The ITO, Ward-1(4), Ahmedabad V. D.B. Corp.Ltd., Ahmedabad

ITA 834/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9635 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 16-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: ANKIT GANDHI
• Keywords: Revised return
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G. D. AGARWAL , VICE PRESIDENT AND SHRI S.S. GODARA JUDICIAL MEMBER ITA NO . 834 /AHD/20 11 A. Y . 20 0 7 - 0 8 INCOME TAX OFFICER, WARD - 1(4), AHMEDABAD. VS D.B. CORP LTD. 280, SA RKEJ GANDHINAGAR HIGHWAY, NR. YMCA CLUB, MAKARBA, AHMEDABAD. PAN: AACCM 5772G (APPELLANT) (RESPONDENT) REVENUE BY : SHRI DINESH SINGH , SR.D.R. ASSESSEE(S) BY : S/ SHRI ANKIT GANDHI & ROHIT PANSARI , A.R. / DATE OF HEARING : 15 / 0 4 /201 5 / DATE OF PRONOUNCEMENT: 17 / 04 /201 5 / O R D E R PER: S. S. GODARA , JUDICIAL MEMBER THIS REVENUE S A PPEAL FOR A.Y.200 7 - 0 8 ARISES FROM ORDER OF THE CIT(A) - VI A HMEDABAD ORDER DATED 4.2.2011 IN CASE NO.CIT(A) - VI/ADDL.CIT/R.1/346/10 - 11 , DELETING ADDITION OF RS.29,71,752/ - MADE ON ACCOUNT OF PROVISION FOR LEAVE ENCASHMENT IN BOOK PROFITS COMPUTED U/S. 115JB , IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT (IN SHORT THE ACT ) . 2. THE ASSESSEE - COMPANY IS IN THE BUSINESS OF NEWSPAPER PUBLICATION AND WINDFARM . IT HAS FILED ITS RETURN ON 31.10.2007 ITA NO. 834 /AHD /20 11 D.B. CORP LTD. FOR A.Y. 20 0 7 - 0 8 - 2 - DECLARING LOSS OF RS.84,99,417/ - AS PER NORMAL COMPUTATION AND BOOK PROFIT S OF RS.67,29,80,215/ - U/S.115JB OF THE ACT. THIS WAS FOLLOWED BY A REVISED RETURN REDUC ING BOOK PROFIT S TO RS.65,13,42,627/ - . T HE SAME WAS SUMMARILY PROCESSED. 3. THE ASSESSING OFFICER TOOK UP SCRUTINY . HE INTER ALIA NOTICED THE ASSESSEE NOT TO HAVE ADDED ITS LEAVE ENCASHMENT PROVISION IN COMPUTATION OF BOOK PROFIT S . T HE ASSESSEE S BOOKS HAD STATED IT TO HAVE BE EN ACCRUED ON THE BASIS OF ACTUARIAL VALUATIO N. THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 29.12.2009 HELD THAT TH E SAME HAD TO BE ADDED UNDER SECTION 115JB EXPLANATION 1 CLAUSE (C) FOR COMPUT IN G BOOK PROFITS. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE CIT(A) H O LD THAT AS PER THE DECISION OF H ON BLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT VS. NATIONAL HYDROELECTRIC POWER CORPORATION LTD. ITA NO.385 OF 2009 DECIDED ON 06.07.2010, A L EAVE ENCASHMENT PROVISION ON ACTUARIAL BASIS CANNOT BE TREATED AS AN UNASCERTAINED LIABILITY UNDER THE AFORESAID STATUTORY PROVISION. HE HAS ALLOWED THE ASSESSEE S APPEAL . THIS LEAVES THE REVENUE AGGRIEVED. 4. WE HAVE HEARD BOTH SIDES AND GONE THROUGH THE RELEVANT FINDINGS. THE REVENUE SEEKS TO RESTORE THE IMPUGNED ADDITION ON ACCOUNT OF PROVISIONS FOR L EAVE E NCASHMENT OF RS.29,71,752/ - IN COMPUTING BOOK PROFITS U/S.115JB EXPLANA TION (1) CLAUSE (C) OF THE ACT READING AS UNDER: ITA NO. 834 /AHD /20 11 D.B. CORP LTD. FOR A.Y. 20 0 7 - 0 8 - 3 - THE AMOUNTS OR AMOUNTS SET A SIDE TO PROVISIONS MADE FOR MEETING LIABILITIES, OTHER THAN ASCERTAINED LIABILITIES. THE PICTURE THAT EMERGES FROM A PERUSAL OF THE AFORESAID STATUTORY PROVISION IS THAT ONLY PROVISIONS FOR UN ASCERTAINED LIABILIT IES ARE TO BE ADDED IN BOOK PROFITS. IT I S A SETTLED LAW BY NOW IN VIEW OF HO N BLE SUPREME COURT DECISION IN BHARAT EARTH MOVERS VS. CIT AS REPORTED IN (2000) 112 TAXMAN 61 (SC) THAT A LEAVE ENCASHMENT PROVISION IS AN ASCERTAINED LIABILITY. THE HON BLE PUNJAB AND HARYANA HIGH COURT (SUPRA) HOLDS THAT SUCH A PROVISION BASED ON ACTUARIAL VALUATION IS AN ASCERTAINED LIABILITY . THAT BEING THE FACTUAL POSITION, WE OBSERVE THAT A L EAVE E NCASHMENT PROVISION ON ACTUARIAL BASIS IS AN ASCERTAINED LIABILITY NOT TO BE ADDED U/S.115JB EXPLANATION 1 CLAUSE (C) OF THE ACT . T HE CIT(A) S ORDER UNDER CHALLENGE IS UPHELD . 4. THE REVENUE S APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 17TH DAY OF APRIL, 2015. SD/ - SD/ - ( G. D. AGARWAL ) ( S.S. GOD ARA ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 17 / 0 4 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . S / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD ITA NO. 834 /AHD /20 11 D.B. CORP LTD. FOR A.Y. 20 0 7 - 0 8 - 4 - 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD