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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGH, VICE- & SHRI G. MANJUNATHA
: अपीलाथ�क�ओरसे/ Appellant by Mr. P.Sajit Kumar, JCIT : None ��यथ�क�ओरसे/Respondent by : 15.09.2022 सुनवाईक�तार ख/Date of hearing 15.09.2022 घोषणाक�तार ख /Date of Pronouncement : आदेश / O R D E R PER G.MANJUNATHA, AM:
This appeal filed by the Revenue is directed against order passed by the learned Commissioner of Income Tax (Appeals)-15, Chennai dated 30.01.2019 and pertains to assessment year 2010-11.
The Revenue has raised following grounds of appeal:-
“1. The order of the Id CIT(A) is contrary to law and to the facts and circumstances of the case.
2.1 The Id CIT (A) erred in deleting the addition to book profit u/s 115JB of Income Tax Act, 1961 made by the AO on provision towards project incentive to the tune of Rs.20 lakhs.
2.2 The Id CIT(A) ought to have noted that the nature of provision made, i.e., project incentive is an unascertained liability and liable to the added to the book profit u/s 115JB of the Act.
2.3 The Id CIT(A) failed to appreciate that the decision of the Hon'ble Tribunal Chennai in the case of M/s. Chemplast Sanmar Ltd in and 1349/MDS/2008 dt. 13.06.2016 relied up on by him is distinguishable on facts with the present case inasmuch as in the said case, the provision was made towards payment of gratuity which is an ascertained liability, whereas in the present case the provision made on project incentives payable cannot be treated as an ascertained liability.”
Brief facts of the case are that the assessee is a company engaged in the business of computer software filed its return of income for the assessment year 2010-11 on 29.09.2010 admitting total income of Rs.4,00,033/- under normal provisions of the Income Tax Act, 1961, and Rs.20,72,860/- under 115JB of the Income Tax Act, 1961. The assessment has been completed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 on 29.03.2016 and determined total income under normal provisions of Rs.56,76,288/- and book profit u/s.115JB of the Act at Rs.4,06,43,118/- by making various additions towards provision for project incentives disallowed amounting to Rs.20 lakhs on the ground that same is unascertained liability.
Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee submitted that provision for project incentive is not unascertained liability and therefore, same need not be added to book profit computed u/s.115JB of the Act. The learned CIT(A), by following decisions of the ITAT., Chennai, deleted addition made by the Assessing Officer. Aggrieved by the learned CIT(A) order, the Revenue is in appeal before us.
None appeared for the assessee, despite various notices given for hearing of the appeal. Therefore, we proceed to dispose off appeal filed by the Revenue by hearing learned DR present for the Revenue. The learned DR present for the Revenue submitted that provision made for project incentive is not ascertained liability, but only continent liability and thus, once, same is added back to normal computation, then same needs to be added to book profit computed u/s.115JB of the Act. The learned CIT(A) without appreciating facts has simply deleted additions made by the Assessing Officer .
We find that provision for ascertained liability all other liabilities are need to be added back to book profit computed u/s.115JB of the Act. In this case, provision made by the assessee for project incentive is considered as unascertained liability and therefore, same needs to be added back to book profit. The learned CIT(A), without appreciating above facts has simply deleted addition made by the Assessing Officer. Hence, we reverse findings of the learned CIT(A) and uphold additions made by the Assessing Officer towards computation of book profit u/s.115JB of the Income Tax Act, 1961.