HARSHA DEVANI,J. - (1.) The appellant revenue by this appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as "the Act") has called in question the order dated 13th March, 2015 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'D' (hereinafter referred to as "the Tribunal") in ITA No.1400/Ahd/2003 by proposing the following two questions stated to be substantial questions of law:- (1) "Whether on the facts and circumstances of the case and in law, the ITAT was justified in deleting the addition made on account of lease equalization charges in computing the book profit under explanation to section 115JA of the Act without appreciating that the A.O. correctly invoked the provision of section 115JA, which finds support from the decision of Hon'ble High Court of Karnataka in the case of C.I.T. v. Weizmann Homes Ltd. reported in [2013] 33 taxmann.com 171 (Karnatak) and decision of I.T.A.T. Chennai Bench "A" in the case of Deputy Commissioner of Income tax v. Citi Financial Retails Services India Ltd. In I.T.A. No.1102 & 1103 (MDS) of 2014 A.Y. 1999-2000 and 2000-01, reported in [2014] 52 taxmann.com 68 (Chennai-Trib.)?" (2) "Whether on the facts and circumstances of the case and in law, the ITAT was justified in holding that the gain on Exchange rate fluctuation Rs.11,72,828/- does not form part of 'total turnover' for the purpose of section 80HHC of the Act without appreciating that forex fluctuation gain is not profit derived from export but forms part of total turnover for the purpose of Section 80HHC of the Act, since gain on exchange rate fluctuation is in the nature of other income includible in gross receipts?"
(2.) The assessment year is 2000-2001 and the relevant accounting period is the previous year 1999-2000. The assessee which is assessed in the status of a company filed its return of income on 30th November, 2000 declaring total income at Rs.15,92,21,260/- under section 115JA of the Act. The return came to be processed under section 143(1) of the Act on 9th March, 2000. Subsequently, the assessee company on 1st June, 2001 filed a revised return of income declaring total income under section 115JA of the Act at Rs.15,92,21,250/-. The assessment came to be framed under section 143(3) of the Act under the normal provision determining the assessed income at Rs.11,84,80,295/- and the income came to be computed under section 115JA of the Act at Rs.17,75,85,674/- after making various additions/ disallowances.
(3.) In relation to proposed question (1), the Assessing Officer did not accept the assessee's contention that lease equalization/terminal charge should not be added while calculating the book profit under section 115JA of the Act. The Assessing Officer noticed that the assessee had itself added back the lease equalization charge in the computation of income for working total business income as per Chapter IV of the Act, but did not add back the same while calculating the book profit under section 115JA of the Act. According to the Assessing Officer, section 115JA clearly stated that book profit means the net profit as shown in the Profit and Loss Account for the relevant previous year prepared under sub-section (2) clause (b) as increased by the amounts carried to any reserve by whatever name called. The Assessing Officer was of the view that lease equalization charge was nothing but reserve created by the assessee and was necessarily required to be added back while calculating the book profit as per clause (b) of the Explanation to sub-section (2) of section 115JA. He accordingly, while calculating the book profit of the assessee, added Rs.81,99,764/- debited to lease equalization account. The assessee carried the matter in appeal before the Commissioner (Appeals), who, upon appreciating the material on record, noted that the main contention of the assessee was that the lease equalization charge is not a reserve but in fact is a fund which does not satisfy the characteristics of a reserve. The Commissioner (Appeals) did not agree with the submission advanced on behalf of the assessee and observed that as per Explanation (b) to section 115J, "book profit" means the net profits as shown in the P & L Account for the relevant previous year (prepared under sub-section (1A), as increased by: (b) the amounts carried to any reserve (other than the reserve specified in section 80HHD) (or sub-section (1)A to section 33AC), by whatever name called. He, accordingly, was of the view that the lease equalization fund which has been taken by the assessee to Schedule 5 of fixed assets in the name of lease terminal adjustment is nothing but a reserve and dismissed the said ground of appeal. The assessee carried the matter in further appeal before the Tribunal, which placed reliance upon the decision of the Delhi High Court in the case of GE Capital Transportation Finance Services Ltd. 113 ITD 22 (Del.), and the Madras High Court in TVS Finance & Services Limited, 318 ITR 435 (Mad.), and allowed the ground of appeal.;