Sports & Leisure Apparel Ltd., New Delhi V. DCIT, New Delhi

ITA 3796/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9023 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 09-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Non-deduction of tax; Bad and doubtful debts; Set aside; Capital Gains
• Section: 143(3); 234B; 115JB; 37; 28; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI SMC BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.3796/DEL/2017 ASSESSMENT YEAR : 2012-13 SPORTS & LEISURE APPAREL LTD., B 25, QUTAB INSTITUTIONAL AREA, NEW DELHI PAN-AAACS2959M VS DCIT, CIRCLE-24(1), NEW DELHI. APPELLANT RESPONDENT APPELLANT BY SH. M.P.RASTOGI, ADV. RESPONDENT BY SH. R.K.GUPTA, SR.DR DATE OF HEARING 0 2.0 8 .2021 DATE OF PRONOUNCEMENT 11 .08 .2021 ORDER PER KUL BHARAT, JM : THIS APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMEN T YEAR 2012-13 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-8, NEW DEL HI DATED 29.03.2017. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1.1. THE LEARNED CIT[A] HAS ERRED IN CONFIRMING T HE DISALLOWANCE OF RS.1,27,476/- AMOUNTS WRITTEN BEING NOTICE PAY ETC DEBITED TO EMPLOYEES AT THE TIME OF THEIR SEPARATION IN THE EA RLIER YEARS AND CREDITED TO INCOME / EXPENSE SALARIES & ALLOWANCES BUT COULD NOT BE RECOVERED. 1.2. THE LEARNED CIT [A] HAS ERRED IN NOT DELETING THE WRITE OFF OF AMOUNTS TREATED AS INCOME / CREDITED TO EXPENSE IN EARLIER YEARS AND WRITTEN OFF IN THE CURRENT AS THEY ARE ALLOWABLE UN DER SECTIONS 28 AND 37 OF THE ACT. 2. THE LEARNED CIT [A] HAS ERRED IN NOT CLEARLY DI RECTING THAT THE DISALLOWANCES MADE UNDER NORMAL PROVISIONS ARE NOT INCLUDABLE TO BOOK PROFITS/ INCOME COMPUTED U/S 115JB OF THE ACT -AS THEY ARE NOT COVERED BY EXPLANATION TO SECTION 115JB OF THE ACT. ITA NO. 3796/DEL/2017 PAGE | 2 3. THE INTEREST CHARGED U/S 234B IS WRONG. 4. THAT THE ABOVE GROUNDS ARE INDEPENDENT AND WITHO UT PREJUDICE TO EACH OTHER. 2. FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME AT NIL (INCOME D ECLARED U/S 115JB AT RS.45,95,551/-) ON 29.09.2012. THE CASE WAS SELECT ED FOR SCRUTINY UNDER CASS AND THE ASSESSMENT WAS FRAMED U/S 143(3) OF TH E INCOME TAX ACT, 1961 (THE ACT) VIDE ORDER DATED 30.01.2015. BY FRAMING THE ASSESSMENT, THE ASSESSING OFFICER MADE VARIOUS DISALLOWANCES I. E. DISALLOWANCE OF RS.12,79,430/- ON ACCOUNT OF NON-DEDUCTION OF TAX; RS.1,27,476/- ON ACCOUNT OF DISALLOWANCE OF BAD DEBT/ADVANCE WRITTEN OFF IN THE P&L A/C; AND RS.13,97,196/- ON ACCOUNT OF COMMISSION PAID IN EXCESS TO AGREEMENT. THUS, THE ASSESSING OFFICER COMPUTED TOTAL TAXABLE INCOME UNDER NORMAL INCOME OF RS.5,59,008/- UNDER THE PROVISION OF SECT ION 115JB OF THE ACT IS RS.73,99,653/-. THE ASSESSING OFFICER OBSERVED THA T SINCE THE TAX PAYABLE IN NORMAL INCOME IS LESS THAN THE TAX PAYABLE ON B OOK PROFIT U/S 115JB OF THE ACT. THEREFORE, TAXABLE INCOME WAS TAKEN AT RS .73,99,653/- U/S 115JB OF THE ACT. 3. AGGRIEVED AGAINST THIS, THE ASSESSEE PREFERRED A PPEAL BEFORE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS, PARTL Y ALLOWED THE APPEAL. THEREBY, LD.CIT(A) DELETED THE ADDITION MADE ON ACC OUNT OF DISALLOWANCE OF COMMISSION OF RS.13,97,196/-, DELETED THE ADDITION RS.12,79,430/- MADE ON ACCOUNT OF NON-DEDUCTION OF TAX. HOWEVER, LD.CI T(A) CONFIRMED THE ITA NO. 3796/DEL/2017 PAGE | 3 ADDITION OF RS.1,27,476/- MADE ON ACCOUNT OF DISALL OWANCE OF CLAIM OF BAD DEBT WRITTEN OFF. 4. AGGRIEVED AGAINST THIS, THE ASSESSEE PREFERRED A PPEAL BEFORE THIS TRIBUNAL. 5. GROUND NO.1.1 TO 1.2 RAISED BY THE ASSESSEE IN T HIS APPEAL ARE AGAINST THE CONFIRMING THE DISALLOWANCE OF RS.1,27, 476/- MADE BY THE ASSESSING OFFICER. 6. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED T HAT THE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THE FACTS IN RIGHT PROSPECTIVE AND HAD MADE DISALLOWANCE WITHOUT APPRECIATING THE FACTS IN RIGH T PROSPECTIVE. HE FURTHER REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN S YNOPSIS. HE SUBMITTED THAT THE EMPLOYEES WHO HAD LEFT THE EMPLOYMENT OF T HE ASSESSEE WITHOUT GIVING NOTICE FOR MAKING PAYMENT IN LIEU OF NOTICE PERIOD. HE SUBMITTED THAT THE AMOUNT WAS CREDITED TO THE SALARY ACCOUNT OF THE RESPECTIVE EMPLOYEES. SIMILARLY, IN THE CASE OF SHORTAGE OF GARMENTS AND UNIFORM EXPENSES ALSO CREDITED TO RESPECTIVE HEADS, HENCE S TOOD RECOVERABLE FROM THE RESPECTIVE EMPLOYEES. SINCE, THIS AMOUNT COULD NOT BE RECOVERED, THEREFORE, THESE AMOUNTS WERE WRITTEN OFF IN THE SU BSEQUENT YEARS. LD. COUNSEL FOR THE ASSESSEE HAS ALSO SUBMITTED A WRITT EN SYNOPSIS WHICH IS REPRODUCED AS UNDER FOR READY-REFERENCE:- THIS HAS REFERENCE TO THE WRITTEN SUBMISSIONS DATE D 21 ST JUNE 2021 ALONG WITH A PAPER BOOK COMPILATION ITA NO. 3796/DEL/2017 PAGE | 4 IT ALSO HAS REFERENCE TO CERTAIN FURTHER DOCUMENTS WHICH WERE DIRECTED TO BE FURNISHED ON THE LAST DATE OF HEARING ON 20 TH JULY 2021 IT IS RECAPITULATED THAT THE TWO GROUNDS OF APPEAL BEFORE YOUR KIND SELF IS EFFECTIVELY IS ONE WITH REGARD TO DISALLOWANCE O F RS 1,27,476 DUE FROM EX-EMPLOYEES WRITTEN OFF WHICH WAS TERMED AS ' BAD DEBTS / ADVANCES W/OFF IN THE PROFIT &. LOSS ACCOUNT THE COMPANY HAD DEBITED THE ACCOUNTS OF EMPLOYEES T OWARDS (1) SHORTAGE OF GARMENTS IN THE CUSTODY OF EMPLOYE ES-WHICH FINALLY GOT CREDITED TO THE PROFIT & LOSS ACCOUNT (2) COST OF UNIFORMS PROVIDED TO EMPLOYEES AND THE Y HAD LEFT SERVICE WITHOUT CONTINUING EMPLOYMENT FOR A REASONA BLE LIME AFTER ISSUE-WHICH FINALLY GOT CREDITED TO UNIFORMS EXPENS E. (3) NOTICE PAY DEDUCTED FROM EMPLOYEES FOR NOT GIV ING THE MANDATORY NOTICE OF ONE MONTH BEFORE THEIR LEAVING SERVICE FOR DAYS OF SHORT NOTICE DETAILS OF SUCH WERE SUBMITTED BEFORE THE AUTHORITI ES BELOW AND ALSO BEFORE YOU AT PAGE 3 OF THE PAPER BOOK ALREADY SUBM ITTED BEFORE YOUR KIND SELF. THE SAID PAGE IS ENCLOSED AGAIN FOR YOUR KIND READY- REFERENCE. THE FOLLOWING FURTHER DOCUMENTS WERE DIRECTED TO BE FURNISHED ON THE LAST DATE OF HEARING ON 20 TH JULY 2021. REGARDING SHORTAGE OF GARMENTS: LEDGER ACCOUNT OF SALES RECOVERY FROM EMPLOYEES FOR THE EARLIER FINANCIAL YEAR (2010-111 - TO ESTABLISH THAT THEY A RE CREDITED TO THE STATEMENT OF PROFIT AND LOSS ACCOUNT-WHICH IS MARKE D AS PAGE S-1 PLEASE FIND ALSO FIND ENCLOSED: THE STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED O N 31-3-2011 WHICH IS MARKED AS PAGE S-2 ITA NO. 3796/DEL/2017 PAGE | 5 THE GROUPING OF SALES OF EACH STATE WHICH GOT CRED ITED TO THE STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED IN 31 -3-2011 WHICH IS MARKED AS PAGE S-3 IT WILL BE OBSERVED THAT THE SALES RECOVERY FROM EM PLOYEES -ON ACCOUNT GARMENT SHORTAGE DURING FY 2010-11 IS RS 5.93 LAKS, OUT OF WHICH ONLY A SMALL PART OF RS. 1.1 LAKHS HAS BEEN WRITTEN OFF AS BAD DEBTS ETC DURING THE YEAR UNDER APPEAL REGARDING RECOVERY ON ACCOUNT OF UNIFORMS: LEDGER ACCOUNT OF UNIFORMS FOR THE EARLIER FINANCE YEAR (2010-11) TO ESTABLISH THAT THE RECOVERIES GOT CREDITED TO THE E XPENSE STATEMENT OF PROFIT AND LOSS ACCOUNT-WHICH IS MARKED AS PAGE S-4 THE GROUPING OF PERSONNEL EXPENSES WHICH GOT DEBITE D TO THE STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED ON 31 -3-2011 WHICH IS MARKED AS PAGE S-5 THE SUB-GROUPING OF SALARIES, WAGES AND BONUS GROUP S IN PERSONNEL EXPENDITURE WHICH GOT DEBITED TO THE STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED ON 31-3-2011 WHICH IS MARKED AS PAG E S-6 PLEASE FIND ENCLOSED SALARY VOUCHERS FOR THE 12 MON THS OF FINANCIAL YEAR 2010-11 TO SHOW HOW THE PERSONNEL EXPENSES ARE ACCOUNTED FOR HOPE THAT YOUR KIND SELF WILL FIND THE ABOVE IN ORD ER THEREFORE IT IS ONCE AGAIN PRAYED THAT THE DISALLOW ANCE OF RS 1,27,476 MA KINDLY BE DELETED. 7. LD. SR. DR OPPOSED THESE SUBMISSIONS AND SUBMITT ED THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE. HE SUBMITTED THAT THE CLAIM OF THE ASSESSEE DOES NOT F ALL WITHIN THE AMBIT OF BAD DEBTS. HE SUBMITTED THAT THE ASSESSEE APPARENT LY HAS CLAIMED BAD DEBT ON THREE COUNTS: FIRSTLY , NOTICE PAY RECEIVABLE FROM THE EMPLOYEES WHO LEFT WITHOUT MAKING PAYMENT OF NOTICE PERIOD; SECONDLY, SUCH EMPLOYEES ITA NO. 3796/DEL/2017 PAGE | 6 WERE GIVEN UNIFORM BY THE ASSESSEE WHEREIN THESE UN IFORMS AS PER THE ASSESSEE WERE TO BE RETURNED WHICH THE EMPLOYEES DI D NOT RETURN; AND THIRDLY, GARMENTS HANDED OVER TO THE SUCH EMPLOYEES WERE NO T RETURNED BACK, THEREFORE, THE ASSESSEE MADE RELEVANT ENTRY I N THE JOURNAL. HE FURTHER CONTENDED THAT NO ACCOUNTING PRINCIPLES PER MIT THE CLAIM OF THE ASSESSEE. 8. IN RE-JOINDER, LD. COUNSEL FOR THE ASSESSEE CONT ENDED THAT THE CLAIM FALLS WITHIN THE AMBIT OF BAD DEBT EVEN THE ASSESSE E IS ELIGIBLE TO CLAIM A BUSINESS LOSS U/S 28 OF THE ACT. HE CONTENDED THAT THE ASSESSEE COMPANY DEBITED THE ACCOUNTS OF THE EMPLOYEES TOWARDS SHORT AGE OF GARMENTS IN THE CUSTODY OF THE EMPLOYEES WHICH WAS FINALLY CREDITED TO THE P&L A/C. SECONDLY, COST OF UNIFORM PROVIDED TO THE EMPLOYEES WHO HAVE LEFT SERVICE WITHOUT CONTINUING FOR A REASONABLE TIME AFTER ISSU E OF UNIFORM WHICH WAS FINALLY CREDITED TO THE UNIFORM EXPENSES. FURTHER , NOTICE PAY DEDUCTED FROM EMPLOYEES FOR NOT GIVING THE MANDATORY NOTICE OF ONE MONTH BEFORE THEIR LEAVING SERVICE. REGARDING, SHORTAGE OF GARM ENTS, LD. COUNSEL FOR THE ASSESSEE DREW MY ATTENTION TO THE LEDGER ACCOUNT OF SALES RECOVERY OF EMPLOYEES IN THE EARLIER FINANCIAL YEAR 2010-11 TH EY WERE CREDITED TO THE EXPENSE STATEMENT OF P&L A/C. THE GROUPING OF PERS ONNEL EXPENSES WHICH GOT DEBITED TO THE STATEMENT OF P&L A/C FOR THE YEA R ENDED ON 31.03.2011 IN RESPECT OF RECOVERY ON ACCOUNT OF UNIFORMS. 9. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE MOOT QUESTION FOR DETERMINATION IS WHETHER ALL THESE THR EE ITEMS WOULD FALL ITA NO. 3796/DEL/2017 PAGE | 7 WITHIN THE CATEGORY OF DEBT AND EVEN IF THEY DO NOT FALL WITHIN THE CATEGORY OF THAT WHETHER SUCH EXPENSES ARE ALLOWABLE AS BUSI NESS EXPENDITURE. THE CONTENTION OF THE ASSESSEE HAS BEEN THROUGH OUT THA T THE TRANSACTIONS HAVE OCCURRED DURING THE COURSE OF BUSINESS AND ROUTED T HROUGH P&L A/C. THEREFORE, THE AMOUNTS WHICH ARE RECOVERABLE FROM T HE EMPLOYEES UNDER DIFFERENT ITEMS WOULD CERTAINLY FALL WITHIN THE AMB IT OF THE DEBT. 10. UNDISPUTEDLY, IN THIS CASE, SO FAR ITEM RELATE D TO SHORTAGE OF GARMENTS IS CONCERNED AND RETURNING OF UNIFORM, BOT H THESE ITEMS ARE DIRECTLY RELATED TO THE COURSE OF BUSINESS OF THE A SSESSEE. THEREFORE, THE AUTHORITIES BELOW OUGHT TO HAVE ALLOWED THE CLAIM O F THE ASSESSEE. I, THEREFORE, DIRECT THE ASSESSING OFFICER TO DELETE T HE ADDITION. HOWEVER, IN THE CASE WHERE THE EMPLOYEES HAD LEFT EMPLOYMENT WI THOUT PAYING MANDATORY NOTICE PAY, THE ASSESSEE HAS NOT BROUGHT ON RECORD THAT WHAT STEPS WERE TAKEN TO RECOVER THIS AMOUNT TO DEMONST RATE THAT IN FACT THESE WERE RECOVERABLE FROM THE EMPLOYEES. IN THE ABSENC E OF SUCH EVIDENCE, NO INTERFERENCE IS CALLED FOR. THUS, GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 11. GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE RE ADS AS UNDER:- 2. THE LEARNED CIT [A] HAS ERRED IN NOT CLEARLY DI RECTING THAT THE DISALLOWANCES MADE UNDER NORMAL PROVISIONS ARE NOT INCLUDABLE TO BOOK PROFITS/ INCOME COMPUTED U/S 115JB OF THE ACT -AS THEY ARE NOT COVERED BY EXPLANATION TO SECTION 115JB OF THE ACT. ITA NO. 3796/DEL/2017 PAGE | 8 12. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. CIT(A FAILED TO GIVE CLEAR DIRECTION TO THE ASSESSING OFFICER TO EXCLUDE THE DISALLOWANCE MADE UNDER NORMAL PROVISIONS FOR COMPUTING THE BOOK PROF ITS/INCOME U/S 115JB OF THE ACT. LD. COUNSEL FOR THE ASSESSEE FURTHER S UBMITTED THAT LD.CIT(A) OUGHT TO HAVE GIVEN A CLEAR DIRECTION FOR EXCLUDING THE DISALLOWANCE MADE UNDER NORMAL PROVISIONS FOR COMPUTING THE BOOK PROF IT. 13. ON THE CONTRARY, LD. SR. DR OPPOSED THESE SUBMI SSIONS AND SUPPORTED THE ORDER OF LD.CIT(A). 14. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN AGREEMENT WITH THE LD. COUNSEL FOR T HE ASSESSEE THAT AS PER THE EXPLANATION 2 OF SECTION 115JB OF THE ACT, THE AMOUNT DISALLOWED COULD NOT HAVE BEEN ADDED FOR THE PURPOSE OF SECTION 115J B OF THE ACT. AS PER THE EXPLANATION, THE FOLLOWING AMOUNTS ARE TO BE AD DED WHILE COMPUTING THE BOOK PROFITS:- (A) THE AMOUNT OF INCOME-TAX PAID OR PAYABLE, AND THE PROVISION THEREFOR; OR (B) THE AMOUNTS CARRIED TO ANY RESERVES, BY WHATEVE R NAME CALLED, OTHER THAN A RESERVE SPECIFIED UNDER SECTION 33AC; OR (C) THE AMOUNT OR AMOUNTS SET ASIDE TO PROVISIONS M ADE FOR MEETING LIABILITIES, OTHER THAN ASCERTAINED LIABILITIES; OR (D) THE AMOUNT BY WAY OF PROVISION FOR LOSSES OF SU BSIDIARY COMPANIES; OR (E) THE AMOUNT OR AMOUNTS OF DIVIDENDS PAID OR PROP OSED ; OR ITA NO. 3796/DEL/2017 PAGE | 9 (F) THE AMOUNT OR AMOUNTS OF EXPENDITURE RELATABLE TO ANY INCOME TO WHICH SECTION 10 (OTHER THAN THE PROVISIONS CONTAIN ED IN CLAUSE (38) THEREOF) OR SECTION 11 OR SECTION 12 APPLY; OR (FA) THE AMOUNT OR AMOUNTS OF EXPENDITURE RELATABLE TO INCOME, BEING SHARE OF THE ASSESSEE IN THE INCOME OF AN ASSOCIATI ON OF PERSONS OR BODY OF INDIVIDUALS, ON WHICH NO INCOME-TAX IS PAYA BLE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 86; OR (FB) THE AMOUNT OR AMOUNTS OF EXPENDITURE RELATABLE TO INCOME ACCRUING OR ARISING TO AN ASSESSEE, BEING A FOREIGN COMPANY, FROM, (A) THE CAPITAL GAINS ARISING ON TRANSACTIONS IN S ECURITIES; OR (B) THE INTEREST, 76[DIVIDEND,] ROYALTY OR FEES FOR TECHNICAL SERVICES CHARGEABLE TO TAX AT THE RATE OR RATES SPE CIFIED IN CHAPTER XII, IF THE INCOME-TAX PAYABLE THEREON IN A CCORDANCE WITH THE PROVISIONS OF THIS ACT, OTHER THAN THE PRO VISIONS OF THIS CHAPTER, IS AT A RATE LESS THAN THE RATE SPECIFIED IN SUB-SECTION (1); OR (FC) THE AMOUNT REPRESENTING NOTIONAL LOSS ON TRANS FER OF A CAPITAL ASSET, BEING SHARE OF A SPECIAL PURPOSE VEHICLE, TO A BUSI NESS TRUST IN EXCHANGE OF UNITS ALLOTTED BY THE TRUST REFERRED TO IN CLAUSE (XVII) OF SECTION 47 OR THE AMOUNT REPRESENTING NOTIONAL LOSS RESULTING FROM ANY CHANGE IN CARRYING AMOUNT OF SAID UNITS OR THE AMOU NT OF LOSS ON TRANSFER OF UNITS REFERRED TO IN CLAUSE (XVII) OF S ECTION 47; OR (FD) THE AMOUNT OR AMOUNTS OF EXPENDITURE RELATABLE TO INCOME BY WAY OF ROYALTY IN RESPECT OF PATENT CHARGEABLE TO TAX U NDER SECTION 115BBF; OR (G) THE AMOUNT OF DEPRECIATION, (H) THE AMOUNT OF DEFERRED TAX AND THE PROVISION TH EREFOR, (I) THE AMOUNT OR AMOUNTS SET ASIDE AS PROVISION FO R DIMINUTION IN THE VALUE OF ANY ASSET, ITA NO. 3796/DEL/2017 PAGE | 10 (J) THE AMOUNT STANDING IN REVALUATION RESERVE RELA TING TO REVALUED ASSET ON THE RETIREMENT OR DISPOSAL OF SUCH ASSET, (K) THE AMOUNT OF GAIN ON TRANSFER OF UNITS REFERRE D TO IN CLAUSE (XVII) OF SECTION 47 COMPUTED BY TAKING INTO ACCOUNT THE COST OF THE SHARES EXCHANGED WITH UNITS REFERRED TO IN THE SAID CLAUSE OR THE CARRYING AMOUNT OF THE SHARES AT THE TIME OF EXCHANGE WHERE SUCH SHARES ARE CARRIED AT A VALUE OTHER THAN THE COST THROUGH STAT EMENT OF PROFIT AND LOSS, AS THE CASE MAY BE. 15. I, THEREFORE, DIRECT THE ASSESSING OFFICER TO C OMPUTE BOOK PROFITS AS PER EXPLANATION 2 OF SECTION 115JB OF THE ACT. THU S, GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS ALLOWED. 16. GROUND NO.3 RAISED BY THE ASSESSEE IS AGAINST T HE CHARGING OF INTEREST U/S 234B OF THE ACT. NO SUBMISSION AS MAD E ON BEHALF OF THE ASSESSEE AS TO HOW THE CHARGING OF INTEREST IS INCO RRECT. THIS BEING CONSEQUENTIAL IN NATURE. I HOLD ACCORDINGLY. THUS , GROUND NO.3 RAISED BY THE ASSESSEE IS ALLOWED. 17. GROUND OF APPEAL NO.4 RAISED BY THE ASSESSEE IS GENERAL IN NATURE, NEEDS NO ADJUDICATION. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ABOVE DECISION WAS PRONOUNCED ON CONCLUSION OF VIRT UAL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 11 TH AUGUST, 2021. SD/- (KUL BHARAT) JUDICIAL MEMBER ITA NO. 3796/DEL/2017 PAGE | 11 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI