Calcutta High Court
Principal Commissioner Of Income ... vs Balmer Lawrie And Company Limited on 13 April, 2023
ITAT NO. 259 OF 2022
REPORTABLE
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
SPECIAL JURISDICTION (INCOME TAX)
ORIGINAL SIDE
RESERVED ON: 29.03.2023
DELIVERED ON:13.04.2023
CORAM:
THE HON'BLE MR. ACTING CHIEF JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE HIRANMAY BHATTACHARYYA
ITAT/259/2022
(IA NO: GA/02/2022)
PRINCIPAL COMMISSIONER OF INCOME TAX-2, KOLKATA
VERSUS
BALMER LAWRIE AND COMPANY LIMITED
Appearance:-
Mr. Vipul Kundalia, Senior Advocate.
Mr. Amit Sharma, Advocate.
.....For the Appellant.
Mr. Pratyush Jhunjhunwala, Advocate.
Mr. Mrigank Kejriwal, Advocate.
.....For the Respondent.
Page 1 of 18
ITAT NO. 259 OF 2022
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JUDGMENT
(Judgment of the Court was delivered by T.S.SIVAGNANAM, ACJ.)
1. This appeal filed by the revenue under Section 260A of the Income Tax
Act, 1961 (the Act) is directed against the order dated 31.10.2019 passed by
the Income Tax Appellate Tribunal "C" Bench Kolkata (tribunal) in ITA No.
111/Kol/2018 and ITA No. 98/Kol/2018 for the assessment year 2012-
2013. The revenue has raised the following substantial questions of law for
consideration:-
1) Whether the Learned Tribunal erred in law in
holding that the prior period expenses of Rs.
4,08,23,000/- as an allowable expense in the
instant assessment year which is patently
wrong in as much as the assessee is following
mercantile systems of accounting and as such
the prior period expenses cannot be allowed
during the assessment year in question.
2) Whether the Learned Tribunal erred in law in
allowing Rs. 11.82 crores as provision for
diminution in the value of investment which is
an unascertained liability ignoring Remand
Report of Assessing Officer as such the order
of the Tribunal is perverse and absurd?
2. We have heard Mr. Vipul Kundalia, learned senior standing counsel
assisted by Mr. Amit Sharma, learned standing counsel for the appellant
department and Mr. Pratyush Jhunjhunwala, advocate assisted by Mr.
Mrigank Kejriwal, learned advocate for the respondent assessee.
3. Two issues arise for consideration in this appeal. The first being prior
period expenses to the tune of Rs. 4,08,23,000/- and the second issue being
provision for diminution in the value of investment to the tune of Rs.
11,82,37,000/-. The assessee in its return of income for the assessment
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year under consideration claimed Rs. 4,08,23,000/- as prior paid
adjustment and in the details thereof, the same had been stated as general
expenditure in nature. The assessing officer called upon the assessee to
explain as to why prior period expenditure be not disallowed. The assessing
officer records that the assessee did not offer any explanation. The assessing
officer while completing the assessment under Section 143(3) of the Act by
order dated 17.02.2015 observed that the according to the accounting
standard, the expenses are debited to the profit and loss account on accrual
basis and the unpaid expenses are made provisions in the balance sheet
and any expenses accrued but not settled during any year are debited in the
year of accrual and any deviation on settlement is charged in the profit and
loss account as income or expenses as applicable in the following years. The
assessing officer therefore held the assessee having not followed the
mercantile system of accounting in respect of prior period expenses debited
in the profit and loss account for the current year the same is not allowable
expenditure. Aggrieved by such order, the assessee preferred appeal before
the Commissioner of Income Tax Appeal-6, Kolkata CIT(A), contending that
the expenditure though related to earlier period but got crystallized during
the year under consideration and incurred wholly and exclusively for the
purpose of carrying on business and hence is deductable. The assessee
stated that in response to the specific queries raised by the assessing officer,
he had submitted the details of prior period expenses vide letter dated
29.01.2015, however, the assessing officer erroneously recorded that no
explanation was submitted by the assessee. Further the assessee contended
that during the course of assessment, detail breakup of the expenses
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relating to the prior period, liability in respect of which crystallized during
the relevant previous years was submitted to the assessing officer on
30.01.2015 by giving justification for each one of them. The said details were
also furnished before the CIT(A). Further the assessee contended that under
the mercantile system of accounting deduction is allowed on the basis of
accrual of liability and once liability accrues, it has to be allowed irrespective
of the fact whether the amount was actually paid in the year or not. The
assessee placed reliance on the decision of the Hon'ble Supreme Court in
Nonsuch Tea Estate Limited Versus Commissioner of Income Tax 1 and
the decision of this court in Commissioner of Income Tax Versus West
Chusick Coal Company Limited 2. Reliance was also placed on the
decision of the High Court of Delhi in Commissioner of Income Tax Versus
Exxon Mobil Lubricants Private Limited 3 wherein it was held that where
liability of the assesses arose and was crystallized in the current year, the
assessee was entitled to allowance of that expenditure only in the current
assessment year. Further by referring to Section 145 of the Act, the assessee
submitted that the said provision is a mandatory provision which compels
the department to accept the system or method of accounting regularly
employed by the assessee for ascertaining the profits from the business or
profession carried on by him or the income from other source subject to its
being the proper method of reflecting the true or correct profits. After
referring to the item No. 7 of Accounting Standards- II (AS II), it was stated
that the statute itself prescribes the manner of disclosure of expenses
[1975] 98 ITR 189 (SC)
129 ITR 62 Cal
[2010] 8 taxmann.com 249 (Delhi)
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relating to prior period, which arises in the previous year as a separate item.
It was therefore contended that non-compliance of such disclosure by the
assessee would render the books of accounts to be rejected. Further it was
contended that in terms of the accounting standards prescribed by the
CBDT and the Institute of Chartered Accountant of India (ICAI), the assessee
like any other corporate, prepared its account and disclosed relevant details
of "prior period items" on a regular basis since the inception of the
accounting standard. Therefore the appellant contended that the expenses
which have been solely and exclusively incurred during the previous year for
carrying out its business should be allowed as deductable expenditure
under Section 37 of the Act. Further on facts the assessee contended that
they are engaged in the activity of project execution and engineering services
through its engineering division and out of the sum of Rs. 408.23 lakhs,
398.69 lakhs pertain to various costs of services booked by the engineering
and project division on account of various expenditure and cost which
crystallized during the financial year under the reference. Further it was
stated that of the aggregate of Rs. 398.69 lakhs, Rs. 208.92 lakhs pertain to
costs of ONGC SCOPE Minar Project, the execution of which was completed
in the financial year 2006-2007, however the sub-contractor has raised
claims for damages, interest etc. and arbitration proceedings were initiated
and by award dated 19.08.2010, the learned arbitrator awarded a sum of
Rs. 45.05 lakhs to M/s. Interiors India and this award was contested by the
assessee before the High Court of Delhi. Though the award was contested
the assessee as measure of prudence and in accordance with the accounting
principles of conservatism, the claims has cost escalation and other
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statutory dues as claimed by the contractor, recognized Rs. 15.00 lakhs in
the books of accounts during the year under consideration as its measure of
definite ascertain liability towards Interior India. In respect of other
contractors, relating to the ONGC SCOPE Minar Project, liability has also
been crystallized during the year under consideration. Further it was stated
that in executing the works for M/s ONGC Limited bills of the assessee had
been withheld aggregating to Rs. 129.10 lakhs as security deposit and
redemption money with the contractee at various point of time which being
no longer recoverable from M/s. ONGC Limited, has been written off as
irrecoverable during the financial year under consideration. Further the
assessee pointed out that in respect of other project executed by them, the
sub-contractors had lodged claim for additional work under taken and
refund of liquidated damages earlier deducted from its bill and the matter is
still under arbitration and apprehending that the arbitrator may pass an
award, the assessee provided for sum of Rs. 17.00 lakhs as liability on this
project, having accrued and crystallized during the previous year. Similarly
for another project in West Bengal, a sum of Rs. 13.36 lakhs was forfeited by
the contractee during the previous year. Further the assessee contended
that they were faced with the order passed by the appellate authority under
the Indirect Taxes Act at Kerala for the financial year 2009-2010 on
30.03.2011 and considering the meager amount involved, the assessee
made the payments of Rs. 4.78 lakhs. Further in respect of projects
executed at Qatar which was completed by engaging sub-contractors,
liability for payment to the sub-contractors in respect of on-going project
was provided during the year under consideration despite the completion of
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having taken place in the earlier year. Similarly with regard to the sub-
contractors relating to the HPCL projects, liability towards the sub-
contractors crystallized during the year under consideration. The assessee
also enclosed the copies of the awards passed by the arbitrators with regard
to the two contractors. Further the assessee contended that similar
expenses was disallowed by the assessing officer for the assessment year
2002-2003 however, the CIT(A) by order dated 29.09.2005 deleted the entire
amount of such disallowance treating the same as deductable expenditure
under Section 37 of the Act. Further the assessing officer in regular
assessment for the year 2003-2004, allowed the entire amount of expenses
relating to prior period which crystallized during the relevant previous year.
Further the assessee pointed out that the CIT(A) has allowed similar relief to
the assessee for the assessment years 2005-2006, 2007-2008, 2008-2009,
2009-2010, 2010-2011 and 2011-2012. Therefore, the assessee submitted
that the entire disallowance of Rs. 4,08,23,000/- being the expenditure
towards prior period expenses debited in the profit and loss account of the
assessee may be deleted. The CIT(A) having taken note of the factual
position and also that in the earlier assessment years, the CIT(A) has
granted relief, agreed with such decision and allowed the entire prior period
expenses. Aggrieved by the same, the revenue has preferred the appeal
before the tribunal.
4. The tribunal after taking note of the factual position noted that the
CIT(A) has taken specific note of the fact that the expenses claimed by the
assessee as prior period, the liability to pay had crystallized during the
relevant previous year and therefore the claim was allowed. Further the
ITAT NO. 259 OF 2022
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tribunal noted that no appeal was preferred by the revenue against the
orders of the CIT(A) for the assessment years 2007-2008 to 2009-2010 and
the appeals filed by the revenue for the assessment years 2010-2011 and
2011-2012 were dismissed by the tribunal. Further the tribunal has pointed
out that the revenue was unable to bring any material or fact to disprove the
assessee's explanation furnished before the authorities in support of its
claim that liability to pay expenses charged under the head "prior period"
crystallized during the financial year 2011-2012. Further on perusing the
details furnished by the assessee with regard to those expenses, the tribunal
noted that the assessee had claimed deduction in respect of items which
were revenue in nature and therefore fully allowable in arriving at its
business income. Further the learned tribunal has pointed out that the
revenue did not controvert the contention raised by the assessee that no
deduction in respect of these expenses was allowed in the prior years and
the tax rate in the earlier years and in the year under consideration were
same and therefore irrespective of the year of deduction allowed, the
revenue's effect was taxed neutral. The learned tribunal also referred to the
decision of the High Court of Gujarat in PCIT Versus Adani Enterprises
Limited Tax Appeal No. 566 of 2016 and found the said decision to be
relevant to the facts and circumstances of the case. Thus, we find that the
learned CIT(A) and the learned tribunal has examined the facts and granted
relief to the assessee and more importantly that for the earlier assessment
years i.e. 2005-2006, 2009-2010, the revenue has accepted the orders
passed by the CIT(A). Though the appeal was filed before the tribunal for the
assessment years 2010-2011 and 2011-2012, the same were dismissed.
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Thus, a consistent view is required to be adopted in the absence of any
material placed by the revenue before the required tribunal to show that
there was any distinguishing feature in the assessment year under
consideration to make a departure from the earlier view.
5. The learned senior standing counsel submitted that merely because the
assessee was state undertaking, it cannot be stated that it cannot do any
wrong and the learned tribunal did not examine the facts of the case. We do
not agree with the said submission as we have found that both the CIT(A) as
well as the tribunal has examined the facts. In fact, the examination of facts
by the CIT(A) is more elaborate and more importantly as noted by the
tribunal, the revenue was not able to place any material to disprove that the
assessee explanation furnished before the authorities in support of its claim
that the liability to pay the expenses charged under the head "prior period"
crystallized during the financial year 2011-2012. Thus, we find that no
substantial question of law arises for consideration under the head prior
period expenses.
6. The next issue is with regard to the provision for diminution in the
value of investments. In the return of income, the assessee claimed Rs.
11,82,37,000/- as provision for diminution in the value of investments. The
assessing officer held that by no such imagination can provisions be treated
as allowable expenditure and the claim of the assessee is absurd and
accordingly disallowed the same. The assessee carried the matter on appeal
before the CIT(A) and after referring to the Memorandum of Articles of
Association of company with which one of the objects of the assessee was to
lend money to such persons and on such terms as to expedite and in
ITAT NO. 259 OF 2022
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particular to customers and others having dealing with the company and to
guarantee overdraft and loans, it was contended that in the course of
carrying on that business the assessee from time to time lends money to its
subsidiary and group concerns against payment of interest and such
interest income has all along been assessed as the assessee's business
income. It was stated that during October 1990, the assessee promoted a
new company called Indian Container Leasing Company Limited and held
40% of its equity shares capital and the remaining shares were held by
financial institutions. During 1996, the leading multinational company in
container leasing came in as an investor and the new company issued fresh
equity shares to the said multinational company which amounted to 27.26%
of its share capital and as a result of the said issue, the assessee
shareholding in the new company came down to 29.09% and that of the
financial institutions also came down to 43.65%. In 2003, the multinational
company exited from the new company and its shareholding was acquired
by the financial institutions whose aggregate shareholding went up to
70.91% and remaining 29.09% being held by the assessee. By virtue of
rights issued in 2009, the assessee shareholding went up to 34.78%.In the
year 2009 financial institutions wanted to exit from the new company and
their holdings were partly acquired by the assessee and partly by one of its
joint ventures and consequent to such acquisition the assessee's
shareholding in the new company increased to 50% and the balance 50%
being held by the assessee's Joint Venture Company. Further the assessee
contended that apart from the manufacturing operations, the assessee is
engaged in the business of container freight station etc. and in the year
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2006, the assessee gave its specialty container division to the new company
for running it on leave and license basis and subsequently the division was
sold by the assessee to the new company as going on concern with effect
from 01.04.2007. During 2008, the assessee extended the inter corporate
loan of Rs. 3 crores at interest rate of 9.51% per annum to the new company
and in December 2008, the assessee gave its freight container repair and
refurbishment division to the new company under the license to operate for
and behalf of the assessee. The new company obtained a loan of Rs. 7.11
crores from financial institutions and subsequently the financial institutions
sought for repayment of the said loan and they approach the assessee for
inter corporate loan of Rs. 7.3 crores on similar terms as the earlier loan of
Rs. 3 lakhs in order to pay to the financial institutions. The assessee thus
gave an interest-bearing loan of Rs. 7.3 crores to the new company (Transafe
Services Limited) in April 2009. During 2009, the financial irregularities
were deducted in transafe leading to its liquidity position being adversely
affected and it was unable to service its debt obligations and approached the
lenders for restructuring its debt. The corporate debt restructuring cell in its
decision dated November 18, 2010 stipulated that the assessee as the
promoters should infuse fresh contribution of Rs. 7.8 crores of which Rs. 6
crores would be converted into 0.001% optionally convertible cumulative
redeemable preference shares and the remaining Rs. 1.8 crores would
remain as unsecured interest bearing loans. The existing interest bearing
loan of Rs. 7.30 crores given by the assessee was also to be converted into
preference shares. Thus, the total amount of Rs. 13.30 crores was converted
into preference shares because of the decision of the corporate debt
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restructuring cell. During the financial year 2011-2012, it was found that
the net worth of the transferee was substantially eroded and stood of Rs.
5.55 crores as against the share capital of Rs. 49.99 crores because of losses
of Rs. 44.44 crores. Accordingly, the book value of each preference shares of
the face value of Rs. 10 held by the assessee amounted to Rs. 1.11 per
share. Thus, out of the sum of Rs. 13.30 crores advanced by the assessee,
the erosion had taken place to the extent of Rs. 11.82 crores. Therefore, the
Board of Directors of the assessee resolved to make a provision of Rs. 11.82
crores in the account of the assessee for the financial year ended March 31,
2012. In its account, the said sum of Rs. 11.82 crores was debited to the
profit and loss account for the year ended March 31, 2012 and the identical
amount was reduced from the investment value of preference shares of Rs.
13.30 crores thereby reducing the amount to Rs. 1.48 crores. During July
2013, the transferee made reference to the BIFR which was registered on
November 25, 2013. Thus, the assessee contended that what the assessee
had advanced was actually an interest bearing loan and it was compelled to
accept its conversion into preference shares because of the direction of the
RBI corporate debt restructuring cell. The assessee placed reliance on the
decision of the Hon'ble Supreme Court in Vijaya Bank Versus
Commissioner of Income Tax 4 where similar accounting as made by the
assessee was held as amounting to writing off of the debt. In support of the
claim under Section 28/37 of the Act as business laws, reliance was placed
on the decision of the Hon'ble Supreme Court in Badridas Daga Versus
[2010] 190 Taxman 257 (SC)
ITAT NO. 259 OF 2022
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Commissioner of Income Tax 5. Thus, the assessee contended that the
sum of Rs. 11.82 crores is allowable both in the normal computation as well
as in computing book profit under Section 115JB of the Act. The CIT(A) after
considering the above factual details pointed out that the assessee case
revolves around the fact that out of its loan of Rs. 13.00 crores advanced for
the purpose of its business, Rs. 11.82 crores had turned bad and though
investment was initially propelled by business expediency and was
subsequently thrust on the assessee by reason of the RBI's corporate debt
restructuring cell's decision. Further CIT(A) pointed out that additional
material which was referred to the assessing officer has not elucidated any
rebuttal in the remand report dated 07.03.2017. Taking note of the factual
position and following the decision in Vijaya Bank and Badridas Daga,
the assessee's appeal was allowed and the disallowance of Rs.
11,82,37,000/- was directed to be deleted by the assessing officer both in
the normal computation and in the computation of the book profit.
Aggrieved by such decision, the revenue carried the matter on appeal to the
tribunal. The tribunal noted that the primary contention raised by the
revenue is on the premise that the assessee's claim was not permissible
because in its profit and loss account the amount was charged by way of
"provision" and therefore it should not be construed to be in the nature of
crystallized loss permissible as deduction in arriving at taxable income of
the relevant year. The tribunal notes that such contention raised by the
revenue was negated by the Hon'ble Supreme Court in Rotork Controla
(1958) 34 ITR 10 (SC)
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India Private Limited Versus Commissioner of Income Tax 6 and allowed
claim for provisions for warrantees by observing that the provision is
allowable item if the liability is measured using a substantial degree of
estimation. In the said decision, three contingencies were pointed out as to
when the provision is recognized namely (a) an enterprise has a present
obligation as a result of a past event; (b) it is probable that an out of flow of
resource will be required to settle the obligation; (c) a reliable estimate can
be made of the amount of the obligations. The Hon'ble Supreme Court held
that if all these conditions are not made, then no provision can be
recognized. Bearing the said legal principle in mind, the tribunal tested the
facts of the assessee's case and found that the principle transaction leading
to the claim was one of the granting loan to subsidiary to promote assessee's
own business of freight containers. Further the tribunal noted that in order
to diversify its business, the assessee had co-promoted the subsidiary to
which the assessee had advanced interest bearing loans and the interest
when charge was assessed as "business income" and therefore the tribunal
found that the transaction was in the course and for the purpose of the
promoting the assessee's business. The tribunal also noted that consequent
to granting of loans due to extraordinary and compelling circumstances,
(direction of the RBI corporate debt restructuring cell) the loan was
converted into preference shares but such fact by itself did not change or
alter the basic character of the transactions. More importantly, the tribunal
on facts found that the preference shares in transferee were not acquired by
the assessee for the purpose of earning dividend and capital appreciation
180 Taxman 422 (SC)
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but the preference shares were acquired as per the directions of the CBR cell
of RBI which was binding on the assessee being the promoter of the
subsidiary. Furthermore, that the assessee had recognized the loss incurred
in its books only after it was found that almost the entire net worth of the
subsidiary was eroded. The contention of the revenue before us is that
whatever direction was given by the CDR cell cannot be construed to be a
dictate but it is more in the nature of a conciliatory direction. We are unable
to persuade ourselves to agree with the said submission because the
directive is from the corporate debt restructuring cell of the Reserve Bank of
India and binding upon the assessee more so it being a public sector
undertaking. Furthermore, the tribunal found that since the provision was
for ascertaining loss in note No. 10 of the audited account the value of the
investment in transafe was disclosed at Rs. 147.63 lakhs that is after
knitting off the loss provided in the profit and loss account of the relevant
year. Thus applying the decision of the Hon'ble Supreme Court in Vijaya
Bank it was held that there is no infirmity in the order passed by the
CIT(A).The tribunal also referred to the decision of the coordinate bench of
the tribunal in the case of West Bengal Electronics Industry
Development Corporation Limited in ITA No. 1945/Kol/2013 dated
24.08.2018 we find that in the said order passed by the coordinate bench of
the Tribunal, reliance has been placed on the decision of the High Court of
Madras in the case of Commissioner of Income Tax Versus Tamil Nadu
Industrial Investment Corporation Limited 7 wherein one of the
substantial questions of law was whether the tribunal had enough material
[2017] 88 Taxmann.com 528 (Mad)
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to hold and was it right in holding that the loans to the company in
liquidation had become bad debts and ought to be written off. In the said
case the assessee Tamil Nadu Industrial Investment Corporation
Limited was a state government undertaking and had made certain
investment in shares of industrial companies and lend money to those
companies and it sought to write off the advances given and value of
investment in those industrial companies and claim the same as deduction
in its returns wherein it was held as follows:-
Question Nos 1 and 3 challenge the conclusions of the
tribunal relating to facts and would have to be tested on
the touchstone of perversity. The tribunal has noted that
valuation of the shares is effected in order to ensure a
prepare deplication of the value of the asset in the
balance sheet. A note prepared for the consideration of
the Board in TIIC B.No. 13587-88 dated 21.07.1987 has
been placed before us. A detailed analysis has been
undertaken therein with respect to various items
identified and sought to be written off in view of the
doubtful character of recovery of loans and investments.
Investments in the shares of six industrial companies
were undertaken by way of underwriting of issue of
shares. Upon finding that the net worth was negative, it
was proposed to write off 100% of such investment in five
cases. In the matter relating to one defaulter, M/s.
Southern Brick Works Limited, the recommendations for
write-off was only 50% of the investment, in view of a
proposal for take of the entity by M/s. Vinichem Private
Limited.
The note also proposes the write off of an amount of Rs.
33.82 lakhs being 90% of the advances made to two
companies, M/s. Upper India Bearings Limited and M/s.
Nedumbalam Samiappa Annapoorani Mills Limited,
where creditors had approached the High Court seeking
their winding up and receivers had been appointed.
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The need for an criteria adopted for the valuation of the
shares as well as the efforts taken and measures
adopted by the assessee company for recovery of the
advances have been duly noted by the tribunal. The
erosion of capital leading to a fall in value of shares has
been established. We are thus of the view that the
conclusion of the tribunal in this regard are well founded
and are not vitiated by perversity. Question Nos 1 and 3
are answered against the Department and in favour of
the assessee.
7. The learned tribunal after considering the aforementioned decision
found that the facts of the assessee's case are more or less similar. Since
transferee was a subsidiary promoted for furtherance of the assessee's
freight container business and in furtherance of such business the loan
were advanced from which interest income was earned and such interest
income was assessed under the head "business". Further under compelling
circumstances as by the direction of the RBI such loans were converted into
preference shares which consequently eroded in value because of the law
sustained by the subsidiary. Therefore, the tribunal held that merely
because loss was debited under the nomenclature "provision" did not alter
the basic character of the transaction and the loss incurred due to non
recoverability of the amount advanced in the ordinary course of business
could not have been disallowed by the assessing officer. With regard to the
objection raised by the revenue to the relief granted by the CIT(A) while
computation of book profit under Section 115JB, the tribunal rejected such
objection raised by the revenue by rightly placing reliance on the decision of
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the High Court of Gujarat in Principal Commissioner of Income Tax
Versus Torrent Private Limited 8 wherein it was held as follows:-
In terms of the accounting standards, in view of the
decline in the value of the provisions created in the
current year (as shown at page 57 of the paper
book) the carrying amount of such investments has
been reduced and in case of provisions where there
was a rise in the value, the provisions are written
back and the net amount of provision has been
debited to the profit and loss account. Thus, in so far
as the provision for diminution of value of investment
to the extent of Rs. 13.85 crores is concerned, the
same has actually been reduced from the asset side
of the balance sheet and therefore is in the nature of
the write off. Under the circumstances, the amount
of Rs. 13.85 crores though bearing the nomenclature
of provision for diminution of value of investment,
having been actually written off, cannot be added to
the book profit under section 115JB(2)(i) of the Act.
8. Thus, the tribunal rightly took note of the decision of the Gujarat High
Court and after re-appreciating the factual position, affirmed the orders
passed by the CIT(A) and therefore we are of the view that no substantial
question of law arises for consideration on the said issue.
9. In the result, the appeal filed by the revenue is dismissed on the ground
that no substantial question of law arises for consideration.
(T.S. SIVAGNANAM)
ACTING CHIEF JUSTICE
I Agree.
(HIRANMAY BHATTACHARYYA, J.)
(P.A- SACHIN)
266 Taxman 151 (Guj)
