M/s BHPV Ltd,, Visakhapatnam v. The ACIT, Circle-3(1), Visakhapatnam

ITA 403/VIZ/2005 | 2002-2003
Pronouncement Date: 29-01-2010 | Result: Allowed

Appeal Details

RSA Number 40325314 RSA 2005
Bench Visakhapatnam
Appeal Number ITA 403/VIZ/2005
Duration Of Justice 4 year(s) 4 month(s) 2 day(s)
Appellant M/s BHPV Ltd,, Visakhapatnam
Respondent The ACIT, Circle-3(1), Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 29-01-2010
Assessment Year 2002-2003
Appeal Filed On 26-09-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.229 & 403/VIZAG/2005 ASSESSMENT YEAR : 2001-02 & 2002-03 RESPECTIVELY ITA NO.186/VIZAG/2008 ASSESSMENT YEAR : 2002-03 M/S. BHARAT HEAVY PLATES & VESSELS LTD. VISAKHAPATNAM ACIT CIRCLE-3(1) VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI CA RESPONDENT BY: SHRI SUBRATA SARKAR DR ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAINS T THE RESPECTIVE ORDER OF THE CIT(A) PERTAINING TO THE ASSESSMENT YE AR 2001-02 AND 2002-03. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS WE HEARD THEM TOGETHER AND ARE BEING DISPOSED BY THIS CONSOLIDATED ORDER. WE HOWEVER PREFER TO ADJUDICATE THEM ONE AFTER THE OTHER. ITA 229 OF 2005: 2. IN THIS APPEAL THE ASSESSEE HAS ASSAILED THE ORD ER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1. APPELLANT MOST RESPECTFULLY SUBMITS THAT THE HON'BL E COMMISSIONER OF INCOME TAX (APPEALS)-I VISAKHAPATN AM IS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE LE ARNED ASSESSING OFFICER IN RESPECT OF EMPLOYERS CONTRIBU TION TO PROVIDENT FUND RS.2 03 69 268. 2. APPELLANT MOST RESPECTFULLY SUBMITS THAT HON'BLE CI T(A)-I VISAKHAPATNAM IS NOT JUSTIFIED IN CONFIRMING THE AD DITION MADE BY THE LD. ASSESSING OFFICER IN RESPECT OF EMPLOYEE S CONTRIBUTION TO PROVIDENT FUND RS.3 38 63 242. 3. APPELLANT MOST RESPECTFULLY SUBMITS THAT HON'BLE CI T(A)-I VISAKHAPATNAM IS NOT JUSTIFIED IN CONFIRMING THE AD DITION MADE 2 BY THE LD. ASSESSING OFFICER IN RESPECT OF DEPRECIA TION ON FIXED ASSETS FOR WHILE EVIDENCE OF DOCUMENT COULD NOT REA DILY BE PRODUCED RS.1 55 415. 4. APPELLANT MOST RESPECTFULLY SUBMITS THAT THE HON'BL E CIT(A)-I VISAKHAPATNAM IS NOT JUSTIFIED IN CONFIRMING THE AD DITION MADE BY THE LD. ASSESSING OFFICER IN RESPECT OF VOLUNTAR Y RETIREMENT EXPENDITURE RS.26 61 082. 5. APPELLANT MOST RESPECTFULLY SUBMITS THAT HON'BLE CI T(A)-I VISAKHAPATNAM IS NOT JUSTIFIED IN CONFIRMING THE CO MPUTATION OF MAT LIABILITIES UNDER SECTION 115 JB OF THE INCOME TAX ACT 1961 BY ADDING BACK THE FOLLOWING PROVISIONS DEBITE D TO PROFIT & LOSS ACCOUNT TO BOOK PROFITS. A) PROVISIONS OF BAD & DOUBTFUL DEBTS. B) PROVISIONS FOR REDUNDANCY IN RAW MATERIAL. C) PROVISIONS FOR DOUBTFUL ADVANCES D) PROVISIONS FOR CONTRACT ACCOUNTING. 3. WITH REGARD TO GROUND NO.1 THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE JUDGEMENT OF THE APEX COURT IN THE CASE OF CIT VS. M.M. EXTRACTIONS LTD. APPEAL NO.7771 OF 09. IN WHICH THEIR LORDSHIP OF THE APEX COURT HAVE CATEGORICALLY HELD THAT THE FINANCE ACT 2003 THROUGH WHICH AMENDMENT IN SECTION 43B OF THE I.T. ACT WAS BROUGH T IS CURATIVE IN NATURE AND HENCE IT IS RETROSPECTIVE AND IT WOULD OPERATE W.E.F. 1 ST APRIL 1988 WITH THE SUBMISSION THAT IMPUGNED ISSUE IS SQUARELY COVE RED BY JUDGEMENT OF THE APEX COURT AND THE EMPLOYERS CONTRIBUTION TO PROVI DENT FIND IF MADE BEFORE THE DUE DATE OF THE FILING OF THE RETURN IT SHOULD BE ALLOWED U/S 43B OF THE ACT. 4. THE LD. D.R. DID NOT DISPUTE THESE FACTS. HAVIN G GONE THROUGH THE JUDGEMENT OF THE APEX COURT AND THE ORDERS OF THE L OWER AUTHORITIES IN THIS REGARD WE FIND THAT COMPLETE DETAILS WITH REGARD T O THE PAYMENTS OF THE EMPLOYERS CONTRIBUTION TO THE PROVIDENT FUND ARE N OT AVAILABLE AND WE ARE OF THE VIEW THAT THE ISSUE REQUIRES FRESH ADJUDICATION S BY THE ASSESSING OFFICER IN THE LIGHT OF AFORESAID JUDGEMENT OF THE APEX COURT. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO T HE FILE OF THE A.O. WITH THE DIRECTIONS TO RE-ADJUDICATE THE ISSUE IN THE LIGHT OF JUDGEMENT OF THE APEX COURT IN THE CASE OF CIT VS. M.M. EXTRACTION LIMITE D (SUPRA) AND TO ALLOW THOSE PAYMENTS OF EMPLOYERS CONTRIBUTION TO THE PR OVIDENT FUND WHICH WERE MADE BEFORE THE DUE DATE OF THE FILING OF THE RETUR N. 3 5. GROUND NO.2 IS WITH REGARD TO THE ADDITIONS MADE BY THE ASSESSING OFFICER IN RESPECT OF EMPLOYEES CONTRIBUTION TO TH E PROVIDENT FUND. IN THIS REGARD THE LD. COUNSEL FOR THE ASSESSEE HAS AGAIN PLACED A RELIANCE UPON THE AFORESAID JUDGEMENT WITH THE SUBMISSIONS THAT THE P AYMENTS OF THE EMPLOYEES CONTRIBUTIONS BE ALSO ALLOWED IF IT IS MA DE BEFORE THE DUE DATE OF THE FILING OF THE RETURN. 6. THE LD. D.R. ON THE OTHER HAND HAS EMPHATICALLY ARGUED THAT THE PROVISIONS OF SECTION 43B CANNOT BE INVOKED WITH RE SPECT TO THE EMPLOYEES CONTRIBUTION TO THE PROVIDENT FUND. HE HAS ALSO IN VITED OUR ATTENTION THAT ONLY THOSE EXPENDITURES ARE ALLOWABLE U/S 43B OF THE ACT IF THEY ARE OTHERWISE ALLOWABLE UNDER THE ACT. HE FURTHER INVITED OUR AT TENTION TO THE RELEVANT PROVISIONS OF SECTION 36(1)(VA) WITH THE SUBMISSION S THAT THE EMPLOYEES CONTRIBUTION TOWARDS THE PROVIDENT FUND CAN ONLY BE ALLOWED IF IT IS PAID BEFORE THE DUE DATE PRESCRIBED UNDER THE PROVIDENT FUND ACT. SINCE THE IMPUGNED PAYMENTS ARE NOT MADE BEFORE THE DUE DATE PRESCRIBED UNDER THE RELEVANT ACT DEDUCTIONS CANNOT BE ALLOWED U/S 43B OF THE I.T. ACT. 7. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM THE CAREFUL PERUSAL OF THE RECORD WE FIND FORCE IN THE CONTENTION OF THE LD. D.R. CLAUSE (B) OF SECTION 43B OF THE ACT DEALS WITH THE EMPLOYERS CONTRIBUTI ON TO PROVIDENT FUND AND IT IS ALLOWED IF PAID BEFORE THE DUE DATE OF THE FILIN G OF THE RETURN OF INCOME. IN THIS SECTION THERE IS NO REFERENCE WITH REGARD TO T HE CONTRIBUTION OF THE EMPLOYEES TOWARDS THE PROVIDENT FUND. HENCE THE E MPLOYEES CONTRIBUTIONS TOWARDS THE PROVIDENT FUND IF PAID AFTER THE DUE DA TE PRESCRIBED UNDER RELEVANT ACT IS NOT ALLOWABLE EXPENDITURE U/S 43B O F THE I.T. ACT. WE THEREFORE FIND NO MERIT IN THE ASSESSEES CLAIM IN THIS REGARD. 8. GROUND NO.3 RELATE TO AN ADDITION MADE BY THE A. O. IN RESPECT OF DEPRECIATION OF FIXED ASSETS. IN THIS REGARD THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSEES ON THE GROUND THAT ASSESSEE COULD NOT PRODUCE ANY EVIDENCE OF PROPER USE OF THE IMPUGNED ASSET. EVEN BEFORE THE CIT(A) THE ASSESSEE COULD NOT IMPROVE HIS CASE. D URING THE COURSE OF 4 HEARING OF THE APPEAL SPECIFIC QUERY WAS RAISED FRO M THE LD. COUNSEL FOR THE ASSESSEE TO PLACE SOME EVIDENCE THAT THE IMPUGNED A SSET WAS USED FOR THE PURPOSE OF BUSINESS. ANSWER OF THE LD. COUNSEL WAS IN NEGATIVE. SINCE NO EVIDENCE WAS FILED WITH REGARD TO THE USE OF THE AS SET THE CLAIM OF DEPRECIATION CANNOT BE ALLOWED. WE THEREFORE FIND NO MERIT IN THE ASSESSEES CLAIM AND WE REJECT THE SAME. 9. GROUND NO.4 IS WITH REGARD TO THIS ADDITION ON A CCOUNT OF VOLUNTARILY RETIRED EXPENDITURE AT RS.26 61 000/-. IN THIS REG ARD THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN THE CASE OF PI INDUSTRIES LTD. VS. ACIT 106 ITD 401 WITH THE SU BMISSIONS THAT THE IMPUGNED ISSUE IS SQUARELY COVERED THROUGH THIS ORD ER IN FAVOUR OF THE ASSESSEES. HE HAS FURTHER INVITED OUR ATTENTION TO THE CIRCULAR NO.200/79/2000-ITA-1 DATED 23.1.2001 WITH THE SUBMI SSIONS THAT THIS CIRCULAR IS NOT APPLICABLE TO THE IMPUGNED ASSESSMENT YEAR I .E. 2000-01. SO FAR AS THE PROVISIONS OF SECTION 35DDA IS CONCERNED IT WA S CONTENDED THAT THESE PROVISIONS WERE APPLICABLE ONLY W.E.F. THE ASSESSME NT YEAR 2002-03. SINCE THE IMPUGNED ASSESSMENT YEAR IS 2001-02 NEITHER A C IRCULAR NOR THE AMENDMENTS ARE APPLICABLE IN THE INSTANT CASE. 10. THE LD. D.R. ON THE OTHER HAND HAS PLACED HEAVY RELIANCE ON THE ORDER OF THE CIT(A). 11. HAVING GONE THROUGH THE ORDER OF THE LOWER AUTH ORITIES AND THE ORDER OF THE TRIBUNAL IN THE CASE OF PI INDUSTRIES LTD. V S. ACIT (SUPRA) WE ARE OF THE VIEW THAT THIS ORDER IS APPLICABLE ONLY TO THE ASSESSMENT YEARS 2000-01 & 2001-02 AND THE PROVISIONS OF SECTION 35DDA ARE ONL Y APPLICABLE W.E.F. A.Y. 2002-03. WE HAVE ALSO CAREFULLY GONE THROUGH THE O RDER OF THE TRIBUNAL AND WE FIND THAT THE TRIBUNAL HAS EXAMINED THIS ISSUE I N DETAIL AND CATEGORICALLY HELD THAT THE AMOUNT PAID BY THE ASSESSEE COMPANY U NDER VOLUNTARY RETIREMENT SCHEME WAS ALLOWABLE/DEDUCTIBLE AS REVEN UE EXPENDITURE AS THE CLAIM WAS INTRODUCED WITH A VIEW TO ACHIEVE OPTIMUM MAN POWER UTILISATION AND TO CARRY ON BUSINESS MORE EFFICIENTLY AND PROFI TABLY WHILE LEAVING THE FIXED CAPITAL UNTOUCHED. THE TRIBUNAL HAS ALSO HEL D THAT SECTION 35DDA WAS 5 ALSO APPLICABLE FOR THE ASSESSMENT YEAR 2002-03 ONW ARDS AND CIRCULAR F.NO.200/79/2000-ITA-1 DATED 23.1.2001 IS EFFECTIVE FROM 23.1.2001 AND THEREFORE THEY WERE NOT APPLICABLE TO THE ASSESSMEN T YEAR 2000-01. 12. THE IMPUGNED ASSESSMENT YEAR INVOLVED IS 2001-0 2 AND U/S 35DDA WAS BROUGHT TO THE STATUTE BY THE FINANCE ACT 2001 W.E.F. 1.4.2001. MEANING THEREBY THE PROVISIONS OF SECTION 35DDA WO ULD BE APPLICABLE FROM THE ASSESSMENT YEAR 2002-03. IN THESE CIRCUMSTANCE S WE ARE OF THE VIEW THAT THE IMPUGNED ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL AND FOLLOWING THE SAME WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF VOLUNTARY RETIREMENT EXPENDITURES AS A REVENUE EXPENDITURE. 13. GROUND NO.5 RELATE TO THE COMPUTATION OF MAT LI ABILITIES U/S 115 JB OF THE INCOME TAX PROVISIONS BY ADDING BACK TO THE FOL LOWING PROVISIONS DEBITED TO PROFIT & LOSS ACCOUNT TO BOOK PROFITS: A) PROVISIONS FOR BAD & DOUBTFUL DEBTS B) PROVISIONS FOR REDUNDANCY IN RAW MATERIAL C) PROVISIONS FOR DOUBTFUL ADVANCES D) PROVISIONS FOR CONTRACT ACCOUNTING. 14. DURING THE COURSE OF HEARING OF THE APPEAL THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE ISSUE OF PROVISIONS OF BAD AND DOUBTFUL DEBTS REDUNDANCY IN RAW MATERIAL AND DOUBTFUL ADVA NCES ARE REQUIRED TO BE RE-EXAMINED BY THE ASSESSING OFFICER IN THE LIGHT O F RETROSPECTIVE AMENDMENT BROUGHT TO SECTION 115JB OF THE ACT W.E.F. RETROSPE CTIVE FROM 1.4.01. THIS PROPOSITION WAS NOT OBJECTED TO BY THE LD. D.R. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ISSUE FOR ITS R E-ADJUDICATION TO THE ASSESSING OFFICER WITH A DIRECTION TO RE-ADJUDICATE IT IN THE LIGHT OF THE AMENDMENT BROUGHT IN SECTION 115JB OF THE ACT FOR C OMPUTING THE BOOK PROFITS. 15. SO FAR AS PROVISIONS FOR CONTRACT ACCOUNTING AR E CONCERNED THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THIS IS SUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF JACOB ENGI NEERING INDIA PVT. LTD. VS. ACIT IN ITA 335 & 336/MUM/07 IN WHICH THE TRIBUNAL HAS DEALT WITH THE CLAIM 6 OF FORESEEABLE LOSSES. COPY OF THE ORDER OF THE TR IBUNAL IS PLACED ON RECORD FOR OUR PERUSAL. 16. THE LD. D.R. ON THE OTHER HAND HAS STRONGLY OPP OSED THE CONTENTIONS OF THE ASSESSEES WITH THE SUBMISSIONS THAT THE SO C ALLED PROVISIONS FOR CONTRACT ACCOUNTING IN AN UNASCERTAINED LIABILITY W HICH CANNOT BE EXCLUDED WHILE COMPUTING THE BOOK PROFIT U/S 115 JB OF THE A CT. HE PLACED A HEAVY RELIANCE UPON THE ORDER OF THE CIT(A). WITH REGARD TO THE ORDER OF THE TRIBUNAL THE LD. D.R. HAS SUBMITTED THAT TRIBUNAL HAS TAKEN A VIEW WHILE COMPUTING THE PROFIT IN A PROJECT COMPLETION METHOD AND NO DOUBT WHEN THE PROJECT IS COMPLETED THE ASSESSEE IS REQUIRED TO CO MPUTE HIS PROFIT AND AT THAT TIME HE CAN TAKE INTO ACCOUNT THE FUTURE LOSSE S WHICH ARE EXPECTED IN COMPLETION OF THE PROJECT. BUT FACTS OF THE CASE A RE QUITE DIFFERENT IN THE INSTANT CASE. FOR COMPUTING THE BOOK PROFIT FOR TH E PURPOSE OF SECTION 115JB ONLY PROVISIONS OF ASCERTAINED LIABILITIES ARE TO B E EXCLUDED. THE ASSESSEE WAS INVOLVED IN A TURNKEY PROJECT AND IT IS NOT CLEAR F ROM THE ORDERS AS TO WHAT METHOD OF ACCOUNTING WAS ADOPTED BY THE ASSESSEE. IT IS ALSO NOT CLEAR WHETHER THE PROJECT WAS COMPLETED IN THE IMPUGNED A SSESSMENT YEAR AND WHAT ARE THE BASIS OF MAKING OF PROVISION BY THIS C ONTRACT ACCOUNTING. IF IT IS NOT A ASCERTAINED LIABILITIES IT CANNOT BE EXCLUDED FOR COMPUTING THE BOOK PROFIT FOR THE PURPOSE OF SECTION 115JB OF THE ACT. 17. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A C AREFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES WE FIND THAT IN TH E CASE OF JACOBS ENGINEERING INDIA PVT. LTD. THE ASSESSEE WAS A CONTRACTOR AND WAS FOLLOWING THE PROJECT COMPLETION METHOD FOR COMPUTING THE PROFIT. UNDER PROJECT COMPLETION METHOD THE ASSESSEE IS REQUIRED TO TAKE ALL POSSIBL E PROFITS AND LOSSES FOR COMPUTING ITS NET PROFIT FROM THE PROJECT. BUT IN THE INSTANT CASE THE ASSESSEE WAS ENGAGED IN A TURNKEY CONSTRUCTION CONT RACT AND IS NOT CLEAR FROM THE ORDER OF THE LOWER AUTHORITIES OR FROM ANY OTHER DOCUMENT AS TO WHAT METHOD OF ACCOUNTING WAS FOLLOWED BY THE ASSES SEES. IT IS ALSO NOT CLEAR FROM THE ORDERS WHETHER THE PROJECT WAS COMP LETED IN THE IMPUGNED ASSESSMENT YEAR. NOTHING HAS BEEN PLACED ON RECORD ON WHAT BASIS THE ASSESSEE HAS MADE PROVISIONS FOR THIS CONTRACT ACCO UNTING. WE HAVE ALSO 7 CAREFULLY PERUSED THE ORDER OF THE CIT(A) AND WE FI ND THAT HE HAS RIGHTLY OBSERVED THAT THE LIABILITIES FOR WHICH PROVISION W AS CLAIMED BY THE ASSESSEES CANNOT BE TERMED TO BE THE ASCERTAINED LIABILITIES AND AS SUCH IT CANNOT BE EXCLUDED WHILE COMPUTING BOOK PROFIT FOR THE PURPOS E OF U/S 115JB OF THE I.T. ACT. FOR THE SAKE OF REFERENCE WE EXTRACT THE RELE VANT PORTION OF THE CIT(A) I HAVE CAREFULLY EXAMINED THE SUBMISSIONS OF THE A.R. VIS-- VIS THE FACTS ON RECORD. IN SO FAR AS THESE PROVI SIONS ARE CONCERNED THE MAIN THRUST OF THE ARGUMENT OF THE A PPELLANT IS THAT THEY ARE ALL ASCERTAINED LIABILITY AND HENCE EXCLUD ED FROM CLAUSE-(C) OF THE EXPLANATION TO SUB-SECTION-2 OF SECTION 115J B. I AM NOT INCLINED TO ACCEPT THE ABOVE ARGUMENTS. THE INCOME TAX ACT HAS NOT IMPLICITLY OR EXPLICITLY DEFINED THE TERM PROV ISION. ACCORDINGLY THE MEANING OF SUCH WORDS MAY BE INTERPRETED BY IMP ORTING A DEFINITION. ACCORDING TO THE TERM PROVISION AS S TATED IN COMPANIES ACT 1956. AS PER CLAUSE-7(1) OF PART-II OF SCHEDULE-VI OF THE COMPANIES ACT 1956 THE TERM PROVISION HA S BEEN DEFINED AS UNDER: THE TERM PROVISION MEANS ANY AMOUNT WRITTEN OFF OR RETAINED BY THE WAY OF PROVIDING FOR DEPRECIATION RENEWALS OR DIMUNUATION IN VALUE OF ASSETS OR RETAINED BY WAY OF PROVIDING FOR ANY KNOW N LIABILITY OF WHICH THE AMOUNT CANNOT BE DETERMINED WITH SUBSTANTIAL ACCURACY SIMILARLY IN LAW LEXICON THE PROVISION HAS BEEN DEFINED AS FOLLOWS: A PROVISION IS A CHARGE AGAINST PROFITS. IT IS CREATED TO MEET THE LIABILITIES WHICH ARE KNOWN AND FORESEEABLE BUT WHOSE EXACT TIMING AND HENCE WHOSE QUANTIFICATIONS ABOVE ARE UNCERTAIN AT THE MOMENT. THE HON'BLE SUPREME COURT IN THE CASE OF METAL BOX CO. OF INDIA LTD. VS. THEIR WORKMEN 73 ITR 53 HAVE OBSERVED: AN AMOUNT SET ASIDE OUT OF THE PROFITS AND OTHER SURPLUSES TO PRO VIDE FOR ANY KNOWN LIABILITY OF WHICH THE AMOUNT CANNOT BE DETER MINED WITH SUBSTANTIAL ACCURACY IS A PROVISION. AN ANALYSIS OF THESE DEFINITIONS CLEARLY SHOWS THAT PROVISIONS ARE A CHARGE ON PROFITS I.E. IT HAS THE EFFECT OF REDUC ING THE PROFITS AND THOUGH THEY MAY BE KNOWN AND FORSEABLE THEIR QUANT IFICATION IS NOT CERTAIN I.E. IT IS AN UNASCERTAINED LIABILITY. WHEREVER4 FOLLOWING ANY ACCOUNTING STANDARDS OR NORMS THE CO MPANY MAKES A DEBIT ENTRY IN ITS PROFIT AND LOSS ACCOUNT TOWARD S PROVISION IT CAN ONLY BE INTERPRETED IN AN ACCOUNTING SENSE AS AN AM OUNT WHICH HAS THE EFFECT OF DIMINISHING OR REDUCING THE VALUE OF ASSETS OF THE COMPANY. AS SUCH WHEN A DEBIT IS MADE TO THE PROF IT AND LOSS ACCOUNT EITHER COMPRISING OF A PROVISION TOWARDS DI MUNUATION OF 8 THE VALUE OF CERTAIN ASSETS OR A PROVISION TO MEET SOME CONTINGENT LIABILITY THAT ARE LIKELY TO BE IRRECOVERABLE IN FU TURE THE RESULT IS REDUCTION IN BOOK PROFIT. WHEN A COMPANY FOR WHAT EVER REASONS MAKES ANY PROVISION IT ONLY IMPLIES THAT SOME TUR NOVER WHICH HAVE BEEN EFFECTED IN PAST YEARS ARE EXPECTED NOT T O BE RECOVERABLE IN FUTURE. AT BEST IT CAN ONLY BE TRE ATED AS AN ESTIMATION OF CERTAIN FUTURE HAPPENINGS WHICH MAY O CCUR OR WHICH MAY NOT OCCUR TO THE QUANTIFIED EXTENT. THEREFORE IN ALL SITUATIONS A REDUCTION IN THE BOOK PROFIT BY A SUM PROVIDED TO WARDS SUCH PROVISIONS CAN ONLY BE CONSIDERED TO BE A CONTINGEN CY. UNDER NO CIRCUMSTANCES THESE CAN BE TERMED AS ASCERTAINED L IABILITIES. THUS THE ACTION OF THE A.O. IN ADDING BACK THESE PROVISI ONS FOR COMPUTATION OF LIABILITY U/S 115JB IS CORRECT AND T HE SAME IS UPHELD. ACCORDINGLY THIS GROUND OF APPEAL IS DISMISSED. 17.1 SINCE WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF CIT(A) WE CONFIRM HIS ORDER. WE THEREFORE FIND NO MERIT IN THE CLAIM OF THE ASSESSEES. ACCORDINGLY WE SUBSCRIBE THE VIEW OF THE CIT(A) IN THIS REGARD. ITA 403 OF 05: 18. IN THIS APPEAL THE REVENUE HAS ASSAILED THE ORD ER OF THE CIT(A) INTERALIA ON FOLLOWING GROUNDS: 1. APPELLANT MOST RESPECTFULLY SUBMITS THAT THE HON'BL E CIT(A)-1 VISAKHAPATNAM IS NOT JUSTIFIED IN CONFIRMING THE AD DITION MADE BY THE LD. A.O. IN RESPECT OF EMPLOYERS CONTRIBUTION TO PROVIDENT FUND RS.1 09 07 240/-. 2. APPELLANT MOST RESPECTFULLY SUBMITS THAT THE HON'BL E CIT(A)-1 VISAKHAPATNAM IS NOT JUSTIFIED IN CONFIRMING THE AD DITION MADE BY THE LD. A.O. IN RESPECT OF EMPLOYEES CONTRIBUTION T O PROVIDENT FUND RS.8 92 97 097/-. 3. APPELLANT MOST RESPECTFULLY SUBMITS THAT THE HON'BL E CIT(A)-1 VISAKHAPATNAM IS NOT JUSTIFIED IN DIRECTING THE ASS ESSING OFFICER TO VERIFY AND ALLOW THE DEPRECIATION TO THE EXTENT OF EVIDENCES AVAILABLE - RS.2 92 495/-. 4. APPELLANT MOST RESPECTFULLY SUBMITS THAT THE HON'BL E CIT(A)-1 VISAKHAPATNAM IS NOT JUSTIFIED IN CONFIRMING THE CO MPUTATION OF MAT LIABILITIES UNDER SECTION 115JB OF THE INCOME T AX ACT 1961 BY ADDING BACK THE FOLLOWING PROVISIONS DEBITED TO PRO FIT & LOSS ACCOUNT TO BOOK PROFITS. A) PROVISIONS FOR BAD & DOUBTFUL DEBTS - RS.7 15 91 727 B) PROVISIONS FOR REDUNDANCY IN RAW MATERIAL- RS. 21 72 026 C) PROVISIONS FOR DOUBTFUL CLAIMS - RS. 6 58 725 19. GROUND NOS.1&2 RELATE TO THE ADDITION ON ACCOUN T OF EMPLOYERS AND EMPLOYEES CONTRIBUTION TO THE PROVIDENT FUND. WIT H REGARD TO THE EMPLOYERS 9 CONTRIBUTION WE HAVE HELD IN THE FOREGOING APPEAL S THAT IT IS DEDUCTIBLE U/S 43B IN THE LIGHT OF JUDGEMENT OF THE APEX COURT. W E ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE F ILE OF THE A.O. WITH THE DIRECTION TO ALLOW THE CLAIM OF PAYMENT FOR EMPLOYE RS CONTRIBUTION TO THE PROVIDENT FUND FOUND IF IT IS MADE BEFORE THE DUE D ATE OF THE FILING OF THE RETURN. 20. SO FAR AS EMPLOYEES CONTRIBUTION TO THE PROVID ENT FUND ARE CONCERNED WE HAVE TAKEN A VIEW IN THE FOREGOING APPEAL THAT P ROVISIONS OF SECTION 43B CANNOT BE INVOKED FOR THIS PAYMENT AND IT CAN ONLY BE ALLOWED IF IT IS MADE BEFORE THE DUE DATE PRESCRIBED UNDER THE RELEVANT A CT. ACCORDINGLY WE FIND NO MERIT IN THIS CLAIM OF THE ASSESSEES AND ORDER O F THE CIT(A) IS CONFIRMED IN THIS REGARD. 21. WITH REGARD TO GROUND NO.3 WHICH RELATE TO THE DISALLOWANCE OF DEPRECIATION WE FIND THAT NO EVIDENCE WITH REGARD TO USE OF THE ASSETS ARE PLACED EVEN BEFORE THE TRIBUNAL. WE ACCORDINGLY F IND NO MERIT IN THIS CLAIM OF THE ASSESSEE AND WE REJECT THE SAME. 22. GROUND NO.4 RELATE TO THE COMPUTATION OF MAT LI ABILITIES U/S 115JB OF THE ACT FOR ADDING BACK THE PROVISIONS FOR BAD AND DOUBTFUL DEBTS PROVISION FOR REDUNDANCY AND PROVISION FOR DOUBTFUL CLAIMS. THIS ISSUE HAS BEEN ALREADY BEEN ADJUDICATED BY US IN THE FOREGOING APP EALS AND FOLLOWING THE SAME WE RESTORE THE ISSUE TO THE FILE OF THE A.O. W ITH THE DIRECTIONS TO RE- ADJUDICATE IT IN THE LIGHT OF AMENDMENT BROUGHT TO SECTION 115JB OF THE ACT. FOLLOWING THE SAME THIS ISSUE IS RESTORED TO THE F ILE OF THE ASSESSING OFFICER FOR ITS RE-ADJUDICATION IN THE LIGHT OF AMENDED PRO VISIONS OF SECTION 115JB. ITA 186 OF 08: 23. IN THIS APPEAL ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) ON SOLITARY GROUND THAT HE HAS CONFIRMED THE ADDITIONS ON ACCOU NT OF AMOUNT CLAIMED TOWARDS EMPLOYERS CONTRIBUTION TO PROVIDENT FUND. IN THIS REGARD WE HAVE ALREADY SET ASIDE THE MATTER IN FOLLOWING APPEALS T O THE ASSESSING OFFICER TO RE-ADJUDICATE IT IN THE LIGHT OF JUDGEMENT OF THE A PEX COURT IN THE CASE OF M.M. EXTRACTIONS LIMITED AND ALLOW THE CLAIM OF THE EMPLOYERS CONTRIBUTION TO 10 PROVIDENT FUND WHICH WERE MADE BEFORE THE DUE DATE OF THE FILING OF THE RETURN OF INCOME. ACCORDINGLY THE ORDER OF THE CI T(A) IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE A.O. TO RE-AD JUDICATE IT IN TERMS INDICATED ABOVE. 24. IN THE RESULT THE ITA NO.229 OF 05 IS PARTLY A LLOWED FOR STATISTICAL PURPOSES AND ITA NOS.403 OF 2005 AND 186 OF 2008 AR E ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 29.1.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 29 TH JANUARY 2010 COPY TO 1 M/S. BHARAT HEAVY PLATES & VESSELS LTD. NATHAYYA PALEM BHPV POST VISAKHAPATNAM 2 THE ACIT RANGE-3 VISAKHAPATNAM 3 THE CIT VISAKHAPATNAM 4 THE CIT(A)-I VISAKHAPATNAM 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM