1 itxa113-10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.113 OF 2010 The Commissioner of Income Tax, Central-III, Mumbai ..Appellant. V/s. M/s. Templeton Asset Management (India) Pvt. Ltd. ..Respondent. Mr. Suresh Kumar for the appellant. Mr. F.V. Irani with A.K. Jasani for the respondent. CORAM : J.P. DEVADHAR AND A.A. SAYED, JJ. DATED : 5TH AUGUST, 2011 P.C. :- 1. Five questions are raised by the revenue in this appeal, which read thus:- (1) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the order of CIT(A) in not sustaining the order of the assessing officer in rejecting the books of accounts and making additions on account of estimated profits @ 10% from the total fees received by the assessee company in various years covering the block period ? (2) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the order of CIT(A) deleting the addition of Rs.77,39,530/- made on account of accrued interest on debentures of M/s. Viral Filaments Ltd. in spite of the fact that the trial balance, based on which the additions made was found at the time of survey action which lead to the 2 itxa113-10 search action under section 132 ? (3) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the order of the CIT(A) in directing the assessing officer to delete the addition of Rs. 11,36,44,400/- ignoring the provisions of explanation to Section 158BB which stipulate that the undisclosed income of each assessment year for the purpose of aggregation has to be computed without giving effect to set off of brought forward losses under chapter VI or unabsorbed depreciation under Section 32(2) of the I.T. Act, 1961 ? (4) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the order of CIT(A) in directing the assessing officer to delete the addition of Rs. 11,36,44,400/- when the provisions of Section 158BB(4) provide that brought forward losses and unabsorbed depreciation under Section 32(2) of the I.T. Act, 1961 are not to be allowed to "set off" from undisclosed income arrived at after aggregation ? (5) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in not confirming the addition of Rs. 38,99,860/- being accrued interest on debentures of M/s. Precision Fasteners Ltd. sustained by CIT(A) on account of assessee's failure to prove that the same had been disclosed in the audited accounts ? 2. As regards question No.1 is concerned, the finding of fact recorded by the ITAT in para 3.1.1 of its order is that, the assessing officer had estimated profits from the fees received by the assessee without there being any evidence or material found during the search. It is neither the case of the revenue that the assessee had not accounted any part of the fees received nor it is the case of the revenue that the assessee had inflated the claim. The Tribunal has deleted the additions made in the Block Assessment on the ground that such additions were not based on evidence found during the course of search. The 3 itxa113-10 discrepancies noticed by the assessing officer from the trial balance found during the course of search has been explained by the assessee and in fact no additions were made on the basis of the discrepancies found in the trial balance. In these circumstances, the decision of the ITAT in deleting the addition made on account of estimated profits from the total fees received by the assessee cannot be faulted. 3. As regards question Nos.2 & 5 relating to deletion of accrued interest are concerned, the finding of fact recorded by the ITAT is that the assessee had purchased the debentures in question in the year 1999 and the same were reflected in the books of account maintained by the assessee. Therefore, whether interest on those debentures were includible in the total income on accrual basis or not was a question to be considered in the regular assessment and not in the block assessment. Therefore, no fault can be found with the decision of the Tribunal in deleting the interest on accrual basis in the Block assessment order. Accordingly question Nos.2 & 5 cannot be entertained. 4. Question Nos 3 & 4 relate to the deletion of addition made by the assessing officer on account of depreciation and disallowance of business loss in the regular assessment. The Tribunal has recorded a finding that the depreciation allowed in the regular assessment was 4 itxa113-10 current depreciation and there is no material to suggest that current depreciation was not admissible to the assessee and that there is no provision to consider current depreciation as undisclosed income of the assessee. In any event, these additions could not be made in the Block Assessment in the absence of any material found during the course of search. Therefore, question Nos.3 & 4 cannot be entertained. 5. Accordingly, we see no merit in the appeal and the same is is hereby dismissed with no order as to costs. (A.A. SAYED, J.) (J.P. DEVADHAR, J.)