO THE LEVEL OF ENERGY GENERATION OF 52393700 KWH PER ANNU M/OR ADAMTILLA. THE PAYMENT OF FIXED CHARGES ON MONTHLY BASIS SHALL BE MADE PROPORTIONATE TO THE ELECTRICITY GENERATION BY THE COMPANY(CONSIDERING BOTH ACTUAL & DEEMED GENERATION ). NECESSARY ADJUSTMENT BASED ON THE CUMULATIVE GENERA TION SHALL BE MADE AT THE END OF THE YEAR (AS PER GOI GUIDELIN ES). VARIABLE PART: THE TOTAL VARIABLE COST PER MONTH SHALL BE CALCULAT ED BASED ON GROSS GENERATION AT GENERATOR TERMINALS, LANDED COS T OF THE FUEL ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 6 INCLUSIVE OF ALL TAXES/LEVIES, DECLARED PLANT HEAT RATE AND GROSS CALORIFIC VALUE OF THE FUEL. THE COST OF START-UP & MAINTENANCE POWER PAID FOR EACH MONTH BY THE COMPANY SHALL BE A DDED TO THIS COST. THE VARIABLE PART OF THE TARIFF PER MONTH SHALL BE CALCULATED BY DIVISION OF THE TOTAL VARIABLE COST PER MONTH BY N ET UNITS OF ENERGY METERED. THE VARIABLE COST IS NOT DEPENDED ON P LF AND IS PA YABLE ON ALL COSTS ASSOCIATED WITH ACTUAL GENERATION IRRESPECTIV E OF PLF.' CLAUSE 3.3 OF THE PPA PROVIDES FOR FIXATION OF ANNU AL FIXED CHARGES BASED ON VARIOUS FACTORS, INCLUDING, INTER ALIA, THE FOLL OWING :- CLAUSE 3.3 OF THE PP A PROVIDES FOR FIXATION OF AN NUAL FIXED CHARGES BASED ON VARIOUS FACTORS, INCLUDING, INTER ALIA, TH E FOLLOWING: (A) INTEREST ON DEBT; (B) RETURN ON EQUITY OF 16%, WHICH IS DEPENDENT UP ON COST OF INVESTMENTS; (C) DEPRECIATION ON ASSETS; (D) OPERATIONS AND MAINTENANCE COSTS CLAUSE 3.2 OF THE PPA THUS DEFINES FIXED PART OF TH E TARIFF TO BE BASED UPON ACTUAL CAPITAL COST AND PLANT LOAD FACTOR (PLF ) OF THE POWER PLANT OF THE COMPANY. CLAUSE 3.11.1 PROVIDES FOR VARIOUS IN CENTIVES AND DISINCENTIVES. THE RELEVANT CLAUSE IS REPRODUCED AS UNDER :- '3.11.1 INCENTIVES:- (I) FOR BANASKANDI : FOR PLF OF ABOVE 68.49% (CONSIDERING BOTH ACTUAL & DEEMED GENERATION) AN INCENTIVE IN RETURN ON EQUITY (ROE) AT THE RATE OF ADDITIONAL 0.7% FOR EACH 1 % INCREASE IN PLF ABOVE 68.49% SHALL BE ALLOWED. (II) FOR ADAMTILLA : A RETURN ON EQUITY OF 16% SHALL BE ALLOWED FOR P LF CORRESPONDING TO GENERATION OF 52393770 KWH (66.46% PLF) PER ANNUM WITH GAS SUPPLY OF AJ 50,000 SM3/DAY . IN CASE THE COMPANY IS ABLE TO GET MORE QUANTITY OF GAS PER DAY THEN THE PLF AT WHICH 52393770 KWH CAN BE REACHED WOULD BE DETER MINED. ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 7 THUS FOR INCENTIVE IN PLF ABOVE THE PLF REQUIRED TO GENERATE 52393770 KWH/ ANNUM AN INCREASE IN ROE AT THE RATE OF ADDITIONAL 0.7% FOR EACH 1% INCREASE IN P LF SHALL BE ALLOWED. ON THE PERUSAL OF THESE CLAUSES, IT CAN BE NOTICED THAT FIXED TARIFF AND INCENTIVES RECEIVABLE UNDER THE PPA IS BASED ON VAR IOUS FACTORS LIKE CAPITAL INVESTMENT / COST OF PROJECT, PLF, ELIGIBLE AMOUNTS LIKE INTEREST ON DEBIT, DEPRECIATION, ETC. THE ASSESSEE WAS ALSO EN TITLED TO RECEIVE CERTAIN TARIFF AS BONUS IF THE ASSESSEE WAS ABLE TO ACTIVE A CERTAIN LEVEL OF PRODUCTION, WHICH IS DETERMINED AS CERTAIN PERCENTA GE OF PLF, NORMALLY CALLED AS PERCENTAGE OF PLF. IN THE BOOKS OF ACCOU NTS, THE ASSESSEE RECOGNIZED TARIFF RECEIVABLE FOR SUPPLY OF POWER TO ASEB BASED ON THE ACTUAL CAPITAL COST INCURRED AND PLF ACHIEVED UP TO 100% (ACTUAL AND DEEMED) FOR SETTING UP THE POWER PLANT AND AS PER P PA. THE COMPANY RECOGNIZED INCENTIVE IN TARIFF RECEIVABLE FOR SUPPL Y OF POWER TO ASEB BASED ON THE PLF ACHIEVED UP TO 100% (ACTUAL AND DE EMED). HOWEVER, THERE HAS BEEN A CONSISTENT DISPUTE BETWEEN THE ASS ESSEE AND THE CUSTOMERS OF POWERS, I.E. ASEB, REGARDING ACTUAL CA PITAL COST OF THE PLANT, PLF AND CONSEQUENTLY, ON THE TARIFF FOR SUPPLY OF P OWER. LD. AR ALSO RELIED ON THE VARIOUS SUBMISSIONS MADE BEFORE THE A UTHORITIES BELOW. 6. ON THE OTHER HAND, THE LD. DR VEHEMENTLY PLEADED THAT THE ASSESSING OFFICER HAS GIVEN ELABORATE REASONS IN TH E ORDER. THE LD. DR SUBMITTED THAT WHILE MAKING THE DISALLOWANCES, THE ASSESSING OFFICER HAS CONSIDERED THE FACTUAL MATRIX OF THE CASE RANGING F ROM AGREEMENT WITH ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 8 CUSTOMERS OF THE ASSESSEE AND OBSERVATIONS OF THE R EGULATORY COMMISSION ON PETITION OF ASSESSEE. THE LD. DR HAS ARGUED ON ALL RELEVANT ISSUES IN DETAIL WHICH HAVE BEEN DEALT BY THE ASSESSING OFFIC ER AND CIT (A) AND ON THE REPLY TO THE ARGUMENTS MADE BY THE LD. AR. LD. DR ALSO SUBMITTED DETAILED WRITTEN SUBMISSIONS WHICH READ AS UNDER :- THE COMMON ISSUES INVOLVED IN THESE APPEALS ARE A DDITION ON ACCOUNT OF PROVISION FOR DOUBTFUL DEBTS U/S 115J B AND CHARGING OF INTEREST U/S 234B OF THE I.T.ACT,1961. 2. THE AO HAS GIVEN ELABORATE REASONS IN THE ASSESS MENT ORDER FOR THE A.Y. 2005-06 FOR MAKING THE ADDITION OF RS.11,92,14,918/- FOR A.Y. 2005-06. HE HAS DISSECTE D THE FACTUAL MATRIX OF THE CASE RANGING FROM NOTE ON PROVISION F OR DOUBTFUL DEBTS, AGREEMENT WITH CUSTOMERS OF THE ASSESSEE, TH E PETITION FILED BEFORE THE CENTRAL ELECTRICITY REGULATORY COMMISSIO N, COMMISSION'S OBSERVATIONS AND THEN ARRIVED CONCLUSI ON THAT THE AMOUNT OF RS.11,92,14,918/- IS TAXABLE U/S OR THE S AKE OF THE CONVENIENCE THE RELEVANT FINDINGS OF THE AO AS GIVE N ON PG. 10, 11 & 12 OF THE ASSESSMENT ORDER DATED 26.12.2007 ARE R EPRODUCED BELOW: A PERUSAL OF THE GROUNDS TAKEN AND STATEMENT OF FA CTS SUBMITTED BEFORE THE APPELLATE TRIBUNAL SHOWS THAT AS PER CLAUSE 1.18.2 OF THE POWER PURCHASE AGREEMENT, THAT LAYS DOWN THE FORMULA FOR THE PURPOSE OF FIXATION OF TAR IFF AS PER PAGE 11 OF THE AGREEMENT DLF POWER CO. LTD. HAD TO FURNISH DOCUMENTARY EVIDENCE IN SUPPORT OF ACTUAL C APITAL COST TO BE ACCEPTED BY CIL AFTER EXAMINING THE REASONABILITY OF REQUIREMENT OF ADDITIONAL CAPITAL INVESTMENT ON THE BASIS OF MUTUAL AGREEMENT. FOR TH E FIRST YEAR THE TARIFF WAS TO REMAIN FIRM AT RS.1.20 PER U NIT. FOR DETERMINING THE TARIFF FOR THE SUBSEQUENT YEAR FIXA TION OF CAPITAL COST OF PLANT ON THE DATE OF ITS COMMISSION WAS THE PRIME FACTOR. DLF POWER CO. LTD. WAS REQUESTED ON NUMEROUS OCCASION TO SUBMIT PLANT WISE AND ITEM WIS E DETAILS OF CAPITAL COST INCURRED BY THEM. HOWEVER, INSPITE OF REPEATED REQUEST DLF POWER LTD. DID NOT FURNISH ITE M WISE DETAILS TOGETHER ALONG WITH DOCUMENTARY EVIDENCE AN D THEY ONLY RELIED IN SUPPORT OF THE INVESTMENTS MADE ON A UDITED FINAL ACCOUNTS. THE ASSESSEE DUE TO ADAMANT ATTITUD E OF NOT FURNISHING THE DETAILS BEFORE THE CCL RESULTED INTO THIS LITIGATION WHICH CANNOT BE RESOLVED TILL THE TIME T HESE DETAILS OF INVESTMENT IN CAPITAL GOODS IS FURNISHED [PARA 4 (X TO XV)]. NOW THE CCL HAS MOVED THE APPELLATE TRI BUNAL ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 9 TO LOOK INTO THE ENTIRE MATTER AFRESH AND DECIDE AL L THE ISSUES ARISING IN THE DISPUTE. THEREFORE, IT IS CLE AR THAT THE LIABILITY PROVIDED BY THE ASSESSEE IS SUBJUDICE AND THEREFORE, NO PROVISION CAN BE CALCULATED BY THE AS SESSEE. NO AMOUNT CAN BE ASCERTAINED SINCE THE ISSUES INVOL VED IN THE DISPUTE ARE NOT ONLY CONCERNED WITH THE QUANTIF ICATION BUT ARE CHALLENGING THE JURISDICTION OF JCERC ON VA RIOUS GROUNDS AS MENTIONED ABOVE. THEREFORE, THE RATE FIX ED BY THE JCERC CANNOT BECOME A GUIDELINE OR LEAD TO A ASCERTAINED LIABILITY FOR WHICH A PROVISION CAN BE MADE. MORESO, WHEN THE ASSESSEE HIMSELF IS IN DEFAULT OF NOT FURNISHING THE COMPLETE DETAILS BEFORE THE PRESCRIB ED AUTHORITY WHICH ARE PRIMARILY ESSENTIAL FOR FIXING THE TARIFF FROM SECOND YEAR. ASSESSEE CANNOT TAKE BENEFIT OF A SITUATION CREATED BY ITS OWN CONDUCT. SUCH A DEBT C ANNOT BE SAID TO HAVE BECOME BAD WHICH IS DUE TO THE ASSESSE E'S OWN MANIPULATIONS AND ACT OF NOT FURNISHING THE DOCUMEN TARY EVIDENCE OF CAPITAL INVESTMENT WITHOUT WHICH THE TA RIFF CANNOT BE DETERMINED ESPECIALLY WHEN THE OTHER PART Y TO THE CONTRACT IS CHALLENGING THE GENUINENESS OF THE INVE STMENT. ASSESSEE HAS RELIED ON THE JUDGEMENT OF SPECIAL BEN CH OF THE TRIBUNAL IN THE CASE OF JCIT VS. USHA MARTIN IN DUSTRIES LTD. 288 ITR 63 (AT) (KAL.) (SB) FOR THE PROPOSAL T HAT THE PROVISION FOR DOUBTFUL DEBT IS NOT A PROVISION FOR LIABILITY BUT REPRESENTS PROVISION FOR DOMINATION IN VALUE OF ASSETS AND HENCE, CLAUSE C OF EXPLANATION TO SECTION 115JA IS NOT APPLICABLE. HOWEVER, THIS VIEW HAS BEEN IMPLIEDLY O VER RULED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. EICHER LTD. 287 ITR 170 AND CIT VS. HCL COMNET SYSTEMS & SERVICES LTD. 292 ITR 299 WHERE THEY HELD THAT (WE ARE OF THE VIEW THAT THERE IS NOT REASON WHY A BAD AND DOUBTFUL DEBT CLAIMED BY THE ASSESSEE CANNOT BE TRE ATED AS AN ASCERTAINED LIABILITY (PAGE 292 ITR 299, 300 PAR A 6 OF THE JUDGMENT). BOTH THESE JUDGMENT HAVE LAID DOWN T HE LAW THAT PROVISION FOR BAD AND DOUBTFUL DEBT IS IN THE NATURE OF A LIABILITY AND CAN BE ALLOWED ONLY IF IT IS ASCERTAI NED AND IF NOT ASCERTAINED THEN THEY WILL FALL UNDER THE PURVI EW OF CLAUSE C OF EXPLANATION TO SECTION 115JA OF 1. T. A CT. IN OUR CASE AS EVIDENT FROM THE FACTS ABOVE EVEN THE W HOLE ISSUE IS UNDER DISPUTE AS THE BASIS OF ESTIMATING T HE TARIFF HAS BEEN QUESTIONED AND THE JURISDICTION OF THE AUT HORITY FIXING THE REVISED TARIFF IS ALSO UNDER JUDICIAL RE VIEW THEREFORE, AT THIS STAGE THE LIABILITY IS AT BEST A CONTINGENT LIABILITY WHICH WILL GET FIXED WHEN THESE PROCEEDIN GS WILL GET FINALITY AND HENCE WILL BE AVAILABLE FOR CALCUL ATING THE ASCERTAIN LIABILITY WHICH THEN CAN BE WRITTEN OFF B Y THE ASSESSEE IN WHICHEVER YEAR THEY CHOOSE. ANOTHER DISTINCTION TO BE KEPT IN MIND WHILE DECIDING THIS ISSUE IS THA T WE ARE ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 10 NOT DECIDING THE ALLOWABILITY OF A BAD DEBT BUT WE ARE DECIDING THE ISSUE OF CALCULATION OF BOOK PROFIT AS PER PROVISIONS OF SECTION 115JB OF I.T. ACT. THIS LIABI LITY IS CERTAINLY NOT ASCERTAINED AS ON DATE AND THEREFORE, THE JUDGMENTS ISSUED BY THE JURISDICTIONAL HIGH COURT F AVOURS THE REVENUE. ACCORDINGLY THE SUM OF RS.11,92,14,918/ - DEBITED F ROM P&L ACCOUNT OF PROVISION FOR DOUBTFUL DEBTS IS ADDE D TO THE BOOK PROFIT COMPUTED BY THE ASSESSEE TREATING THE S AME AS UNASCERTAINED LIABILITIES.' (EMPHASIS SUPPLIED). 2.1 THE ASSESSEE COMPANY HAS PREFERRED AN APPEAL BE FORE THE CIT(A). THE LD. CIT(A) VIDE ORDER DATED 22.9.2009 HAS DISMISSED THE APPEAL OF THE ASSESSEE. FOR THE SAKE OF THE CON VENIENCE THE RELEVANT PART OF THE CIT(A)'S ORDER IS REPRODUCED B ELOW: 'DURING THE APPELLANT PROCEEDINGS, THE APPELLANT CO MPANY, MADE THE WRITTEN SUBMISSIONS VIDE ITS LETTER DATED 27.8.2009 AS UNDER: 'IN FAIRNESS, IT WAS FURTHER POINTED OUT DURING THE COURSE OF HEARING OF 19.8.2009 AND ALSO IN THE SUPPLEMENTARY SUBMISSIONS FILED ON THAT DATE THAT I N VIEW OF RECENT INSERTION OF CLAUSE (I) IN EXPLANATION 1 TO SECTION 115JB OF THE ACT BY THE FINANCE (N.2) ACT 2009 W.R. E.J. 1.4.2001 THE AFORESAID ISSUE IS, PRIME FACIE, COVER ED AGAINST THE APPELLANT. IT MAY, IN THIS REGARD BE FURTHER POINTED OUT THAT THE MANAGEMENT OF THE APPELLANT IS, HOWEVER, STILL ADVI SED THAT DESPITE THE AFORESAID AMENDMENT BY WAY OF INSERTION OF CLAUSE (I) IN EXPLANATION 1 OF SECTION 115JB OF THE ACT, PROVISIONS FOR BAD AND DOUBTFUL DEBTS DEBITED BY TH E APPELLANT TO THE PROFIT AND LOSS ACCOUNT CANNOT BE ADJUSTED SINCE THE SAME COULD NOT BE REGARDED AS PROVISIONS FOR DIMINUTION IN THE VALUE OF ANY ASSET. THE MANAGEMEN T IS ALSO SEEKING FURTHER LEGAL ADVISE IN THE MATTER AND IS ALSO CONTEMPLATING CHALLENGING THE VALIDITY OF THE AFORE SAID RETROSPECTIVE AMENDMENT IN LAW. AFTER GOING THROUGH THE ASSESSMENT ORDER AND APPELLANT'S WRITTEN SUBMISSIONS AND FINANCE ACT, 20 09 WHICH BECOME PART OF I.T. ACT 1961 IT IS QUITE CLEA R THAT ON ACCOUNT OF RETROSPECTIVE AMENDMENTS OF SECTION 115J B, THERE IS NO DISPUTE REGARDING CALCULATION OF BOOK P ROFIT U/S 115JB AS FAR AS PROVISIONS FOR DOUBTFUL DEBTS ARE C ONCERNED. FOR THE SAKE OF CLARIFY THE AMENDMENT IS REPRODUCED AS BELOW: '(A) IN SUB SECTION (1), WITH EFFECT FROM THE 1 ST DAY OF APRIL, 2010 = ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 11 (I) FOR THE WORDS, FIGURES AND LETTERS'THE 1ST DAY OF APRIL, 2007', THE WORDS, FIGURES AND LETTERS 'THE 1 ST DAY OF APRIL 2010' SHALL BE SUBSTITUTED. (II) FOR THE WORDS 'TEN PERCENT', AT BOTH THE PLAC ES WHERE THEY OCCUR, THE WORDS 'FIFTEEN PERCENT' SHALL BE SU BSTITUTED (A) IN SUB-SECTION (2), AFTER THE SECOND PROVISO, I N EXPLANATION 1, AFTER CLAUSE (H), FOR THE WORDS, BRA CKETS AND LETTERS 'IF ANY AMOUNT REFERRED TO IN CLAUSES (A) T O (H) IS DEBITED TO THE PROFIT AND LOSS ACCOUNT, AND AS REDU CED BY - 'THE FOLLOWING SHALL BE SUBSTITUTED AND SHALL BE DE EMED TO HAVE BEEN SUBSTITUTED WITH EFFECT FROM THE 1ST DAY OF APRIL 2001, NAMELY: (I) THE AMOUNT OR AMOUNTS SET ASIDE AS PROVISION FO R DIMINUTION IN THE VALUE OF ANY ASSET. IF ANY AMOUNT REFERRED TO IN CLAUSES (A) TO (I) IS DEBITED TO THE PROFIT AND LOSS ACCOUNT, AND AS REDUCED BY, -' THEREFORE, ON ACCOUNT OF ABOVE REASONS THIS GROUND OF APPEAL IS DISMISSED AND ISSUE IS DECIDED IN FAVO UR OF REVENUE.' (EMPHASIS SUPPLIED). 3. FOR THE ASSESSMENT YEAR 2006-07, THE AO HAS MADE ADDITION WITH FOLLOWING OBSERVATIONS: 'IN SUPPORT OF ITS CONTENTION, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COMPANY ALSO FURNISHED COPY OF JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. HCL COMNET SYSTEMS AND SERVICES LTD. (305 ITR 409). 4.2 THE ABOVE REPLY OF THE ASSESSEE COMPANY IS NOT TENABLE FOR THE FOLLOWING REASONS. (I) THE DECISION OF HON'BLE SUPREME COURT IN THE C ASE OF CIT VS. HCL COMNET SYSTEM AND SERVICES LTD. (305 ITR 40 9), RELIED UPON BY THE ASSESSEE HAS BEEN CONSIDERED. TH E FACTS OF THE CASE OF CIT VS. HCL COMNET SYSTEM AND SERVIC ES LTD. (305 ITR 409) ARE DIFFERENT FROM THOSE OF ASSE SSEE'S CASE ITSELF. IN THE ASSESSEE'S CASE, THE PROVISION MADE BY IT IS FOR UNASCERTAINED LIABILITY BECAUSE THE LIABILIT Y PROVIDED BY THE ASSESSEE IS SUBJUDICE, AS THE ASSESSEE COMPA NY AND THE CCL ARE IN LITIGATION OVER THE POWER TARIFF. (ELABORATED REASONS HAVE BEEN MENTIONED BY THE AO IN THE ORDER OF THE ASSESSEE FOR A. Y. 2005-06). THEREFORE, THIS YEAR A LSO, ON THE BASIS OF PRINCIPLE OF CONSISTENCY THE PROVISION FOR ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 12 DOUBTFUL DEBTS AMOUNTING TO RS.18,26,02,000/ - IS A DDED TO THE BOOK PROFIT FOR THE PURPOSE OF PROVISIONS OF SE C. 115JB.' (EMPHASIS SUPPLIED). 3.1 THE ASSESSEE COMPANY PREFERRED AN APPEAL BEFORE THE CIT (A). THE CIT(A) HAS DISMISSED THE APPEAL VIDE THE O RDER DATED 3.11.2009. FOR THE SAKE OF CONVENIENCE, THE RELEVAN T PORTION OF THE CIT (A) ORDER IS REPRODUCED BELOW: 'AFTER GOING THROUGH THE ASSESSMENT ORDER AND APPEL LANT'S WRITTEN SUBMISSIONS AND FINANCE ACT, 2009 WHICH BEC OME PART OF I. T. ACT, 1961 IT IS QUITE CLEAR THAT ON A CCOUNT OF RETROSPECTIVE AMENDMENTS TO SECTION 115JB, THERE IS NO DISPUTE REGARDING CALCULATION OF BOOK PROFIT U/S 11 5JB AS FAR AS PROVISIONS FOR DOUBTFUL DEBTS ARE CONCERNED. FOR THE SAKE OF CLARITY THE AMENDMENT IS REPRODUCED AS BELO W:- (A) IN SUB SECTION (L), WITH EFFECT FROM THE 1 ST DAY OF APRIL, 2010 - (I) FOR THE WORDS, FIGURES AND LETTERS' THE 1 ST D AY OF APRIL, 2007', THE WORDS, FIGURES AND LETTERS' THE 1 ST DAY OF APRIL 2010' SHALL BE SUBSTITUTED; (II) FOR WORDS 'TEN PER CENT', AT BOTH THE PLACES WHERE THEY OCCUR, THE WORDS 'FIFTEEN PER CENT' SHALL BE SUBSTITUTED; (A) IN SUB-SECTION (2), AFTER THE SECOND PROVISO, I N EXPLANATION 1, AFTER CLAUSE (H), FOR THE WORDS, BRACKETS AND LETTERS 'IF ANY AMOUNT REFERRED TO IN CLAUSES (A) TO (H) IS DEBITED TO THE PROFIT AND LOS S ACCOUNT, AND AS REDUCED BY- ', THE FOLLOWING SHALL BE SUBSTITUTED AND SHALL BE DEEMED TO HAVE BEEN SUBSTITUTED WITH EFFECT FROM THE 1ST DAY OF APRIL, 2001, NAMELY:- (I) THE AMOUNT OR AMOUNTS SET ASIDE AS PROVISION F OR DIMINUTION IN THE VALUE OF ANY ASSET, IF ANY AMOUNT REFERRED TO IN CLAUSES (A) TO (I) IS DEBITED TO THE PROFIT AND LOSS ACCOUNT, AND AS REDUCED BY, - THIS ISSUE HAS ALREADY BEEN DECIDED IN EARLIER YEAR (A. Y. 2005-06) VIDE ORDER DATED 02-09-2009 IN APPE LLANT OWN CASE. THEREFORE, ON ACCOUNT OF ABOVE REASONS TH IS GROUND OF APPEAL IS DISMISSED AND ISSUE IS DECIDED IN FAVOUR OF REVENUE. ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 13 THE NEXT GROUND IS REGARDING LEVYING OF INTEREST U/ S 234B. IN THIS WRITTEN SUBMISSION, THE APPELLANT HAS MENTIONED THAT THE CBDT HAS ISSUED FOLLOWING NOTIFI CATION / ORDERS FOR WAIVER OF INTEREST U/ S 234B LEVIABLE DUE TO RETROSPECTIVE AMENDMENT. NOTIFICATION NO. F.NO. 212/495/92-IT(A-11) DATED 2-5-1994 NOTIFICATION F.NO. 400/234/ 95-IT(B) DATED 23.5.1996 ORDER F.NO. 400-234/95-IT(B) DATED 30-1-1997 IN VIEW OF THE ABOVE AND IN THE FITNESS OF THE THIN G, THE ASSESSEE SHOULD FILE WAIVER PETITION BEFORE THE JURISDICTIONAL COMMISSIONER OF INCOME TAX AND NO INTERFERENCE IS REQUIRED AT THIS STAGE. IN THE RESULT, THE APPEAL IS DISMISSED.' (EMPHASIS SUPPLIED). 4. FOR THE ASSESSMENT YEAR 2007-08, THE AO HAS MADE THE ADDITION OF RS.13,75,00,000/- WITH THE FOLLOWING OB SERVATION: 'ASSESSEE HAS MADE A PROVISION FOR BED & DOUBTFUL D EBTS IN ITS PROFIT AND LOSS ACCOUNT AMOUNTING TO RS.13,75,00,00 0/ - DURING THE ASSESSMENT PROCEEDINGS, VIDE NOTE SHEET ENTRY DATED 11/09/2009, ASSESSEE WAS ASKED TO GIVE DETAILS OF PROVISION FOR DOUBTFUL DEBTS AMOUNTING TO RS.13,75,00,000/ - DEBITED TO THE PROF IT & LOSS ACCOUNT AND JUSTIFY ITS CLAIM. ASSESSEE WAS ALSO AS KED TO SHOW CAUSE WHY NOT THE SAME BE ADDED TO ITS BOOK PROFIT FOR THE FINANCIAL YEAR UNDER CONSIDERATION, KEEPING IN VIEW THE FACTS OF THE CASE IN PRECEDING TWO ASSESSMENT YEARS VIZ. 2005-06 & 2006- 07 WHEREIN SIMILAR ADDITION WAS MADE IN THIS CASE. IN RESPONSE TO THE ABOVE ASSESSEE FILED ITS REPLY V IDE LETTER DATED 25/09/2009 AS UNDER: 'SINCE SEVERAL YEAR THE CLAIM OF THE COMPANY ARE NO T BEING ACCEPTED, BUT IN ITS ACCOUNT BOOKS IT HAS TO CHARGE THE FULL AMOUNT AS PER ITS OWN CALCULATION. IF IT DOES NOT DO SO, I TS CASE FOR RECOVERY OF ITS FULL CLAIMS GETS PREJUDICED. ACCORDINGLY THE COMPANY HAS BEEN CREDING TO ITS PROFIT & LOSS ACCOUNT THE FULL AMOUNT CLEARED BY IT. BUT LATER ON IT MAKES A PROVISION IN ITS ACCOUN T BOOKS FOR A PART OF THE BILL SENT TO THE CHENTS. THE CALCULATION OF PROVISIONS OF RS.1375 LACKS AND COPY OF OPINION OF SH. S.S. BAGAI AN EMINENT PERSON IN THE FIELD OF TAXATION, ARE ATTACHED.' THE ABOVE REPLY AND SUBMISSION OF THE ASSESSEE COMP ANY ARE UNFAVOURABLE FOR FOLLOWING REASONS: ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 14 1. THE DECISION OF HON'BLE SUPREME COURT IN THE CAS E OF CIT VS. HCL COMNET SYSTEMS AND SERVICES LIMITED (305 IT R 409) RELIED UPON BY THE ASSESSEE HAS BEEN CONSIDERE D. THE FACTS OF THIS CASE ARE DIFFERENT FORM THE INSTANT C ASE AS THE PROVISION MADE BY THE ASSESSEE M/ S DLF POWER LTD I S FOR UNASCERTAINED LIABILITY BECAUSE THE LIABILITY OF TH E ASSESSEE IS SUBJUDICE, AS THE ASSESSEE COMPANY AND THE CCL A RE IN LITIGATION OVER THE POWER TARIFF ELABORATED REASONS FOR THE SAME HAVE BEEN MENTIONED BY THE AO IN THE ASSESSMEN T ORDERS FOR THE A. Y. 2005-06 & 006-07. 2. FURTHER ASSESSEE HAS SUBMITTED THE OPINION OF SH . S.S. BAGAI, M.A., L.L.B. WHO IN HIS OPINION VIDE POINT N O, 6 & 7 (REPRODUCED AS (A) & (B) HEREUNDER) HAS SUBMITTED AS UNDER. A. IN A RECENT CASE (CIT VS. HCL COMNET SYSTEMS AND SERVICES LIMITED, (305 ITR 409) THE SUPREME COURT HAS HELD A PROVISION FOR BAD & DOUBTFUL DEBTS IS PROBABLY IN THE NATURE OF 'DIMINUATION IN THE VALUE OF THE ASSET'. B. IN ORDER TO NULLIFY THIS JUDGMENT OF THE SUPREME COURT AND TO ENABLE THE TAX AUTHORITIES TO ADD BACK PROVISION FOR BED & DOUBTFUL DEBTS, THE PARLIAMENT HAS AMENDED THE INCOME TAX ACT, THROUGH THE FINANCE ACT 2009 AND ADDED CLAUSE (I) TO THE SECTIO N PROVISO UNDER SUB-SECTION (2) OF SECTION 115JB OF I T ACT WHICH READS AS ' (I) THE AMOUNT OR AMOUNTS SET ASIDE AS PROVISION FOR DIMINATION IN THE VALUE OF A NY ASSET' AND MADE HIS AMENDMENT EFFECTIVE FORM 01/04/2001. IN LIGHT OF THIS RETROSPECTIVE AMENDMENT, THE QUERI ST (ASSESSEE) HAS BEEN ADVISED THAT IT MAY STOP CONTES TING ITS APPEAL. THEREFORE, IT IS SEEN THAT EVEN THE LEGAL OPINION G IVEN BY SH. S. S. BEGAI AND CITED BY THE ASSESSEE COMPANY ALSO DOES N OT SUPPORT THE CONTENTION OF THE ASSESSEE. HENCE ON THE BASIS OF R EASONS GIVEN HEREIN ABOVE AND THE PROVISION OF SECTION 115JB OF THE IT ACT AND THE AMENDMENT MADE RECENTLY I.E. CLAUSE (I) OF THE EXPLAINATION-1 TO SECTION 115JB OF IT ACT 1961! THIS AMOUNT IS TO BE ADDED TO THE BOOK PROFIT OF THE ASSESSEE COMPANY AS THIS IS NOT AN ASCERTAINED LIABILITY AND FURTHER IT AMOUNTS TO A PROVISION SET AS VALUE OF ASSET. HENCE IT IS TO BE ADDED TO THE BOOK PROFIT OF THE A SSESSEE U! S 115JB. THIS HAS BEEN CONSTANTLY FOLLOWED IN THE CAS E OF THE ASSESSEE BY THE INCOME TAX DEPARTMENT IN EARLIER YE ARS ALSO.' (EMPHASIS SUPPLIED). ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 15 4.1 THE ASSESSEE COMPANY PREFERRED APPEAL BEFORE TH E CIT(A). THE LD CIT(A) HAS DISMISSED THE APPEAL WITH FOLLOWI NG OBSERVATIONS: 'I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE AB OVE BY THE APPELLANT AND ALSO PERSUADE THE ASSESSMENT ORDER. IT IS NOTICED THAT THE APPELLANT ITSELF HAS RECOGNI ZED THE SAID PROVISION AS 'PROVISION FOR DOUBTFUL DEBTS' IN THE PROFIT AND LOSS ACCOUNT. THE SAID PROVISION, IN MY VIEW, CLEARLY FA LLS IN NEWLY INSERTED CLAUSE (1) OF EXPLANATION 1 TO SECTION 115 JB OF THE 1. T. ACT BROUGHT VIDE FINANCE ACT 2009, AND WITH RETROSP ECTIVE EFFECT FROM 01.04.2001. FURTHER THE OBSERVATION OF HONOURA BLE SUPREME COURTS IN CASE OF CIT VS. HCL COMNET SYSTEM AND SER VICE LTD. 305 ITR 409 ARE QUITE RELEVANT ON THE ISSUE. THE EX TRACTS FROM THE JUDGMENT ARE AS FOLLOWS:- 'THERE ARE TWO TYPES OF 'DEBT' A DEBT PAYABLE BY TH E ASSESSEE IS DIFFERENT FROM A DEBT RECEIVABLE BY THE ASSESSEE. A DEBT IS PAYABLE BY THE ASSESSEE WHERE THE ASSESSE E HAS TO PAY THE AMOUNT TO OTHERS WHEREAS THE DEBT RECEIVABL E BY THE ASSESSEE IS AN AMOUNT WHICH THE ASSESSEE HAS TO REC EIVE FROM OTHERS. IN THE PRESENT CASE, THE 'DEBT' UNDER CONSIDERATION IS A 'DEBT RECEIVABLE' BY THE ASSESSE E. THEREFORE SUCH A PROVISION CANNOT BE SAID TO BE A P ROVISION FOR A LIABILITY, BECAUSE EVEN IF A DEBT IS NOT RECO VERABLE NO LIABILITY COULD BE FASTENED UPON THE ASSESSEE AND N OT ANY LIABILITY PAYABLE BY THE ASSESSEE AND, THEREFORE AN Y PROVISION MADE TOWARDS IRRECOVERABILITY OF THE DEBT CANNOT BE SAID TO BE A PROVISION FOR LIABILITY. THEREFORE, IN OUR VIEW ITEM (A) OF THE EXPLANATION IS NOT ATTRACTED T O THE FACTS OF THE PRESENT CASE.' NOW S.115 JB IS A 'SPECIAL PROVISION FOR PAYMENT OF TAX BY CERTAIN COMPANIES' AND FORMS PART OF CHAPTER XII - B OF THE IT ACT. A SPECIAL PROVISION CREATES A LEGAL FICTION AND THE REFORE IN TAXING STATUS, HAVE TO BE STRICTLY CONSTRUED. HENCE THE WO RDS OF THE STATURE IN S.115JB SHOULD BE STRICTLY CONSTRUED. IT FURTHER APPEARS THAT THE IMPUGNED RESTROSPECTIVE AMENDMENT HAS BEEN INSERTED WITH RETROSPECTIVE EFFECT SINCE 01.04.2001 SO AS TO CLAR IFY THE LEGISLATIVE INTENT AND BRING IT IN CONSONANCE WITH THE OBSERVAT ION OF HON'BLE SUPREME COURT IN THE CASE OF HCL COMNET CASE, CITED ABOVE. THIS PRECISELY APPEARS TO BE THE REASON WHY SIMILAR 'PRO VISION FOR DOUBTFUL DEBT' WAS HELD TO BE FALLING IN CLAUSE (I) OF EXPLANATION 1 TO SECTION 115JB OF THE 1. T. ACT BY MY PREDECESSOR IN THE ASSESSMENT YEARS 2005-06 AND 2006-07 DECIDED IN APP EAL NOS. 228/07-08 VIDE ORDER DATED 2ND SEPTEMBER, 2009 AND APPEAL NO. 120/08-09 VIDE ORDER DATED 3.11.2009 RESPECTIVELY. THUS, IN VIEW ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 16 OF THE ABOVE OBSERVATION AS ALSO FOLLOWING THE ORDE RS OF MY PREDECESSOR FOR THE SAID ASSESSMENT YEARS, THE ACTI ON OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.13.75 CR ORES IS HEREBY CONFIRMED. IN VIEW OF THE ABOVE REASONS, THE GROUNDS OF APPEAL NOS. 1 & 2 RAISED BY THE APPELLANT ARE DISMISSED. IN RESPECT TO GROUND NO.3, THE APPELLANT HAS CHALLE NGED THE IMPOSITION OF INTEREST AMOUNTING TO RS.51,76,407/ - U/ S 234B OF THE I.T. ACT. AS REGARDS THE SAME, IT WAS CONTENDED BY THE AR FOR THE APPELLANT THAT IN CASE ADDITION MADE BY THE ASS ESSING OFFICER IT UPHELD ON ACCOUNT OF INSERTION OF CLAUSE (I) IN EXP LANATION 1 TO SECTION 115JB OF THE 1.T.ACT WITH RETROSPECTIVE EFF ECT FROM 1.4.2001, BY THE FINANCE (NO.2) ACT, 2009, THE APPE LLANT SHOULD NOT BE HELD TO BE IN DEFAULT IN PAYMENT OF ADVANCE TAX AND CONSEQUENTIAL IMPOSITION OF INTEREST U/S 234B OF TH E I.T. ACT IN THIS REGARD, THE AR FOR THE APPELLANT HAS CITED A NUMBER OF DECISIONS OF THE TRIBUNAL WHEREIN IT HAS BEEN HELD THAT INTEREST U/ S 234B / 234C SHOULD NOT BE LEVIED WHERE DEMAND ARISE S ON ACCOUNT OF RETROSPECTIVE AMENDMENT IN LAW. THIS ISSUE WAS T HE CONSIDERED BY MY PREDECESSOR IN THE A. Y. 2005-06 AND 2006-07 DECIDED IN APPEAL NOS. 228/ 07-08 VIDE ORDER DATED 2ND SEP., 2 009 AND APPEAL NO. 120/ 08-09 AND ORDER DATED 3.11.2009 RESPECTIVE LY, WHEREIN THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE OB SERVING AS UNDER: 'THE NEXT GROUND IS REGARDING LEVYING OF INTEREST U / S 234B. IN HIS WRITTEN SUBMISSION THE APPELLANT HAS MENTION ED THAT THE CBDT HAS ISSUED FOLLOWING NOTIFICATION ORDERS F OR WAIVER OF INTEREST U/ S 234B LEVIABLE DUE TO RETROS PECTIVE AMENDMENT. NOTIFICATION NO.F.NO.212/495/92-IT(A-11) DATED 2.5.94 NOTIFICATION F.NO. 400/234/ 95-IT(B) DATED 23.5.1996 ORDER F.NO.400/ 234/ 95-IT(B) DATED 30.1.1997 IN VIEW OF THE ABOVE AND IN THE FITNESS OF THE THIN GS, THE ASSESSEE SHOULD FILE WAIVER PETITION BEFORE THE JURISDICTIONAL COMMISSIONER OF INCOME-TAX AND NO INTERFERENCE IS REQUIRED AT THIS STAGE.' THE APPELLANT MAY FILE WAIVER PETITION BEFORE THE JURISDICTIONAL COMMISSIONER OF INCOME-TAX FOR THIS YEAR TOO. THUS THIS GROUND OF APPEAL IS ALSO DISMISSED. (EMPHASIS SUPPLIED). ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 17 5. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED B EFORE YOUR HONOURS THAT IT NEEDS TO BE CONSIDERED WHETHER A DE BT COMES IN EXISTENCE AS A CONSEQUENCE OF UNILATERAL CLAIM, NOT ACKNOWLEDGED BY THE CUSTOMER. IT WAS SUBMITTED THAT THE PROVISION FOR DOUBTFUL DE BTS RELATES TO PROVISION FOR UN-ACCRUED INCOME. INCOME SHOWN IN THE BOOKS OF ACCOUNTS WAS INFLATED AND PROVISION WAS MA DE TO BRING DOWN PROFIT BY PROVIDING PROVISION FOR UN-ACCRUED I NCOME, THOUGH NOMENCLATURE WAS GIVEN AS PROVISION FOR BAD AND DOU BTFUL DEBTS. IT WAS SUBMITTED THAT THOUGH THE ASSESSEE IS FOLLOW ING MERCANTILE SYSTEM OF ACCOUNTING, THE DEBT HAS NOT A CCRUED IN FAVOUR OF ASSESSEE. THE CUSTOMER IS DISPUTING TARIF F/RATE AND THERE IS A LIVE DISPUTE IN FIXATION OF TARIFF. THEREFORE, IT CAN NOT BE SAID THAT ANY DEBT HAS ACCRUED IN FAVOUR OF ASSESSEE. IT WAS SUBMITTED THAT THE AO SHOULD HAVE RECAST THE ACCOUNTS TO ARRIVE AT THE CORRECT PROFIT. HE FURTHE R SUBMITTED THAT IF DEBT IS NOT DUE TO THE ASSESSEE, IT IS NOT INCOME O F THE ASSESSEE. 6. IT IS RESPECTFULLY SUBMITTED THAT THE SUBMISSION S OF THE LD.AR ARE FACTUALLY AND LEGALLY INCORRECT AND THERE FORE THE SAME DESERVE TO BE REJECTED FOR THE FOLLOWING REASONS: (I) IT IS AN ADMITTED FACT THAT THE APPELLANT COMPA NY IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND PREPA RING ITS ACCOUNT UNDER THE MERCANTILE SYSTEM. THEREFORE, THE MOMENT THE BILL IS RAISED AND IT IS CREDITED IN THE BOOKS OF A CCOUNTS IT BECOMES INCOME OF THE ASSESSEE. (II) THE BILLS ARE RAISED ON THE BASIS OF A WRITTEN POWER PURCHASE AGREEMENT WITH ITS CUSTOMER. THEREFORE, TH E ASSESSEE BECOMES LEGALLY ENTITLED TO RECOVER THEM AND PRECIS ELY FOR THIS REASON THE ASSESSEE COMPANY HAS FILED A CIVIL SUIT TO RECOVER ITS CLAIM AND HAS ALSO GONE IN ARBITRATION. THE COPY OF ARBITRATION PROCEEDINGS HAVE NOT BEEN PRODUCED SO FAR IN SPITE OF DIRECTION GIVEN BY THE HON'BLE BENCH. IN NONE OF THE PROCEEDI NGS EITHER BEFORE THE ELECTRICITY REGULATORY COMMISSION OR BEF ORE THE APPELLATE TRIBUNAL FOR ELECTRICITY THE ASSESSEE COM PANY HAS TAKEN THE PLEA THAT THEY HAVE RAISED INFLATED BILLS. ON T HE CONTRARY, THEY HAVE CLAIMED THAT THE BILLS HAVE BEEN RAISED ON THE BASIS OF POWER PURCHASE AGREEMENT. THEREFORE, THE SUBMISSIONS OF T HE LD AR THAT BILLS WERE INFLATED NEEDS TO BE REJECTED. (III) IT IS RESPECTFULLY SUBMITTED THAT IF THE AS SESSEE IS CLAIMING THAT IT WAS A UNILATERAL CLAIM THEN WHY TH EY HAVE FILED A CIVIL SUIT TO RECOVER THE AMOUNT AND WHY THEY HAVE GONE FOR ARBITRATION TO RECOVER THE AMOUNT ON THE BASIS OF B ILLS RAISED. IT MAY ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 18 BE MENTIONED THAT THE ELECTRICITY REGULATORY COMMIS SION VIDE ORDER DATED 4.12.2004 AS AMENDED BY THE ORDER DATED 28.2.2005 DETERMINED THE COST OF THE PROJECT IN FAVOUR OF THE ASSESSEE COMPANY. THE CCL FURTHER FILED APPEAL AGAINST THE O RDER OF THE COMMISSION BEFORE THE APPELLATE TRIBUNAL FOR ELECTR ICITY WHICH WAS DISMISSED VIDE ORDER DATED 11.5.2006 (PG.159 OF PAPER BOOK FILED BY THE ASSESSEE FOR A.Y.2007-08). PAGE 65 TO 82 OF THE PAPER BOOK CONTAINS THE COPY OF THE PETITION FILED BEFORE APPELLATE TRIBUNAL FOR ELECTRICITY. IN PARA - 5, CLAUSE (A) T O (GG) (PG. 74 TO 79 OF PAPER BOOK FOR A.Y.2007-08), THE CENTRAL COAL FI ELDS LTD (CCL) HAS RAISED GROUNDS OF APPEAL. THE APPELLATE T RIBUNAL FOR ELECTRICITY HAS DISMISSED THE APPEAL (PG.83 TO 107 OF PAPER BOOK FOR A.Y. 2007-08), BY OBSERVING THAT THE PROCEEDING S BEFORE ELECTRICITY REGULATORY COMMISSION WERE IN THE NATUR E OF ARBITRAL PROCEEDINGS AND THEREFORE, THE SAME WERE BINDING ON THE PARTIES. THEREFORE, THE CLAIM OF THE ASSESSEE COMPANY THAT T HE BILLS RAISED BY IT WERE ONLY IN THE NATURE OF UNILATERAL CLAIM A ND NO DEBT HAS ARISEN IN ITS FAVOUR IS NOT CORRECT. (IV) IT IS RESPECTFULLY SUBMITTED THAT THE PARLIAME NT IN ITS WISDOM INSERTED CLAUSE (I) IN EXPLANATION (1) TO SE C. 115JB BY THE FINANCE (NO.2) ACT 2009 WITH RETROSPECTIVE EFFECT F ROM 1.4.2001. THE EXPLANATION READS AS UNDER: EXPLANATION (1) FOR THE PURPOSES OF THIS SECTION ( (BOOK PROFIT' MEANS THE NET PROFIT AS SHOWN IN THE PROFIT AND LOS S ACCOUNT FOR THE RELEVANT PREVIOUS YEAR PREPARED UNDER SUB-SECTION ( 2), AS INCREASED BY- A) THE AMOUNT OF INCOME-TAX PAID OR PAYABLE, AND TH E PROVISION THEREFORE OR B) THE AMOUNT OR AMOUNTS SET ASIDE TO PROVISIONS MADE FOR MEETING LIABILITIES, OTHER THAN ASCERTAINE D LIABILITIES OR C) THE AMOUNTS CARRIED TO ANY RESERVES, BY WHATEVER NAME CALLED OTHER THAN A RESERVE SPECIFIED UNDER SE CTION 33AC OR D) THE AMOUNT BY WAY OF PROVISION FOR LOSSES OF SUBSIDIARY COMPANIES OR E) THE AMOUNT OR AMOUNTS OF DIVIDENDS PAID OR PROPOSED OR F) THE AMOUNT OF AMOUNTS OF EXPENDITURE RELATABLE T O ANY INCOME TO WHICH [SECTION 10 (OTHER THAN THE PRO VISIONS CONTAINED IN CLAUSE (38) THEREOF OR SECTION 11 OR S ECTION 12 APPLY OR ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 19 G) THE AMOUNT OF DEPRECIATION H) THE AMOUNT OF DEFERRED TAX AND THE PROVISION THEREFORE I) THE AMOUNT OF AMOUNTS SET ASIDE AS PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET' THUS THE POSITION IN LAW FOR THE A.Y. 2001-02 AND A FTERWARDS IS THAT ANY AMOUNT DEBITED IN THE P&L ACCOUNT FOR PROV ISION OF BAD AND DOUBTFUL DEBTS HAS TO BE COMPULSORY ADDED FOR C ALCULATING BOOK PROFIT U/S 115 JB. (V) THE CASE LAWS CITED BY THE LD AR RELATES TO THE POSITION BEFORE THE INSERTION OF CLAUSE (I) IN EXPLANATION-1 TO SECTION 115JB. THEREFORE, THEY ARE OF NO HELP TO THE ASSESSEE AS T HE LEGISLATURE HAS BROUGHT THE AMENDMENT TO OVERCOME THE JUDGMENT OF H ON'BLE SUPREME COURT IN THE CASE OF CIT VS HCL COMNET SYST EMS AND SERVICES LTD. REPORTED IN 305 ITR 409 (SC). THE PRO VISION OF LAW AS IT STANDS TODAY MANDATES THE AO TO ADD THE AMOUNT O N ACCOUNT OF PROVISION MADE FOR BAD AND DOUBTFUL DEBTS IN CALCUL ATING BOOK PROFIT U/S 115JB. SINCE THE PROVISION IS MANDATORY, THE AO DOES NOT HAVE ANY CHOICE OF NOT MAKING THE ADDITION. (VI) THE PERUSAL OF SCHEDULE-8 (GENERATION, CONSTRU CTION AND OTHER EXPENSES) TO THE P&L ACCOUNT (PG.21 OF THE P. B. SUBMITTED BY THE APPELLANT IN ITA NO.4471) CLEARLY SHOWS THAT THE APPELLANT HAS MADE PROVISION FOR DOUBTFUL DEBTS AMOUNTING TO RS.1375 LAKHS IN THE A.Y. 2007-08 AND RS.1826.02 LAKHS IN THE A.Y . 2006-07. SIMILARLY SCHEDULE 8 TO THE P & L ACCOUNT FOR THE A .Y. 2005-06 (PG.100 OF P.B. SUBMITTED BY LD.AR IN ITA NO.4463) SHOWS THAT THE APPELLANT COMPANY HAS MADE OF PROVISION FOR DOU BTFUL DEBTS AMOUNTING TO RS.1192.51 LAKHS FOR A.Y.2005-06. THE PERUSAL OF THE ASSESSEE'S ACCOUNTS MAKES IT CLEAR THAT IT WAS CLEARLY A PROVISION FOR DOUBTFUL DEBTS AND HENCE DIRECTLY HIT BY CLAUSE (I) OF EXPLANATION 1 TO SECTION 115JB. (VII) THE APPELLANT COMPANY HAS NO WHERE MENTIONED IN THE ACCOUNT THAT IT WAS A PROVISION FOR UNACCRUED INCOM E. THEREFORE, THE SUBMISSION OF THE LD.AR THAT IT WAS PROVISION F OR UNACCRUED INCOME IS WITHOUT ANY BASIS AND NOT BORNE FROM THE RECORDS. THEREFORE, THE SUBMISSIONS OF THE LD.AR NEEDS TO BE REJECTED. (VIII) WITHOUT PREJUDICE TO THE ABOVE SUBMISSIONS, IT IS FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE ASSESSEE WAS ASKED BY THE AO AS TO WHY THE AMOUNT O N PROVISION FOR BAD AND DOUBTFUL DEBTS SHOULD NOT BE ADDED BACK FOR CALCULATING THE TAX PAYABLE U/S 115 JB OF I T ACT. THE ASSESSEE SUBMITTED ALONG WITH LETTER DATED 26.10.2007 THAT P ROVISION FOR BAD ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 20 AND DOUBTFUL DEBTS CAN NOT BE ADDED WHILE COMPUTING THE TAX PAYABLE U/S 115 JB AS THIS CASE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF CIT VS. HCL, COMNET SYS TEMS AND SERVICES LTD., 292 ITR 299 (DEL). IT IS SUBMITTED T HAT WITH THE INSERTION OF CLAUSE(I) IN EXPLANATION TO S.115JB, T HE ABOVE DECISION IS OF NO HELP TO THE ASSESSEE. NOW, DURING THE HEARING OF APPEAL BEFORE THE HON'BL E TRIBUNAL, THE LD AR IS CONTENDING THAT THE SINCE THE BILLS RAISED BY IT HAVE NOT BEEN ACCEPTED BY THE CLIENTS, IT BECOMES DISPUTABLE CLAIM AND THEREFORE IT CAN NOT BE SAID THAT THE INCOME HAS AC CRUED IN FAVOUR OF THE ASSESSEE EVEN THOUGH ASSESSEE IS FOLLOWING MERC ANTILE SYSTEM OF ACCOUNTING. IT IS RESPECTFULLY SUBMITTED THAT FOR THE SAKE OF A RGUMENT, EVEN IF IT IS ACCEPTED FOR A MOMENT THAT SINCE THE ASSESSEE'S CLIENTS HAS NOT ACCEPTED THE CLAIM OF THE ASSESSEE, IT IS AN UNASCE RTAINED LIABILITY BECAUSE THE ENTIRE AMOUNT UNDER QUESTION IS DISPUTE D AND SUBJECT TO OUTCOME OF DECISION OF THE APPELLATE TRIBUNAL FOR E LECTRICITY, AND OF ARBITRATION PROCEEDINGS. THEREFORE, EVEN IF WE A CCEPT THE ASSESSEE'S CLAIM THAT THE SAID AMOUNT IS PROVISION FOR AMOUNT NOT ACCEPTED AS PAYABLE BY ITS CLIENTS, THEN ALSO, IT R EMAINS UNASCERTAINED LIABILITY AND DESERVES TO BE ADDED BA CK U/S 115 JB. THEREFORE, IT IS A CONTINGENT LIABILITY. HENCE, THE AMOUNT OF PROVISION IS HIT BY S.115JB. 7. FURTHERMORE, WITHOUT PREJUDICE TO THE ABOVE SUB MISSIONS, THE CASE LAWS CITED BY THE LD.AR ARE DISTINGUISHABL E ON FACTS AS DISCUSSED BELOW: I. CIT VS HCL COMNETS SYSTEMS AND SERVICES LTD. 30 5 ITR 409 (SC) - IN VIEW OF THE AMENDMENT BROUGHT BY WAY OF INSERTION OF CLAUSE(I) IN EXPLANATION -1 TO SECTION 115JB, THE DECISION IS NOT APPLICABLE. II) CIT VS NOADIAD ELECTRIC SUPPLY LTD. (BORN) 80 I TR 660 - IN THIS CASE THERE WAS AN AGREEMENT BETWEEN THE ASS ESSEE COMPANY AND NADIAD MUNICIPALITY UNDER WHICH THE ASSESSEE COMPANY WAS TO SUPPLY ELECTRICITY TO THE N ADIAD MUNICIPALITY FOR STREET LIGHTNING ETC. PURPOSES FIX ED IN AGREEMENT AT @ 19 PAISA PER UNIT. THE ASSESSEE COMP ANY RAISED THE BILLS @ 30 PAISA PER UNIT AS AGAINST THE AGREED RATE OF 19 PAISA PER UNIT. THEREFORE, IN VIEW OF TH E CLAIM OF 30 PAISA PROVIDED IN THE AGREEMENT, THE COURT HELD THAT ANY AMOUNT FOR THE ELECTRICITY SUPPLY TO THE MUNICIPALI TY CALCULATED AT ANY RATE OTHER THAN RATE OF 19 PAISA PER UNIT AMOUNTED TO MAKING A CLAIM NOT LEGALLY ENFORCEABLE BY THE ASSESSEE COMPANY, NOR A CORRESPONDING LEGAL ENFORCE ABLE OBLIGATION OF THE MUNICIPALITY. ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 21 THE CASE OF THE APPELLANT COMPANY IS TOTALLY DIFFERENT FROM THE CASE OF NADIAD ELECTRICITY COMPA NY. THE APPELLANT COMPANY IS RAISING THE BILL STRICTLY AS P ER THE POWER PURCHASE AGREEMENT AND NOT IN EXCESS OF AGREE D RATE AS WAS THE CASE IN NADIDI ELECTRICITY SUPPLY COMPAN Y. NOT ONLY THE APPELLANT COMPANY HAS RAISED THE BILLS AS PER AGREED RATE PROVIDED IN THE POWER PURCHASE AGREEMEN T, IT HAS ALSO FILED A CIVIL SUIT IN THE COURT, HAS GONE IN THE ARBITRATION TO RECOVER THE CLAIM MADE BY IT. THEREF ORE, IT CAN NOT BE SAID THAT THE ASSESSEE COMPANY RAISED INFLAT ED BILLS UNILATERALLY. THE LIVE CLAIM OF THE APPELLANT COMPA NY IN THE FORM OF CIVIL SUIT AND APPOINTMENT OF ARBITRATOR FO R ARBITRATION AND PROVISION MADE IN THE BOOKS OF ACCO UNT AS DOUBTFUL DEBTS IS EVIDENCE BEYOND ANY REASONABLE DO UBT THAT THE DEBT HAS ACCRUED IN THE FAVOUR OF THE ASSE SSEE COMPANY. III) CIT VS WESTERN INDIA CO. LTD 81 ITR 712 (GUJRA T) - IN THAT CASE THE ASSESSEE WAS DOING THE BUSINESS OF BUILDIN G, CONSTRUCTION GENERALLY ON THE BASIS OF ACCEPTED TEN DERS WHERE THE ASSESSEE HAD TO ADD NON-TENDER WORK I.E. ADDITIONAL WORK NOT INCLUDED IN THE TENDERS, FOR WH ICH THE RATE HAD NOT BEEN SETTLED. THE ASSESSEE WOULD SUBMI T BILLS FOR SUCH EXTRA WORK AND THE RATE MENTIONED IN SUCH BILLS WOULD BE PITCHED A LITTLE HIGH IN VIEW OF PAST EXPE RIENCE TO ALLOW OF DEDUCTION AT THE TIME OF SUBMISSIONS OF TH E APPEALS. THE ASSESSEE WOULD CREDIT THE AMOUNT OF TH E BILLS FOR NON-TENDER WORK IN HIS WORKS ACCOUNT BUT WOULD MAKE PROVISION IN HIS P&L ACCOUNT ONLY SUCH AMOUNT AS HE EXPECTED TO RECEIVE AND RETAIN THE WORKS AMOUNT AS KASAR. BUT, IN THE CASE UNDER CONSIDERATION THE ASSESSEE C OMPANY IS NOT RAISING THE BILLS FOR EXTRA WORK OR FOR ANY WORK NOT INCLUDED IN THE POWER PURCHASE AGREEMENT OR AT THE RATE HIGHER THAN AGREED IN THE POWER PURCHASE AGREEMENT. THE APPELLANT COMPANY IS RAISING THE BILLS AT THE RATE AGREED IN THE POWER PURCHASE AGREEMENT. THEREFORE, THE DECISI ON IN THE CASE CIT VS WESTERN INDIA COMPANY (SUPRA) IS NO T APPLICABLE TO THE FACTS OF THE CASE. IV. APOLLO TYRES LTD. VS CIT 255 ITR 273 (SC) - IN THIS CASE THE APEX COURT HAS HELD AS UNDER: THE ABOVE SPEECH SHOWS THAT THE INCOME-TAX AUTHORI TIES WERE UNABLE TO BRING CERTAIN COMPANIES WITHIN THE N ET OF INCOME TAX BECAUSE THESE COMPANIES WERE ADJUSTING T HEIR ACCOUNTS IN SUCH A MANNER AS TO ATTRACT NO TAX OR V ERY LITTLE TAX. IT IS WITH A VIEW TO BRING SUCH OF THESE COMPA NIES ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 22 WITHIN THE TAX NET THAT SECTION 115J WAS INTRODUCED IN THE INCOME TAX ACT WITH A DEEMING PROVISIONS WHICH MAKE S THE COMPANY LIABLE TO PAY TAX ON AT LEAST 30 PERCEN T OF ITS BOOK PROFITS AS SHOWN IN ITS OWN ACCOUNT. FOR THE S AID PURPOSE, SECTION 115J MAKES THE INCOME REFLECTED IN THE COMPANY'S BOOKS OF ACCOUNT THE DEEMED INCOME FOR TH E PURPOSE OF ASSESSING THE TAX. IF WE EXAMINE THE SAI D PROVISION IN THE ABOVE BACKGROUND, WE NOTICE THAT T HE USE OF THE WORDS IN ACCORDANCE WITH THE PROVISIONS OF PARTS II AND III OF SCHEDULE VI TO THE COMPANIES ACT' WAS MA DE FOR THE LIMITED PURPOSE OF EMPOWERING THE ASSESSING AUT HORITY TO RELY UPON THE AUTHENTIC STATEMENT OF ACCOUNTS OF THE COMPANY. WHILE SO LOOKING INTO THE ACCOUNTS OF THE COMPANY, AN ASSESSING OFFICER UNDER THE INCOME-TAX ACT HAS TO ACCEPT THE AUTHORITY OF THE ACCOUNTS WITH RE FERENCE TO THE PROVISIONS OF THE COMPANIES ACT WHICH OBLIGATES THE COMPANY TO MAINTAIN ITS ACCOUNTS IN A MANNER PROVID ED BY THE COMPANIES ACT AND THE SAME TO BE SCRUTINIZED AN D CERTIFIED BY THE STATUTORY AUDITORS AND WILL HAVE T O BE APPROVED BY THE COMPANY IN ITS GENERAL MEETING AND THEREAFTER TO BE FILED BEFORE THE REGISTRAR OF COMP ANIES WHO HAS A STATUTORY OBLIGATION ALSO TO EXAMINE AND SATISFY THAT THE ACCOUNTS OF THE COMPANY ARE MAINTAINED IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES A CT. IN SPITE OF ALL THESE PROCEDURES CONTEMPLATED UNDER TH E PROVISIONS OF THE COMPANIES ACT, WE FIND IT DIFFICU LT TO ACCEPT THE ARGUMENT OF THE REVENUE THAT IT IS STILL OPEN TO THE ASSESSING OFFICER TO SCRUTINIZE THIS ACCOUNT AN D SATISFY HIMSELF THAT THESE ACCOUNTS HAVE BEEN MAINTAINED IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT . IN OUR OPINION, RELIANCE PLACED BY THE REVENUE ON SUB- SECTION (LA) OF SECTION 115J OF THE INCOME-TAX ACT IN SUPPO RT OF THE ABOVE CONTENTION IS MISPLACED. SUB-SECTION (LA) OF SECTION 115J DOES NOT EMPOWER THE ASSESSING OFFICER TO EMBA RK UPON A FRESH INQUIRY IN REGARD TO THE ENTRIES MADE IN THE BOOKS OF ACCOUNT OF THE COMPANY. THE SAID SUB-SECTI ON, AS A MATTER OF FACT, MANDATES THE COMPANY TO MAINTAIN ITS ACCOUNTS IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT WHICH MANDATE, ACCORDING TO US, IS BO DILY LIFTED FROM THE COMPANIES ACT INTO THE INCOME TAX A CT FOR THE LIMITED PURPOSE OF MAKING THE SAID ACCOUNT SO MAINTAINED AS A BASIS FOR COMPUTING THE COMPANY'S I NCOME FOR LEVY OF INCOME-TAX. BEYOND THAT, WE DO NOT THIN K THAT THE SAID SUB-SECTION EMPOWERS THE AUTHORITIES UNDER THE COMPANIES ACT. IF THE STATUTE MANDATES THAT INCOME PREPARED IN ACCORDANCE WITH THE COMPANIES ACT SHALL BE DEEMED INCOME FOR THE PURPOSE OF SECTION 115J OF TH E ACT, THEN IT SHOULD BE THAT INCOME WHICH IS ACCEPTABLE T O THE AUTHORITIES UNDER THE COMPANIES ACT. THERE CANNOT B E TWO ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 23 INCOMES ONE FOR THE PURPOSE OF THE COMPANIES ACT AN D ANOTHER FOR THE PURPOSE OF INCOME-TAX BOTH MAINTAIN ED UNDER THE SAME ACT. IF THE LEGISLATURE INTENDED THE ASSESSING OFFICER TO REASSESS THE COMPANY'S INCOME, THEN IT WOULD HAVE STATED IN SECTION 115J THAT ((INCOME OF THE COMPANY AS ACCEPTED BY THE ASSESSING OFFICER'. IN T HE ABSENCE OF THE SAME AND ON THE LANGUAGE OF SECTION 115J, IT WILL HAVE TO HELD THAT VIEW TAKEN BY THE TRIBUNAL I S CORRECT AN THE HIGH COURT HAS ERRED IN REVERSING THE SAID V IEW OF THE TRIBUNAL. V. THEREFORE WE ARE OF THE OPINION, THE ASSESSING O FFICER WHILE COMPUTING THE INCOME UNDER SECTION 115J HAS O NLY THE POWER OF EXAMINING WHETHER THE BOOKS OF ACCOUNT S ARE CERTIFIED AUTHORITIES UNDER THE COMPANIES ACT AS HA VING BEEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE COMPANIES ACT. THE ASSESSING OFFICER THEREAFTER HAS THE LIMITED POWER OF MAKING INCREASES AND REDUCTIONS AS PROVIDED FOR IN THE EXPLANATION TO THE SAID SECTION . TO PUT IT DIFFERENTLY, THE ASSESSING OFFICER DOES NOT HAVE TH E JURISDICTION TO GO BEHIND THE NET PROFIT SHOWN IN T HE PROFIT AND LOSS ACCOUNT EXCEPT TO THE EXTENT PROVIDED IN T HE EXPLANATION TO SECTION 115. (EMPHASIS SUPPLIED). A PERUSAL OF THE ABOVE JUDGMENT IN THE APOLLO TYRES CASE (SUPRA) MAKES IT CLEAR THAT THE AO HAS LIMITED POWER OF MAK ING INCREASES AND REDUCTION AS PROVIDED IN THE EXPLANATION-L OF S ECTION 115JB BROUGHT WITH RETROSPECTIVE EFFECT FROM 1.4.2001. IT WAS HELD THAT THE AO DOES NOT HAVE THE JURISDICTION TO GO BEHIND THE NET PROFIT SHOWN IN THE P&L ACCOUNT EXCEPT TO THE EXTENT PROVI DED IN THE EXPLANATION TO SECTION 115J. THEREFORE, IT IS NOT C ORRECT ON THE PART OF THE LD.AR TO CONTEND THAT THE AO SHOULD HAVE GON E BEHIND THE NET PROFIT SHOWN IN THE P&L ACCOUNT AND RECAST THE ACCOUNTS. THE AO HAS FOLLOWED THE LAW LAID DOWN IN THE CASE OF TH E APOLLO TYRES AND MADE ADDITION ON ACCOUNT OF PROVISION FOR DOUBT FUL DEBTS AS MANDATED BY CLAUSE-(I) OF EXPLANATION -1 TO SECTION 115JB. THEREFORE, THE DECISION IN THE CASE OF APOLLO TYRES SUPPORTS THE STAND OF REVENUE AND NOT OF THE ASSESSEE. V. CIT VS. SA IN PROCESSING & WEAVING MILLS (P) LTD .(2009) 221 CTR REPORTS 493 (DEL) IN THAT CASE ISSUE INVOLVED WAS WHETHER THE CURRENT YEAR'S DEPRECIATION EVEN IF NOT CHARGED TO THE P&L ACCOUNT BUT DISCLOSED IN THE NOTES APPENDED TO THE ACCOUNTS HAS TO BE DEDUCTED FROM THE NET PROFIT TO ARRIVE AT BOOK PROF IT FOR THE PURPOSES OF SECTION 115J. IT WAS HELD THAT THE ASSE SSEE WAS ENTITLED TO SEEK DEDUCTION OF CURRENT YEAR DEPRECIA TION FROM ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 24 NET PROFIT TO ARRIVE AT THE BOOK PROFIT EVEN THOUGH IT IS NOT CHARGED TO THE P&L ACCOUNT. IT IS RESPECTFULLY SUBMITTED THAT THE ABOVE DECISIO N IS DISTINGUISHABLE ON FACTS OF THE CASE AND ALSO THE P ROVISIONS OF LAW. SECTION 32 OF THE LT. ACT MANDATES TO ALLOW DEPRECIATION EVEN IF NOT CLAIMED BY THE ASSESSEE. H OWEVER, IN THE CASE UNDER CONSIDERATION, THE ASSESSEE HAS M ADE PROVISION FOR DOUBTFUL DEBTS WHICH IS DIRECTLY HIT BY CLAUSE (I) OF EXPLANATION-1 TO SECTION 115JB. MOREOVER, TH E ABOVE CASE WAS DECIDED BEFORE THE AMENDMENT WAS MADE IN EXPLANATION-1 TO SECTION 115JB. THEREFORE, THE ABOV E CASE IS OF NO HELP TO THE ASSESSEE. VI. CIT VS. KHAITAN CHEMICALS AND FERTILIZERS LTD. - 221 CTR (DEL) 501 - IN THAT CASE THE ISSUE WAS WHETHER ADJU STMENT OF PRIOR PERIOD ITEMS AND EXTRA ORDINARY ITEMS FOR THE PURPOSES OF SECTION 115JA ARE TO BE DEDUCTED FOR COMPUTING T HE NET PROFIT. IT WAS HELD THAT THE NET PROFIT IS TO BE CO MPUTED AFTER DEDUCTING THE PRIOR PERIOD ITEMS AND EXTRA ORDINARY ITEMS. IT IS RESPECTFULLY SUBMITTED THAT THE ABOVE CASE IS ALSO DISTINGUISHABLE ON THE FACT AND ALSO ON LAW AS THE ISSUE WAS TOTALLY DIFFERENT IN THAT CASE. MOREOVER, THAT CASE WAS DECIDED PRIOR TO THE AMENDMENT BROUGHT IN CLAUSE (I ) OF EXPLANATION-1 TO SECTION 115JB. THE SECTION MANDATE S THAT THE PROVISION FOR DOUBTFUL DEBTS HAS TO BE ADDED FO R COMPUTING THE BOOK PROFIT. THEREFORE, THE ABOVE CAS E IS OF NO HELP TO THE ASSESSEE. VII. RAIN COMMODITIES LTD V DCIT (2010) 40 SOT 265 IN THAT CASE THE ISSUE WAS WHETHER THE ASSESSING OF FICER, WHILE COMPUTING BOOK PROFIT OF A COMPANY UNDER SECT ION 115JB, HAS ONLY POWER OF EXAMINING WHETHER BOOKS OF ACCOUNT ARE CERTIFIED BY AUTHORITIES UNDER COMPANIE S ACT, 1956, AS HAVING BEEN PROPERLY MAINTAINED IN ACCORDA NCE WITH COMPANIES ACT, AND ASSESSING OFFICER THEREAFTE R HAS LIMITED POWER OF MAKING INCREASES AND REDUCTIONS AS PROVIDED FOR IN EXPLANATION TO SECTION 115J - HELD, YES .THE HON'B1E BENCH HAS OBSERVED AS UNDER: ' IT IS NOT TH E INTENTION OF THE LEGISLATURE TO SUBSTITUTE THE OTHE R PROVISIONS OF THE ACT IN PLACE OF WHAT IS SPECIFICA LLY MADE AVAILABLE IN SECTION 115JB IN SO FAR AS THE COMPUTA TION OF BOOK PROFIT UNDER SECTION 115JB IS CONCERNED. THE E NTIRE MECHANISM FOR THE COMPUTATION OF BOOK PROFIT IS CLE ARLY SET OUT IN SUB-SECTION (L) OF SECTION 115JB READ WITH T HE EXPLANATION THERETO. THE STARTING POINT BEING THE N ET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT PREPARED IN ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 25 ACCORDANCE WITH THE PROVISIONS OF PARTS II AND III OF SCHEDULE VI TO THE COMPANIES ACT BUT ALSO THE ITEMS , WHICH ARE TO BE INCREASED AS STIPULATED IN CLAUSES (A) TO (H), AND THE ITEMS, WHICH ARE TO BE REDUCED AS SPECIFIED IN CLAUSES (I) TO (VII), FIND SEPARATE MENTION IN THE SCHEME OF THE SECTION ITSELF SO, THE COMPUTATION OF BOOK PROF IT IS TO BE DONE STRICTLY AS PER THE EXPLANATION TO SECTION 115 JB AND, HENCE, NO ASSISTANCE FROM ANY OTHER SECTION OF THE ACT CAN BE TAKEN FOR THAT PURPOSE. IN THE LIGHT OF THE DISC USSIONS MADE ABOVE, IT IS CLEAR THAT THE ASSESSING OFFICER, WHILE COMPUTING THE BOOK PROFIT OF A COMPANY UNDER SECTIO N 115JB, HAS ONLY THE POWER OF EXAMINING WHETHER THE BOOKS OF ACCOUNT ARE CERTIFIED BY THE AUTHORITIES UNDER T HE COMPANIES ACT AS HAVING BEEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE COMPANIES ACT, AND THE ASSESSIN G OFFICER THEREAFTER HAS THE LIMITED POWER OF MAKING INCREASES AND REDUCTIONS AS PROVIDED FOR IN THE EXP LANATION TO SECTION 115J. THE CAPITAL GAIN IN QUESTION IS EX EMPT UNDER SECTION 47(IV) OF THE ACT BUT THE SAME IS NOT COVERED BY ANY OF THE CLAUSES (I) TO (VII) OF THE EXPLANATI ON (1) TO SECTION 115JB. [PARA 27]' (EMPHASIS SUPPLIED). IN THE CASE UNDER CONSIDERATION, THE AUDITED PROFIT AND LOSS ACCOUNT FILED BY THE ASSESSEE CLEARLY SHOWS IN SCHE DU1E-8 THAT THE ASSESSEE HAS DEBITED THE PROVISION FOR BAD AND DOUBTFUL DEBTS. HENCE, THE AO HAS MADE ADDITION AS PER LAW. THEREFORE, THE ABOVE CASE DOES NOT HELP THE CA SE OF ASSESSEE. VIII. CIT V VEEKAYLALLNVESTMENT CO P. LTD (2001)249 ITR 0597 IN THAT CASE THE ISSUE WAS WHETHER THE INCOME FROM CAPITAL GAINS WAS TO BE INCLUDED IN BOOK PROFIT FOR PURPOSE S OF APPLYING SECTION 115J. THE COURT HELD AS UNDER: 'THE ASSESSEE WAS A COMPANY CARRYING ON THE BUSINES S OF INVESTMENT. FOR THE ASSESSMENT YEAR 1989-90 THE ASS ESSEE FILED ITS RETURN OF INCOME DECLARING A NET LOSS. DU RING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR, THE ASSESSEE SOLD LAND AND GAINS FROM WHICH THE ASSESSEE TREATED AS LONG-TERM CAPITAL GAINS. THE AO TREATED THE PROFITS ARISING FROM THE TRANSFER AS CAPITAL GAINS AND REJECTED THE ASSESSEE'S CONTENTION THAT BOOK PROFITS U/S 115J OF THE I.T. A CT, 1961, WOULD NOT INCLUDE CAPITAL GAINS. ON APPEALS, THE COMMISSIONER OF INCOME-TAX (A) UPHELD THE VIEW OF T HE AD. ON FURTHER APPEAL, THE TRIBUNAL HELD THAT WHAT WAS DEEMED TO BE INCOME U/ S 45 WAS NOT INCOME FOR BOOK PROFITS AND HELD IN FAVOUR OF THE ASSESSEE. ON APPE AL BY THE DEPARTMENT: HELD : ALLOWING THE APPEAL, THAT ACCORD ING TO ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 26 SECTION 115J OF THE ACT, IN THE CASE OF AN ASSESSEE BEING A COMPANY. IF THE TOTAL INCOME IS LESS THAN 30% OF IT S BOOK PROFITS THEN THE TOTAL INCOME OF SUCH COMPANY SHALL BE DEEMED TO BE AN AMOUNT EQUAL TO 30% OF SUCH BOOK PR OFIT AND SUCH INCOME SHALL BE CHARGEABLE TO TAX. THE IMP ORTANT THING TO BE NOTED IS THAT WHILE CALCULATING THE TOT AL INCOME UNDER THE INCOME-TAX ACT, THE ASSESSEE IS REQUIRED TO TAKE INTO ACCOUNT INCOME BY WAY OF CAPITAL GAINS U/ S 45 OF THE I T. ACT. IN THE CIRCUMSTANCES, WHILE COMPUTING THE B OOK PROFITS UNDER THE COMPANIES ACT, THE ASSESSEE HAS T O INCLUDE CAPITAL GAINS FOR COMPUTING THE BOOK PROFIT S U/S 115J. EVEN UNDER CLAUSE 3(XII)(B) OF PART II OF SCH EDULE VI TO THE COMPANIES ACT, 1956, PROFITS OR LOSSES IN RE SPECT OF TRANSACTIONS OR TRANSACTIONS OF AN EXCEPTIONAL OR NON-RECURRING NATURE ARE TO BE DISCLOSED. THIS SHOW S CLEARLY THAT CAPITAL GAINS SHOULD BE INCLUDED FOR THE PURPO SES OF COMPUTING BOOK PROFITS.' (EMPHASIS SUPPLIED). THEREFORE THE ABOVE CASE IS OF NO HELP TO THE ASSES SEE. IX. E.D. SASSOON & COMPANY LTD. AND OTHERS VS CIT - 26 ITR 51(SC) IN THAT CASE THE ISSUE WAS WHETHER COMMISSION TO MA NAGING AGENTS ACCRUED ON ANNUAL NET PROFITS AND WHETHER COMMISSION PAID WAS LIABLE FOR APPORTIONMENT BETWEE N ASSIGNOR AND ASSIGNEE AND WHETHER ASSIGNEE WAS LIAB LE TO BE TAXED ON WHOLE COMMISSION. THAT CASE PERTAINS TO SE CTION 4, 26(2) OF THE LT. ACT. 1922. IT WAS HELD THAT THE RIGHT TO RECEIVE THE COMMISSIO N WOULD ARISE AND THE INCOME, PROFITS OR GAINS WOULD ACCRUE TO THE MANAGING AGENTS ONLY AT THE END OF THE CALENDAR YEA R WHICH WAS THE TERMINUS A QUO FOR THE MAKING UP OF THE ACC OUNTS AND ASCERTAINING THE NET PROFITS EARNED BY THE COMP ANY. THE LD. AR OF THE ASSESSEE RELIED ON THE OBSERVATIO NS MENTIONED ON PG.51 OF THE ABOVE DECISION WHICH ARE REPRODUCED AS UNDER: 'IT IS CLEAR THEREFORE THAT INCOME MAY ACCRUE TO AN ASSESSEE WITHOUT THE ACTUAL RECEIPT OF THE SAME. IF THE ASSE SSEE ACQUIRES A RIGHT TO RECEIVE THE INCOME, THE INCOME CAN BE SAID TO HAVE ACCRUED TO HIM THROUGH IT MAY BE RECEI VED LATER ON ITS BEING ASCERTAIN. THE BASIC CONCEPTION IS THA T HE MUST HAVE ACQUIRED A RIGHT TO RECEIVE THE INCOME. THERE MUST BE A DEBT OWED TO HIM BY SOMEBODY. THERE MUST BE AS IS OTHERWISE EXPRESSED DEBITUM IN PRAESENTI, SOLVENDUM IN FUTURE. ' ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 27 IT IS RESPECTFULLY SUBMITTED THAT THE ABOVE DECISIO N DOES NOT HELP THE CASE OF THE ASSESSEE AS FACTS ARE TOTALLY DIFFERENT. IN E.D. SASOON CASE (SUPRA) THE ISSUE WAS COMMISSION PAYABLE TO THE MANAGING AGENT AND APPORTIONMENT BET WEEN ASSIGNOR AND ASSIGNEE. HOWEVER, IN THE CASE UNDER CONSIDERATION, THE BILLS HAVE BEEN RAISED BY THE AS SESSEE ON THE BASIS OF POWER PURCHASE AGREEMENT. MOREOVER, TH E ASSESSEE IS JUSTIFYING ITS CLAIM THAT THE AMOUNT IS DUE TO THE ASSESSEE BY WAY OF CONTESTING ITS CLAIM BEFORE ARBI TRATOR AND ALSO BEFORE THE APPELLATE TRIBUNAL FOR ELECTRIC ITY, NEW DELHI. THE OTHER CASE LAWS CITED BY THE LD.AR ARE ALSO OF NO HELP TO THE ASSESSEE COMPANY AS ALL OF THEM RELATE TO DIFFERENT FACTS AND BEFORE THE AMENDMENT WAS BROUGHT IN CLAUSE-(I) OF EXPLANAT ION-1 TO SECTION 115JB. LD. DR ALSO SUBMITTED DECISIONS IN FAVOUR OF THE DE PARTMENT WHICH ARE AS UNDER :- 8. IT IS RESPECTFULLY SUBMITTED THAT HONBLE B-BENC H OF DELHI ITAT IN THE CASE OF DCM SRIRAM CONSOLIDATED LTD. VS . ACIT - ITA NO.4299 JDELJ2009 - A.Y. 2005-06 VIDE ORDER DAT ED 23.4.2010 HAS CONSIDERED THE IDENTICAL ISSUE. FOR THE SAKE OF THE CONVENIENCE THE RELEVANT PORTION OF THE ORDER OF THE HON'BLE BE NCH IS REPRODUCED AS UNDER: 'PARA - 4 (PG.2 ) 6. 'LEARNED AR ALSO PLACED ON RECORD COPY OF EXTRAC T OF MEMORANDUM EXPLAINING PROVISIONS IN THE FINANCE BILL 1987, COPY OF EXTRACT OF BUDGET SPEECH OF THE FINAN CE MINISTER INTRODUCING FINANCE BILL, 1978, COPY OF EX TRACT OF MEMORANDUM EXPLAINING PROVISIONS IN THE FINANCE BIL L, 1996, MEMORANDUM EXPLAINING PROVISIONS IN FINANCE B ILL, 2000 AND FINANCE BILL (NO.2) ACT, 2009. SHRI DINODI A ALSO PLACED ON RECORD COPY OF ACCOUNTING STANDARD REGARD ING REVENUE RECOGNITION AS PROVIDED UNDER AS-9 AND ALSO COPY OF ACCOUNTING STANDARD REGARDING ACCOUNTING OF INVE STMENT AS PROVIDED UNDER AS-13. 9. {PAGE 8} WE HAVE CONSIDERED THE RIVAL CONTENTION S IN THE LIGHT OF MATERIAL PLACED ON RECORD VIS-A.-VI S AMENDMENT BROUGHT IN PROVISIONS OF SECTION 115JB BY THE FINANCE ACT 2009 BY INSERTION OF NEW CLAUSE (I). AC CORDING TO THE AMENDED PROVISION, AMOUNT SET ASIDE AS PROVI SION FOR DIMINUTION IN VALUE OF ANY ASSET IS REQUIRED TO BE ADDED IN THE BOOK PROFIT. CLAUSE (I) HAS BEEN INSERTED RETRO SPECTIVELY WITH EFFECT FROM 1.4.2001 MEANING THEREBY FROM AY 2 001- ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 28 02, SUCH PROVISION FOR BAD DEBTS IS TO BE ADDED IN THE BOOK PROFIT WHILE COMPUTING BOOK PROFIT U/ S 115JB. THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF HCL COMNET SYSTEM & SERVICES LTD. - 305 ITR 409 IS NO MORE APPLICABLE IN VIEW OF THE AMENDED PROVISIONS B ROUGHT IN THE STATUTE WITH RETROSPECTIVE EFFECT. THE RELEV ANT ASSESSMENT YEAR UNDER CONSIDERATION IS AY 2005-06 T O WHICH AMENDED PROVISIONS ARE APPLICABLE. RECENTLY H ON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. LLPEA PARAM OUNT (P) LTD. - 2010-TIOL-155-HC-DEL-IT, VIDE ORDER DATE D 18.22.2010 AFTER CONSIDERING THE DECISION OF THE HO N'BLE SUPREME COURT IN THE CASE OF HCL COMNET SYSTEM & SERVICES LTD. (SUPRA) HELD THAT AMENDMENT BROUGHT I N SECTION 115JA WAS BROUGHT WITH RETROSPECTIVE EFFECT , ACCORDINGLY PROVISION FOR DOUBTFUL DEBTS ARE NOTHIN G BUT PROVISION FOR DIMINUTION IN THE VALUE OF THE ASSET COVERED UNDER CLAUSE (G) OF THE SAID EXPLANATION. IT WAS AC CORDINGLY HELD THAT SUCH PROVISION IS REQUIRED TO BE ADDED WH ILE COMPUTING BOOK PROFIT U/S 115JA. SIMILARLY, AMENDME NT IN SECTION 115JB WAS ALSO BROUGHT BY THE SAME FINANCE ACT W.E.F, AY 2001-02, THEREFORE RESPECTFULLY FOLLOWING THE ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE LOWER AUTHO RITIES. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED.' (EMPHASIS SUPPLIED). 9. THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI H AS CONSIDERED SIMILAR ISSUE IN ITA NO. 1178J2008 IN TH E CASE OF CIT VS ILPEA PARAMOUNT (P) LTD.- 2010-TIOL-155-HC-DEL-I T THE RELEVANT PORTION OF THE ORDER IS REPRODUCED AS UNDE R: 'THE QUESTIONS WITH REGARD TO THE PROVISION FOR DOU BTFUL DEBTS AND PROVISION FOR DOUBTFUL ADVANCES HAVE TO B E ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE A SSESSEE BECAUSE OF THE RETROSPECTIVE AMENDMENT INTRODUCED I N SECTION 115JA OF THE SAID ACT. BY VIRTUE OF FINANCE (NO.2) ACT, 2009 CLAUSE (G) HAS BEEN INSERTED IN THE EXPLA NATION CONTAINED IN SECTION 115JA(2). BY VIRTUE OF THE SAI D AMENDMENT, THE AMOUNT OR AMOUNTS SET ASIDE AS PROVI SION FOR DIMINUTION IN THE VALUE OF ANY ASSET, IS SPECIF ICALLY MENTIONED. THE SUPREME COURT IN THE CASE OF CIT V. HCL COMNET SYSTEMS & SERVICES : 305 ITR 409 = (2008-TIO L- 182-SC-IT) HELD THAT PROVISION FOR DOUBTFUL DEBTS A ND DOUBTFUL ADVANCES DID NOT FALL WITHIN CLAUSE (C) OF THE SAID EXPLANATION INASMUCH AS THEY AMOUNTED TO PROVISION IN RESPECT OF DIMINUTION IN THE VALUE OF ASSET. ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 29 NOW, WITH THE INTRODUCTION OF THE SAID AMENDMENT WI TH RETROSPECTIVE EFFECT FROM 1.4.98, THE PROVISION FOR DOUBTFUL DEBTS AND THE PROVISION FOR DOUBTFUL ADVANCES, WHIC H ARE NOTHING BUT PROVISION FOR DIMINUTION IN THE VALUE O F ASSET, ARE SPECIFICALLY COVERED UNDER CLAUSE (G) OF THE SA ID EXPLANATION. CONSEQUENTLY, THE QUESTION INSOFAR AS IT RELATES TO PROVISION FOR DOUBTFUL DEBTS AND PROVISION FOR D OUBTFUL ADVANCES, REQUIRED TO BE ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. IT IS SO ANSWERED' 10. HON'BLE ITAT MUMBAI E-BENCH HAS CONSIDERED THE SIMILAR ISSUE IN THE CASE OF ITO VS TCFC FINANCE LTD. REPOR TED IN (2011) 11 ITR (TRIB) 153 (MUM) AFTER DISCUSSING THE FACTUA L AND LEGAL POSITION IT WAS HELD AS UNDER: 'SECTION 115JB HAS TO BE CONSIDERED AS CODE IN ITSE LF. THIS SECTION IS A SPECIAL PROVISION FOR PAYMENT OF TAX B Y CERTAIN COMPANIES AND OPENS WITH NON-OBSTANTE CLAUSE THEREB Y EXCLUDING ANY OTHER PROVISIONS OF THIS ACT IN THE M ATTER OF DETERMINATION OF PAYMENT OF TAX BY CERTAIN COMPANIE S. BOOK PROFIT IS COMPUTED BY ADDING BACK CERTAIN AMOU NTS TO THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCO UNT WHICH HAVE BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT AN D THEREAFTER REDUCTIONS START, WHICH HAVE BEEN SPECIF IED IN THE LATER PART OF THE EXPLANATION. IN CLAUSES (I) TO (V III ). IF SUCH AMOUNTS HAVE BEEN CREDITED TO THE PROFIT AND LOSS A CCOUNT. FROM HERE IT FOLLOWS THAT IF THE AMOUNT SET ASIDE A S PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET, APPEARS ON THE DEBIT SIDE OF THE PROFIT AND LOSS ACCOUNT, W HICH IMPLIES THAT THE AMOUNT OF NET PROFIT AS PER PROFIT AND LOSS ACCOUNT IS AFTER THE AMOUNT OF SUCH PROVISIONS, THE N SUCH AMOUNT WILL BE ADDED BACK TO THE NET PROFIT FOR COM PUTING 'BOOK PROFIT' AS PER EXPLANATION 1 TO SECTION 115JB (2). THERE IS NO OTHER REQUIREMENT IN THE LANGUAGE OF TH E SECTION FOR THE ADDITION OR NON-ADDITION OF THE AMOUNT OF P ROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET TO THE AMO UNT OF NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT, DEP ENDING ON THE WAY IN WHICH SUCH PROVISION HAS BEEN SHOWN IN T HE BALANCE SHEET. THE REFLECTION OF THE AMOUNT OF PROV ISION FOR DIMINUTION IN THE VALUE OF INVESTMENT SEPARATELY ON THE LIABILITY SIDE OF THE BALANCE SHEET OR BY WAY OF RE DUCTION FROM THE FIGURE OF INVESTMENT ON THE ASSET SIDE OF BALANCE SHEET IS TOTALLY ALIEN FOR COMPUTING BOOK PROFIT. W HAT IS RELEVANT FOR THIS PURPOSE IS TO FIND OUT IF ANY PRO VISION FOR DIMINUTION IN THE VALUE OF ANY ASSET HAS BEEN DEBIT ED TO THE PROFIT AND LOSS ACCOUNT. IF IT IS SO DEBITED, THE S AME WILL AUTOMATICALLY STAND ADDED TO THE AMOUNT OF NET PROF IT FOR WORKING OUT THE AMOUNT OF BOOK PROFIT. [PARA 11] ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 30 EXPLANATION 1 TO SECTION 11SJB(2) IN NO UNCERTAIN T ERMS STATES THAT ANY AMOUNT SET ASIDE AS PROVISION FOR DIMINUTION IN THE VALUE OF ASSET DEBITED TO THE PROFIT AND LOSS ACCOUNT IS TO BE ADDED TO THE AMOUNT OF NET PROFIT FOR THE PURPOSE OF COMPUTING B OOK PROFIT. AS THE RELEVANT CONDITION HAVE BEEN FULLY SATISFIED IN THE INSTANT CASE IN TERMS OF THE ASSESSEE DEBITING PROVISION FOR DIM INUTION IN THE VALUE OF INVESTMENT TO ITS PROFIT AND LOSS ACCOUNT, THE SAME WAS REQUIRED TO BE ADDED FOR DETERMINING BOOK PROFIT. [ PARA 12J THE LEGISLATURE HAS EMPLOYED THE EXPRESSION 'PROVIS ION FOR DIMINUTION IN THE VALUE OF ANY ASSET' IN CLAUSE (I) TO EXPLANATION 1 TO SECTION 115JB(2). THE EXPRESSION 'DIMINUTION IN THE VALUE OF ANY ASSET' HAS NOT BEEN DEFINED IN THIS SECTION. IN COM MON PARLANCE THE WORD 'DIMINUTION' INDICATES THE STATE OF REDUCTION. THE MEANING OF THE WORD 'DIMINUTION' IN THE VALUE OF ANY ASSET HAS TO BE CONSTRUED AS REDUCTION FROM ITS ORIGINAL VALUE WHICH MAY STIL L BE A POSITIVE VALUE OR NIL. IF THE REDUCED VALUE HAPPENS TO BE CI PHER, THE DIMINUTION WILL BE THE ORIGINAL VALUE OF THE ASSET ITSELF. THERE IS NOT EVEN A REMOTEST HINT IN THE LANGUAGE OF CLAUSE (I) OF EXPLANATION 1 TO SECTION 11SJB THAT SOME VALUE OF T HE ASSET MUST REMAIN AFTER DIMINUTION, AS A PRECONDITION FOR ADDI NG IT TO THE NET PROFIT. EXPLANATION 1 CONTEMPLATES THE ADDING BACK OF THE PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET TO THE AMO UNT OF NET PROFIT. ONCE PROVISION IS MADE FOR DIMINUTION IN THE VALUE OF ANY ASSET, THE SAME HAS TO BE ADDED FOR COMPUTING BOOK PROFIT, REGARDLESS OF FACT WHETHER OR NOT THERE IS ANY BALANCE VALUE OF A SSET. IN VIEW OF THE FOREGOING DISCUSSION IT IS MANIFEST THAT AS EXP LANATION 1 TO SECTION 115JB(2) DEALS WITH THE COMPUTATION OF BOOK PROFIT AND SPECIFICALLY PROVIDES THAT THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR HAS TO BE INCREASED INTER ALIA BY THE AMOUNT OF PROVISION FOR DIMINUTION IN T HE VALUE OF ANY ASSET, THE AMOUNT OF PROVISION FOR DIMINUTION IN TH E VALUE OF ANY ASSET DEBITED TO THE PROFIT AND LOSS ACCOUNT BEFORE THE DETERMINATION OF NET PROFIT HAS NECESSARILY TO BE A DDED. [PARA 14] IN VIEW OF THE FOREGOING REASONS THE COMMISSIONER ( APPEALS) WAS NOT JUSTIFIED IN ORDERING FOR THE REDUCTION OF THE SAID AMOUNT FROM THE BOOK PROFIT. [PARA 17]' THE ABOVE DECISIONS CLEARLY SUPPORT THE STAND OF RE VENUE. REGARDING THE CHARGEABILITY OF U/S 234B IT IS SUBMI TTED THAT CHARGING OF INTEREST U/S 234B IS MANDATORY. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF SAN KALA POLYMERS P.LTD [2011] 338 ITR 0617 HAS HELD THAT TH E INCOME COMPUTED U/S 115JB IS LIABLE FOR ADVANCE TAX AND IN TEREST WAS LIABLE U/S 234B. SIMILARLY, THE HON'BLE PUNJAB & HA RYANA HIGH COURT IN THE CASE OF CIT VS STEEL STEIPS LEASING LT D. [2011] 338 ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 31 ITR 0455, HAS HELD THAT INTEREST U/S 234B AND 234C WOULD BE PAYABLE ON FAILURE TO PAY ADVANCE TAX IN RESPECT OF TAX PAYABLE U/S 115JAF 115JB. HON'BLE PUNJAB & HARYANA HIGH COURT I N THE CASE OF AMTEK AUTO LTD. VS CIT [2011] 338 ITR 0550 HAS A LSO HELD THAT INTEREST U/S 234B IS PAYABLE ON INCOME COMPUTE D U/S 115JB. IN VIEW OF THE ABOVE FACTUAL AND LEGAL SUBMISSIONS, IT IS RESPECTFULLY PRAYED THAT THE ORDER OF THE CIT(A) SH OULD BE UPHELD AND THE APPEALS OF THE ASSESSEE SHOULD BE DISMISSED . 7. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE AND AL SO CONSIDERED RELEVANT MATERIAL FILED IN THE PAPER BOOK. WE HAVE ALSO CONSIDERED THE CASE LAWS CITED BY BOTH THE SIDES. WE HAVE ALSO CO NSIDERED THE WRITTEN SUBMISSIONS. THE ASSESSEE COMPANY IS ENGAGED IN TH E BUSINESS OF GENERATION OF POWER AND EXECUTING TURNKEY POWER PLA NTS AS AN ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACTO RS. THE ASSESSEE COMPANY ENTERED INTO POWER PURCHASE AGREEMENTS WITH COAL INDIA LTD. AND ASSAM STATE ELECTRICITY BOARD. THE TARIFF WAS TO REMAIN FIRM AT RSS.1.20 PER UNIT FOR THE FIRST YEAR. THE TARIFF I S FIXED AS PER CLAUSE 3 OF P.P.A.. AS PER CLAUSE 3.2, THE TARIFF HAD TWO COMP ONENTS, VIZ., (I) FIXED; AND (II) VARIABLE. THE TARIFF IS BASED ON INTEREST ON DEBT, RETURN ON EQUITY, DEPRECIATION ON ASSETS AND OPERATION & MAINTENANCE COST. FIXED TARIFF BASED ON ACTUAL CAPITAL COST AND PLANT LOAD FACTOR (PLF) OF THE POWER PLANT. THE COMPANY HAD RECOGNIZED TARIFF RECEIVABL E FOR SUPPLY OF POWER AS PER P.P.A. (POWER PURCHASE AGREEMENT). THE ASSE SSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THUS, RECOGNISATI ON OF INCOME WAS AS ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 32 PER ACCOUNTING PRINCIPLES. ASSESSEE HAD RECOGNIZED REVENUE TARIFF AS PER BILLS RAISED IN ACCORDANCE WITH P.P.A. THERE IS DIS PUTE WITH RESPECT OF RECOVERY OF PART OF AMOUNT RAISED IN BILLS. ASSESS EE HAD MADE PROVISION FOR DOUBTFUL DEBT IN P&L ACCOUNT. NOW, ASSESSEE PL EADS THAT ASSESSEE HAD RECOGNIZED EXCESS INCOME. ASSESSEE CLAIMS THAT INCOME SHOWN IN P&L ACCOUNT IS INFLATED. NOW ASSESSEE PLEADS THAT ASSESSING OFFICER SHOULD RECAST THE ACCOUNTS TO ARRIVE AT THE CORRECT PROFIT. IN OUR CONSIDERED VIEW, THIS PROPOSITION OF ASSESSEE IS NO T AS PER LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. VS. CIT 255 ITR 273 (SC). IN THIS CASE, IT IS HELD THAT TH E ASSESSING OFFICER HAS NO POWER TO ADJUST THE NET PROFIT EXCEPT TO THE EXT ENT PROVIDED IN THE EXPLANATION 1 TO SECTION 115JB OF THE ACT. THE HON 'BLE SUPREME COURT HAS HELD AS UNDER :- THE ASSESSING OFFICER, WHILE COMPUTING THE BOOK PROFITS OF A COMPANY UNDER SECTION 115J OF THE INCO ME-TAX ACT, 1961, HAS ONLY THE POWER OF EXAMINING WHETHER THE BOOKS OF ACCOUNT ARE CERTIFIED BY THE AUTHORITIES U NDER THE COMPANIES ACT AS HAVING BEEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE COMPANIES ACT. THE ASSESSING OF FICER, THEREAFTER, HAS THE LIMITED POWER OF MAKING INCREAS ES AND REDUCTIONS AS PROVIDED FOR IN THE EXPLANATION TO SE CTION 115J. THE ASSESSING OFFICER DOES NOT HAVE THE JURISDICTIO N TO GO BEHIND THE NET PROFITS SHOWN IN THE PROFIT AND LOSS ACCOUNT EXCEPT TO THE EXTENT PROVIDED IN THE EXPLANATION. T HE USE OF THE WORDS 'IN ACCORDANCE WITH THE PROVISIONS OF PAR TS II AND III OF SCHEDULE VI TO THE COMPANIES ACT' IN SECTION 115J WAS MADE FOR THE LIMITED PURPOSE OF EMPOWERING THE ASSE SSING OFFICER TO RELY UPON THE AUTHENTIC STATEMENT OF ACC OUNTS OF THE COMPANY. WHILE SO LOOKING INTO THE ACCOUNTS OF THE COMPANY, THE ASSESSING OFFICER HAS TO ACCEPT THE AUTHENTICIT Y OF THE ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 33 ACCOUNTS WITH REFERENCE TO THE PROVISIONS OF THE CO MPANIES ACT, WHICH OBLIGATE THE COMPANY TO MAINTAIN ITS ACC OUNTS IN A MANNER PROVIDED BY THAT ACT AND THE SAME TO BE SCRU TINISED AND CERTIFIED BY STATUTORY AUDITORS AND APPROVED BY THE COMPANY IN GENERAL MEETING AND THEREAFTER TO BE FIL ED BEFORE THE REGISTRAR OF COMPANIES WHO HAS A STATUTORY OBLI GATION ALSO TO EXAMINE AND BE SATISFIED THAT THE ACCOUNTS OF THE COMPANY ARE MAINTAINED IN ACCORDANCE WITH THE REQUI REMENTS OF THE COMPANIES ACT. SUB-SECTION (1A) OF SECTION 1 15J DOES NOT EMPOWER THE ASSESSING OFFICER TO EMBARK UPON A FRESH ENQUIRY IN REGARD TO THE ENTRIES MADE IN THE BOOKS OF ACCOUNT OF THE COMPANY. HELD ACCORDINGLY, THAT, WHILE DETERMINING THE 'BOOK PROFITS' UNDER SECTION 115J, THE ASSESSING OFFICER COULD NOT RECOMPUTE THE PROFITS IN THE PROFIT AND LOSS ACCOUN T BY EXCLUDING PROVISIONS MADE FOR ARREARS OF DEPRECIATI ON. DECISION OF THE KERALA HIGH COURT IN CIT V. APPOLLO TYRES LTD. [1999] 237 ITR 706 REVERSED ON THIS POINT. THE HON'BLE SUPREME COURT HAS ALSO MADE IT CLEAR TH AT THE USE OF THE WORDS IN ACCORDANCE WITH THE PROVISIONS OF PART II AND III OF SCHEDULE VI OF THE COMPANIES ACT IN THE SECTION 115J WAS MA DE FOR THE LIMITED PURPOSE OF EMPOWERING THE ASSESSING OFFICER TO RELY UPON THE AUTHENTIC STATEMENT OF THE ACCOUNTS OF THE COMPANY AND WHILE SO LOOKING INTO THE ACCOUNTS OF THE COMPANY, THE ASSESSING OFFICER HAS TO ACCEPT THE AUTHENTICITY OF THE ACCOUNTS WITH REFERENCE TO THE PROVISIONS OF COMPANIES ACT, WHICH OBLIGATE THE COMPANY TO MAINTA IN ITS ACCOUNTS IN A MANNER PROVIDED BY THAT ACT AND THE SAME TO BE SCRU TINIZED AND CERTIFIED BY THE STATUTORY AUDITOR AND APPROVED BY THE COMPAN Y IN GENERAL MEETING AND THEREAFTER TO BE FILED BEFORE THE REGISTRAR OF COMPANIES WHICH HAS STATUTORY OBLIGATION ALSO TO EXAMINE AND BE SATISFI ED THAT THE ACCOUNTS OF ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 34 THE COMPANY ARE MAINTAINED IN ACCORDANCE WITH THE R EQUIREMENTS OF THE COMPANIES ACT. HON'BLE SUPREME COURT HAS CLEARLY D EBARRED THE ASSESSING OFFICER TO EMBARK UPON A FRESH ENQUIRY IN REGARD TO THE ENTRIES MADE IN THE BOOKS OF ACCOUNT OF THE COMPANY. FURTH ER, WE ALSO HELD THAT THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING AND ALSO PREPARING THE ACCOUNTS UNDER THE MERCANTILE SYSTEM. IN THIS SYSTEM, THE INCOME HAS RECOGNIZED WHEN IT WAS CREDITED IN THE B OOKS OF ACCOUNT. THE BILLS WERE RAISED ON THE BASIS OF WRITTEN POWER PUR CHASE AGREEMENT WITH THE CUSTOMER. THE ASSESSEE IS LEGALLY ENTITLED TO RECOVER THE SAME AND ASSESSEE HAS FILED A CIVIL SUIT TO CLAIM THE AMOUNT AND WHICH HAS GONE INTO ARBITRATION. SINCE THE BILLS HAVE BEEN RAISED ON T HE BASIS OF POWER PURCHASE AGREEMENT AND THE ASSESSEE HAS FILED A SUI T AND FINALLY HAS GONE INTO ARBITRATION, THEREFORE, IT CANNOT BE SAID THAT IT WAS A UNILATERAL ACT ON THE PART OF THE ASSESSEE. IN THE BOOKS OF ACCOUNT, ASSESSEE HAD MADE PROVISION FOR DOUBTFUL DEBTS FOR THIS AMOUNT. THE MATTER IS SUB-JUDICE BEFORE COURT OR ARBITRATION. THIS SHOWS THAT THE A MOUNT WAS NOT ASCERTAINED. IT REMAINED CONTINGENT AT THE RELEVAN T TIME. MOREOVER, IT HAD BEEN GONE AGAINST ASSESSEE DUE TO AMENDMENT IN ACT. THE AMENDMENT MADE BY INSERTING CLAUSE (I) IN EXPLANATI ON 1 TO SECTION 115JB BY THE FINANCE ACT, 2009 WITH RETROSPECTIVE E FFECT 1.4.2001, THE AMOUNT SET ASIDE AND PROVISION FOR DIMINUTION IN TH E VALUE OF AN ASSET IS ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 35 TO BE ADDED TO ARRIVE AT THE BOOK PROFIT UNDER SECT ION 115JB OF THE ACT. THIS EMPOWERS THE ASSESSING OFFICER TO ADD TO INCOM E ANY AMOUNT DEBITED IN PROFIT & LOSS ACCOUNT FOR PROVISION OF B AD AND DOUBTFUL DEBTS. THE CASE LAWS RELIED UPON BY LD. AR PERTAIN TO THE PERIOD PRIOR TO THE INSERTION OF CLAUSE (I) TO EXPLANATION 1 TO SECTION 115JB. IN VIEW OF THESE AMENDED PROVISIONS, THE ASSESSING OFFICER HAS NO CH OICE EXCEPT TO MAKE ADDITIONS TO ARRIVE AT THE BOOK PROFIT. FURTHER, W E WOULD ALSO LIKE TO STATE THAT IN THE ACCOUNTS, THE ASSESSEE HAS MADE PROVISI ON FOR DOUBTFUL DEBTS. NOWHERE THE ASSESSEE HAS STATED THAT IT WAS A PROVI SION FOR UNACCRUED INCOME. HENCE, SUCH PLEADINGS ON BEHALF OF THE AR HAVE NO BASIS. THE AMENDMENT BROUGHT INTO BY INSERTING CLAUSE (I) TO E XPLANATION 1 TO SECTION 115JB HAS BEEN MADE TO OVERCOME THE DECISIO N OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. HCL COMNET SYS TEMS AND SERVICES LTD. 305 ITR 409. THE RATIO OF THE CASE OF HCL C OMET SYSTEMS AND SERVICES LTD. IS NOT APPLICABLE TO ASSESSEES CASE ON ACCOUNT OF THE AMENDMENT BROUGHT BY INSERTION OF CLAUSE (I) TO EXP LANATION 1 OF SECTION 115JB. THE FACTS OF THE CASE OF CIT VS. NADIAD ELE CTRIC SUPPLY LTD. (BOM) 80 ITR 660 ARE AT VARIANCE TO THE FACTS OF THE ASSESSEES CASE. IN THE CASE OF NADIAD ELECTRIC SUPPLY LTD., THE AGREEM ENT WAS BETWEEN ASSESSEE AND NADIAD MUNICIPALITY TO SUPPLY ELECTRIC ITY TO THE NADIAD MUNICIPALITY FOR STREET LIGHTING, ETC. AT FIXED RAT E OF 19 PAISA PER UNIT. ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 36 HOWEVER, ASSESSEE COMPANY RAISED THE BILL @ 30 PAIS A PER UNIT. IN VIEW OF THESE FACTS, THE HON'BLE COURT HAS HELD THAT ANY RATE OTHER THAN THE RATE OF 19 PAISA PER UNIT NOT LEGALLY ENFORCEABLE BY THE ASSESSEE. HOWEVER, IN ASSESSEES CASE, THE BILL WAS RAISED AS PER THE POW ER PURCHASE AGREEMENT WITH THE CUSTOMER. IN THE NADIAD ELECTRIC SUPPLY L TD., IT WAS NOT AS PER AGREED RATE. THE RELIANCE OF THE LD. AR ON THE CAS E OF CIT VS. WESTERN INDIA CO. LTD. 81 ITR 712 (GUJARAT) IS ALSO OF NO HELP AS IN THAT CASE THE ASSESSEE WAS DOING THE BUSINESS OF BUILDING AND CON STRUCTION ON THE BASIS OF ACCEPTED TENDERS. THE ADDITIONAL WORK WAS SNOT INCLUDED IN THE TENDERS FOR WHICH THE RATES WERE NOT SETTLED. THE ASSESSEE WAS CREDITING THE AMOUNT OF BILLS FOR NON-TENDER WORK IN HIS WORKS AC COUNT BUT WAS MAKING PROVISION IN THE PROFIT AND LOSS ACCOUNT ONLY SUCH AMOUNT AS HE IS EXPECTED TO RECEIVE AND RETAIN THE WORKS AMOUNT AS KASAR. THUS, THE FACTS OF THE CASE WERE COMPLETELY AT VARIANCE. IN THE CA SE OF APOLLO TYRES, CITED SUPRA, THE HON'BLE SUPREME COURT HAS CLEARLY DISAGREE WITH THE ARGUMENTS OF THE REVENUE THAT ASSESSING OFFICER HAS POWER TO SCRUTINIZE THEIR ACCOUNTS AND SATISFY HIMSELF THAT THESE ACCOU NTS HAVE BEEN MAINTAINED IN ACCORDANCE WITH THE PROVISIONS OF COM PANIES ACT. THE ASSESSING OFFICER WAS HAVING LIMITED POWER ONLY TO MAKE ADJUSTMENTS EITHER INCREASE OR REDUCTION AS PROVIDED IN EXPLANA TION 1 OF SECTION 115JB. IN THE CASE OF CIT VS. SAIN PROCESSING & WE AVING MILLS (P) LTD. ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 37 REPORTED IN 221 CTR 493 (DEL.), THE ISSUE INVOLVED WAS WHETHER THE CURRENT YEARS DEPRECATION EVEN IF NOT CHARGED TO T HE P&L ACCOUNT BUT DISCLOSED IN THE NOTE APPENDED TO THE ACCOUNTS HAS TO BE DEDUCTED FROM THE NET PROFIT FOR THE PURPOSES OF SECTION 115J. I N THAT SITUATION, THE HON'BLE COURT HELD THAT ASSESSEE WAS ENTITLED TO SE EK DEDUCTION OF CURRENT YEAR DEPRECIATION FROM NET PROFIT TO ARRIVE AT THE BOOK PROFIT EVEN THOUGH IT IS NOT CHARGED TO P&L ACCOUNT. THIS CASE IS ALS O DISTINGUISHABLE ON THE ACCOUNT THAT SECTION 32 OF THE I.T. ACT MANDATES TO ALLOW DEPRECIATION EVEN IF NOT CLAIMED BY THE ASSESSEE. MOREOVER, THI S CASE PERTAINS TO THE PERIOD PRIOR TO THE AMENDMENT IN EXPLANATION 1 TO S ECTION 115JB. THUS, RATIO OF THIS CASE IS ALSO NOT APPLICABLE TO FACTS OF ASSESSEES CASE. IN OUR CONSIDERED VIEW, THE ISSUE IS COVERED AGAINST THE A SSESSEE BY VARIOUS DECISIONS OF ITAT AND DECISION OF HON'BLE JURISDICT IONAL HIGH COURT. IN THE CASE OF CIT VS. KHAITAN CHEMICAL & FERTILISERS LTD., ISSUE WAS OF PRIOR PERIOD ITEMS AND EXTRA ORDINARY ITEMS FOR PUR POSES OF SECTION 115JA. MOREOVER, THIS CASE WAS ALSO PERTAINED TO PERIOD PR IOR TO AMENDMENT IN ACT. IN THE CASE OF RAIN COMMODITIES LTD. VS. DCIT , THE FACTS ARE AT VARIANCE AND IT HAS NO HELP TO ASSESSEE. OTHER CAS E LAWS RELIED BY LD. AR ARE ALSO OF NO HELP TO ASSESSEE ON ACCOUNT OF VARIA TION ON FACTS. IN THE CASE OF DCM SRIRAM CONSOLIDATED LTD. VS. ACIT A NO. 4299/DEL/2009, ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 38 THE ITAT, DELHI BENCH B VIDE ORDER DATED 23.04.20 10 HAS HELD A UNDER:- 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS IN THE LIGHT OF MATERIAL PLACED ON RECORD VIS-A.-VIS AMENDMENT B ROUGHT IN PROVISIONS OF SECTION 115JB BY THE FINANCE ACT 2009 BY INSERTION OF NEW CLAUSE (I). ACCORDING TO THE AMEND ED PROVISION, AMOUNT SET ASIDE AS PROVISION FOR DIMINU TION IN VALUE OF ANY ASSET IS REQUIRED TO BE ADDED IN THE B OOK PROFIT. CLAUSE (I) HAS BEEN INSERTED RETROSPECTIVELY WITH E FFECT FROM 1.4.2001 MEANING THEREBY FROM AY 2001-02, SUCH PROV ISION FOR BAD DEBTS IS TO BE ADDED IN THE BOOK PROFIT WHI LE COMPUTING BOOK PROFIT U/ S 115JB. THE RATIO LAID DO WN BY THE HON'BLE SUPREME COURT IN THE CASE OF HCL COMNET SYS TEM & SERVICES LTD. - 305 ITR 409 IS NO MORE APPLICABLE I N VIEW OF THE AMENDED PROVISIONS BROUGHT IN THE STATUTE WITH RETROSPECTIVE EFFECT. THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION IS AY 2005-06 TO WHICH AMENDED PROVIS IONS ARE APPLICABLE. RECENTLY HON'BLE DELHI HIGH COURT I N THE CASE OF CIT VS. LLPEA PARAMOUNT (P) LTD. - 2010-TIOL-155 -HC- DEL-IT, VIDE ORDER DATED 18.22.2010 AFTER CONSIDERI NG THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F HCL COMNET SYSTEM & SERVICES LTD. (SUPRA) HELD THAT AME NDMENT BROUGHT IN SECTION 115JA WAS BROUGHT WITH RETROSPEC TIVE EFFECT, ACCORDINGLY PROVISION FOR DOUBTFUL DEBTS AR E NOTHING BUT PROVISION FOR DIMINUTION IN THE VALUE OF THE AS SET COVERED UNDER CLAUSE (G) OF THE SAID EXPLANATION. IT WAS AC CORDINGLY HELD THAT SUCH PROVISION IS REQUIRED TO BE ADDED WH ILE COMPUTING BOOK PROFIT U/S 115JA. SIMILARLY, AMENDME NT IN SECTION 115JB WAS ALSO BROUGHT BY THE SAME FINANCE ACT W.E.F, AY 2001-02, THEREFORE RESPECTFULLY FOLLOWING THE ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE LOWER AUTHORITIES. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ILP EA PARAMOUNT (P) LTD., CITED SUPRA, HAS HELD AS UNDER :- ' THE QUESTIONS WITH REGARD TO THE PROVISION FOR DOUBTFUL DEBTS AND PROVISION FOR DOUBTFUL ADVANCES HAVE TO BE ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE BECAUSE OF THE RETROSPECTIVE AMENDMENT INTRODUCED IN SECTION 115JA OF THE SAID ACT. BY VIR TUE OF ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 39 FINANCE (NO.2) ACT, 2009 CLAUSE (G) HAS BEEN INSERT ED IN THE EXPLANATION CONTAINED IN SECTION 115JA(2). BY V IRTUE OF THE SAID AMENDMENT, THE AMOUNT OR AMOUNTS SET AS IDE AS PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASS ET, IS SPECIFICALLY MENTIONED. THE SUPREME COURT IN THE CA SE OF CIT V. HCL COMNET SYSTEMS & SERVICES : 305 ITR 409 = (2008-TIOL-182-SC-IT) HELD THAT PROVISION FOR DOUBTFUL DEBTS AND DOUBTFUL ADVANCES DID NOT FALL W ITHIN CLAUSE (C) OF THE SAID EXPLANATION INASMUCH AS THEY AMOUNTED TO PROVISION IN RESPECT OF DIMINUTION IN T HE VALUE OF ASSET. NOW, WITH THE INTRODUCTION OF THE SAID AMENDMENT WITH RETROSPECTIVE EFFECT FROM 1.4.98, THE PROVISIO N FOR DOUBTFUL DEBTS AND THE PROVISION FOR DOUBTFUL ADVAN CES, WHICH ARE NOTHING BUT PROVISION FOR DIMINUTION IN T HE VALUE OF ASSET, ARE SPECIFICALLY COVERED UNDER CLAU SE (G) OF THE SAID EXPLANATION. CONSEQUENTLY, THE QUESTION INSOFAR AS IT RELATES TO PROVISION FOR DOUBTFUL DEB TS AND PROVISION FOR DOUBTFUL ADVANCES, REQUIRED TO BE ANS WERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. IT IS SO ANSWERED.' HON'BLE ITAT, MUMBAI E BENCH IN THE CASE OF ITO V S. TCFC FINANCE LTD., CITED SUPRA, HAS HELD AS UNDER :- 'SECTION 115JB HAS TO BE CONSIDERED AS CODE IN ITSE LF. THIS SECTION IS A SPECIAL PROVISION FOR PAYMENT OF TAX B Y CERTAIN COMPANIES AND OPENS WITH NON-OBSTANTE CLAUSE THEREB Y EXCLUDING ANY OTHER PROVISIONS OF THIS ACT IN THE M ATTER OF DETERMINATION OF PAYMENT OF TAX BY CERTAIN COMPANIE S. BOOK PROFIT IS COMPUTED BY ADDING BACK CERTAIN AMOUNTS T O THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT WHIC H HAVE BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT AND THE REAFTER REDUCTIONS START, WHICH HAVE BEEN SPECIFIED IN THE LATER PART OF THE EXPLANATION. IN CLAUSES (I) TO (VIII ). IF SUCH AMOUNTS HAVE BEEN CREDITED TO THE PROFIT AND LOSS ACCOUNT. FROM HERE IT FOLLOWS THAT IF THE AMOUNT SET ASIDE AS PROVISION F OR DIMINUTION IN THE VALUE OF ANY ASSET, APPEARS ON TH E DEBIT SIDE OF THE PROFIT AND LOSS ACCOUNT, WHICH IMPLIES THAT THE AMOUNT OF NET PROFIT AS PER PROFIT AND LOSS ACCOUNT IS AFT ER THE AMOUNT OF SUCH PROVISIONS, THEN SUCH AMOUNT WILL BE ADDED BACK TO ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 40 THE NET PROFIT FOR COMPUTING 'BOOK PROFIT' AS PER E XPLANATION 1 TO SECTION 115JB(2). THERE IS NO OTHER REQUIREMENT IN THE LANGUAGE OF THE SECTION FOR THE ADDITION OR NON-ADD ITION OF THE AMOUNT OF PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET TO THE AMOUNT OF NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT, DEPENDING ON THE WAY IN WHICH SUCH PROVISI ON HAS BEEN SHOWN IN THE BALANCE SHEET. THE REFLECTION OF THE AMOUNT OF PROVISION FOR DIMINUTION IN THE VALUE OF INVESTM ENT SEPARATELY ON THE LIABILITY SIDE OF THE BALANCE SHE ET OR BY WAY OF REDUCTION FROM THE FIGURE OF INVESTMENT ON THE A SSET SIDE OF BALANCE SHEET IS TOTALLY ALIEN FOR COMPUTING BOOK P ROFIT. WHAT IS RELEVANT FOR THIS PURPOSE IS TO FIND OUT IF ANY PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET HAS BEEN DEBIT ED TO THE PROFIT AND LOSS ACCOUNT. IF IT IS SO DEBITED, THE S AME WILL AUTOMATICALLY STAND ADDED TO THE AMOUNT OF NET PROF IT FOR WORKING OUT THE AMOUNT OF BOOK PROFIT. [PARA 11] EXPLANATION 1 TO SECTION 11SJB(2) IN NO UNCERTAIN T ERMS STATES THAT ANY AMOUNT SET ASIDE AS PROVISION FOR DIMINUTI ON IN THE VALUE OF ASSET DEBITED TO THE PROFIT AND LOSS ACCOU NT IS TO BE ADDED TO THE AMOUNT OF NET PROFIT FOR THE PURPOSE O F COMPUTING BOOK PROFIT. AS THE RELEVANT CONDITION HA VE BEEN FULLY SATISFIED IN THE INSTANT CASE IN TERMS OF THE ASSESSEE DEBITING PROVISION FOR DIMINUTION IN THE VALUE OF I NVESTMENT TO ITS PROFIT AND LOSS ACCOUNT, THE SAME WAS REQUIR ED TO BE ADDED FOR DETERMINING BOOK PROFIT. [PARA 12J THE LEGISLATURE HAS EMPLOYED THE EXPRESSION 'PROVIS ION FOR DIMINUTION IN THE VALUE OF ANY ASSET' IN CLAUSE (I) TO EXPLANATION 1 TO SECTION 115JB(2). THE EXPRESSION 'DIMINUTION IN THE VALUE OF ANY ASSET' HAS NOT BEEN DEFINED IN THIS SECTION. IN COMMON PARLANCE THE WORD 'DIMINUTI ON' INDICATES THE STATE OF REDUCTION. THE MEANING OF TH E WORD 'DIMINUTION' IN THE VALUE OF ANY ASSET HAS TO BE CO NSTRUED AS REDUCTION FROM ITS ORIGINAL VALUE WHICH MAY STILL B E A POSITIVE VALUE OR NIL. IF THE REDUCED VALUE HAPPENS TO BE CI PHER, THE DIMINUTION WILL BE THE ORIGINAL VALUE OF THE ASSET ITSELF. THERE IS NOT EVEN A REMOTEST HINT IN THE LANGUAGE OF CLAU SE (I) OF EXPLANATION 1 TO SECTION 11SJB THAT SOME VALUE OF T HE ASSET MUST REMAIN AFTER DIMINUTION, AS A PRECONDITION FOR ADDING IT TO THE NET PROFIT. EXPLANATION 1 CONTEMPLATES THE A DDING BACK OF THE PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET TO THE AMOUNT OF NET PROFIT. ONCE PROVISION IS MADE FOR DI MINUTION IN THE VALUE OF ANY ASSET, THE SAME HAS TO BE ADDED FOR COMPUTING BOOK PROFIT, REGARDLESS OF FACT WHETHER O R NOT THERE ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 41 IS ANY BALANCE VALUE OF ASSET. IN VIEW OF THE FOREG OING DISCUSSION IT IS MANIFEST THAT AS EXPLANATION 1 TO SECTION 115JB(2) DEALS WITH THE COMPUTATION OF BOOK PROFIT AND SPECIFICALLY PROVIDES THAT THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR HAS TO BE INCREASED INTER ALIA BY THE AMOUNT OF PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET, THE AMOUNT OF PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET DEBITED TO THE PROFIT AND LOSS ACCOUNT BEFORE THE DETERMINATION OF NET PROFIT HAS NECESSARILY TO BE ADDED. [PARA 14] IN VIEW OF THE FOREGOING REASONS THE COMMISSIONER ( APPEALS) WAS NOT JUSTIFIED IN ORDERING FOR THE REDUCTION OF THE SAID AMOUNT FROM THE BOOK PROFIT. [PARA 17]' CONSIDERING THIS FACTUAL AND LEGAL POSITION, WE SUS TAIN THE ORDERS OF THE AUTHORITIES BELOW AND DISMISS THE ASSESSEES APPEAL ON THIS GROUND. 8. AS REGARDS, CHARGEABILITY OF INTEREST U/S 234B I S CONCERNED, AFTER HEARING BOTH THE SIDES, WE HOLD THAT CHARGING INTER EST IS MANDATORY U/S 234B OF THE INCOME-TAX ACT, 1961. SIMILAR VIEW HAS ALSO BEEN TAKEN BY VARIOUS HIGH COURTS. IN THE CASE OF SANKALA POLYME RS P. LTD. REPORTED IN 338 ITR 617, THE HON'BLE KARNATAKA HIGH COURT HAS H ELD THAT THE INCOME COMPUTED U/S 115JB IS LIABLE FOR ADVANCE TAX AND IN TEREST WAS LIABLE U/S 234B OF THE ACT. SIMILAR VIEW HAS ALSO BEEN HELD B Y HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. STEEL STE IPS LEASING LTD. REPORTED IN 338 ITR 455 AND HELD THAT THE INTEREST U/S 234B AND 234C WAS TO BE PAYABLE ON THE FAILURE TO PAY THE ADVANCE TAX IN RESPECT OF THE TAX PAYABLE U/S 115JA AND 115JB. SIMILAR VIEW HAS ALSO BEEN HELD BY HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF AMTEK AUTO LTD. VS. ITA NO.4463/DEL./2009 ITA NO. 192/DEL./2010 ITA NO.4471/DEL./2010 42 CIT REPORTED IN 338 ITR 550. IN VIEW OF THIS FACT UAL AND LEGAL POSITION, WE DISMISS THIS GROUND OF ASSESSEES APPEAL ALSO. 9. IN THE RESULT, ALL THE GROUNDS RAISED BY THE ASS ESSEE STAND DISMISSED IN ALL THE YEARS. ACCORDINGLY, ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 9 TH DAY OF NOVEMBER, 2012. SD/- SD/- (U.B.S. BEDI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 9 TH DAY OF NOVEMBER, 2012 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT NEW DELHI