Per Abraham P. George, Accountant Member. : These are cross-appeals arising from order of CIT(A)-X, Mumbai. Assessee's appeal and revenue's appeal are taken up in that order for disposal. I. ITA No. 7729/Mum./2004 2. In its Ground number one, assessee is aggrieved that CIT(A) confirmed Assessing Officer's disallowance of performance warranty provision of Rs. 4,83,72,135 for computing income under normal Income-tax provisions. In its second ground, assessee is aggrieved that for purpose of computing book profits as per section 115JB also, Assessing Officer made addition of above provision. Ground number three of assessee is against CIT(A) not deleting interest levied under section 234D by Assessing Officer. 2.1 appellant-company is engaged in providing oil terminal services. During relevant previous year, construction of terminals were also started by it. It was awarded construction and operation of petroleum terminals of M/s. IOC at Dumad and Mathura. Two contracts were entered into for this purpose with M/s. IOC. Under these contracts, appellant was required to design and construct storage facilities and also to provide services relating to handling, storage and dispatch of petroleum products. Return of income was filed by assessee on 30-10-2001 declaring loss of Rs. 14,73,34,669 as per normal provisions of Income-tax Act and Rs. 13,44,98,910 under section 115JB of Income-tax Act. Refund was also claimed and received by assessee. During assessment proceedings, Assessing Officer made addition of Rs. 4,83,72,135 being provision made by assessee in its accounts for performance warranties, while computing its income/loss under normal provisions. For computation of book profits under section 115JB, Assessing Officer, in addition to provision for performance warranties Rs. 4,83,72,135 also added Rs. 1,00,18,189 charged to profit and loss account as 'Preliminary and deferred revenue expenses'. 2.2 Assessing Officer disallowed provision of Rs. 4,83,72,135 for performance warranties citing following reasons:- (i) liability for meeting expenses and outgoes during defect liability period had not been crystallized and ascertained. (ii) provision is not allowable under section 37 of Act since section 37 allows only expenditures and not any provisions.' For disallowing preliminary and deferred revenue expenditure for purpose of computing book profit under section 115JB, learned Assessing Officer gave following reason: (i) preliminary and deferred revenue expenses has been written off due to change in accounting policy as evident from audit note in assessee's audited final account statements. (ii) change in accounting policy resulted in computation of book profit being understated by Rs. 1,00,18,189.' 2.3 In its appeal before CIT(A), assessee made following submissions with regard to provisioning for performance warranties:- (i) Under contracts with M/s. IOC, assessee was responsible for any discrepancies, errors or omissions in plans, drawings and other information prepared pursuant to contracts. (ii) Onus of ensuring satisfactory performance of facility rested with appellant since contracts with M/s. IOC had defect liability period of twelve months from date or completion of commissioning of facility. (iii) Provision of 5 per cent on progressive billings were made after detailed technical assessment carried out by qualified technical engineers to determine nature and type of defects/performance failures which could arise under various components of construction work. (iv) Para 17.4 of AS-7, which is Accounting Standards for construction contracts promulgated by Institute of Chartered Accountants of India (in short ICAI) requires appropriate allowance to be made for future unforeseeable factors either on specific or percentage basis, and, hence, this provision was made in strict compliance with such Accounting Standards.' 2.4 While making above submissions before learned CIT(A), reliance was also placed by assessee on following cases (a)Voltas Ltd. v. Dy. CIT [1998] 64 ITD 232 (Mum.); (b)ITO v. Wanson (India) Ltd. [1983] 5 ITD 102 (Pune); (c)Commissioner of Inland Revenue v. Mitsubishi Motors New Zealand Ltd. [1996] 222 ITR 697 (PC). 2.5 Assessee's submissions before CIT(A) with regard to additions made by Assessing Officer on book profit for computation of MAT under section 115JB were as follows:- (i) That under clause (c) to Explanation to section 115JB, only liabilities which cannot be ascertained are to be added to book-profit and provisioning for performance warranty was not unascertained liability, but made on basis of detailed technical assessment. (ii) assessee was following AS-7 as mandated by ICAI, and prudent accounting principle of matching cost with revenue required such provisioning. (iii) Expert advisory committee of ICAI had opined that provisions made to meet obligations resulting from warranty or guarantee did not represent contingent liability. (iv) That security deposit of 10 per cent of contract value was given to M/s. IOC and such security deposit was indicative of M/s. IOC's own assessment as regards costs that could arise during warranty period. (v) That, with respect to inclusion of preliminary and deferred revenue expenses of Rs. 1,00,18,189 in net profit, such addition goes against Explanation to section 115JB which does not specifically provide that any difference on account of change in method of accounting of preliminary and deferred revenue expenses should be added back to book profit. (vi) decision of Hon'ble Supreme Court in case of Apollo Tyres v. CIT (255 ITR 277) laid down law that Assessing Officer while computing income under section 115J has only power of examining whether books of account are certified by authorities under Companies Act as having been properly maintained in accordance with Companies Act, and that he does not have jurisdiction to go behind net profit shown in profit and loss account, except to extent provide in Explanation to section 115J, and this was not followed by learned Assessing Officer. (vii) That Assessing Officer went wrong in concluding that facts of case in Calcutta Company Ltd. v. CIT (37 ITR 1) as also principles evolved by Hon'ble Supreme Court in case Metal Box Company Ltd. v. T h e ir Workmen (73 ITR 53) were different and could not be applied in assessee's case.'2.6 After hearing assessee, CIT(A) held that provision of 5 per cent coming to Rs. 4,83,71,325 made for performance warranty was not definite and ascertained liability and confirmed order of Assessing Officer o n this aspect. Addition of this amount for computation of book profit under section 115JB, was also sustained by learned CIT(A), since according to him, such provision was contingent and not ascertained. However, for purpose of computing book profit under section 115JB, CIT(A) directed Assessing Officer not to make addition of Rs. 1,00,18,189 on account of differential amount of preliminary and deferred revenue expenses written off, accepting contentions of assessee that section 115JB did not allow such addition. 2.7 For sustaining Assessing Officer's order, disallowing provision for performance warranties, in normal computation as well as for MAT computation under section 115JB, learned CIT(A) gave following reasonings:-(i) liability has been estimated by applying principle of probability of happening of some event, which may or may not occur, as could b e made out from technical assessment prepared by Technical Engineers appointed by assessee itself. According to CIT(A), terminology used by Technical Engineers in such assessment tended to rely on certain terms which only points to likely defects which may arise during defect liability period. In other words, according to CIT(A), technical assessment was based on general terminology whereby only certain probable events like tendency to on general terminology whereby only certain probable events like tendency to develop cracks, replacement of seals, etc., were noted. Hence, according to learned CIT(A), such liabilities were not ascertained or crystallised. (ii) Such liabilities are only contingent and does not give rise to any definite obligation, and, hence, it cannot fall within expression 'expenditure laid out or expended wholly or exclusively for purpose of business'. No enforceable liability had accrued or arisen to assessee on account of warranty. (iii) Mercantile system can never be stretched so as to embrace all sorts of provisions, notional or contingent payment. Projects at Dumad and Mathura had not yet been completed and was under execution. Therefore, according to him, liability, on basis of which deduction has been claimed, did not exist as on last date of relevant previous year.' 2.8 For deleting addition of differential amount of Rs. 1,00,18,189 written off as preliminary and deferred revenue expenses by assessee, in computing book profit under section 115JB and thereby allowing assessee's appeal on this ground, CIT(A) gave following reasons:-(i) Hon'ble Supreme Court in case of Apollo Tyres 253 ITR 273 has held that use of words 'in accordance with provisions of Parts II and III of Schedule VI of Companies Act' in section 115J was made for limited purpose of empowering Assessing Officer to rely only upon authentic statement of account of company. (ii) Once company had prepared its accounts in manner provided by t h e Companies Act and same has been scrutinized and certified by Statutory Auditors, Assessing Officer had to accept authenticity of such accounts. Sub-section (1A) of section 115J does not empower Assessing Officer to embark upon fresh enquiries in regard to entries made in books of account. (iii) By writing off preliminary and deferred revenue expenses of Rs. 1,00,18,189, being balance remaining under that head after earlier year write offs, assessee had not violated any provisions of Accounting Standards or ICAI guidelines.' 2.9 In light of abovestated facts, let us now go into grounds raised by assessee, in his appeal before us. As already stated, ground Nos. 1 and 2 relate to same issue of addition of Rs. 4,83,72,135 on account of provisions for performance warrantee, first for computing income under normal provisions and second for computing book profit under section 115JB. 2.10 In submissions before us, learned Authorised Representative, reiterated all grounds raised before Assessing Officer as well as CIT(A), with gutso. He, further, submitted as follows:-(i) As pet contract with Indian Oil Corporation (in short 'IOC'), assessee had given security deposit of 10 per cent of contract value. learned Authorised Representative brought to our notice paper book pages 68 to 238 which is copy of relevant clauses as contained in agreement between assessee and M/s. IOC (hereinafter referred to as agreement). At page 84 clause captioned 'Security Deposit' clearly states that security deposit of 10 per cent of contract value had to be given to IOC, which would be released by them only on completion of 12 months from date storage facility is completed by assessee, in line with its bid package. (ii) As per clause 15 of agreement as it appears at paper book page No. 222, for period of 6 months, after work was completed, assessee had t o maintain and uphold same in efficient condition and was also bound to remedy any omission or defects discovered to appearing in works as directed by Dy. GM (Project) of M/s. IOC. It is also specified in this clause that security deposit would be released only after expiry of said period and subject to it being ascertained that there was no defective work or material requiring repairs or maintenance. Therefore, assessee was responsible for smooth working after completion during warranty period. (iii) Assessee had adopted percentage completion method which is approved methodology for accounting construction contracts, as per Accounting Standards-7 of ICAI. Though, this is not Accounting Standard which has been notified under section 145(2) of Act, assessee applied it for prudent accounting. This Accounting Standard mandates that when profit is recognized under percentage of completion method appropriate allowance for future unforeseeable factors should be made on either specific or percentage basis. Assessee being Company, limited by shares, it was mandatory to follow Accounting Standards promulgated by ICAI. (iv) If assessee was not creating provision for warranty, then it would not be matching costs with revenue, and, hence, could lead to unbalanced and unfair results. (v) Contract with IOC, at Clause No. 33 (Paper book page 91) clearly states that contractor would be responsible for any discrepancies, errors of omissions in plans drawings, and other information prepared pursuant to agreement and should at its own expense carry out, alterations or remedial work necessitated by reasons of such discrepancies, errors or omissions. (vi) warranty provision of 5 per cent on progressive bill payments received was based on proper scientific analysis and on detailed technical assessments (Paper book Pages 62 and 63) done by General Manager Project & Finance Manager, and vetted by independent agency, namely, M/s. Dalal Consultant & Engineering Ltd. Though such assessment determined probable defect liability expenses at 5.74 per cent of total terminal cost, assessee had provided 5 per cent only. (vii) Assessee had also sub-contracted major parts of work, which increased risk factor for it and this all more called for prudent accounting practice. (viii) Assessee is supported by decision of Hon'ble Bombay High Court in CIT v. Associated Cables (P.) Ltd. (236 ITR 596) wherein it was held that even retention money withheld by contractees pending completion of contract work, does not accrue to assessee-contractor in year in which amount is retained. (ix) Assessee is also supported by following decisions:- (a)Bharat Earth Movers v. CIT 245 ITR 428 (SC); (a)Bharat Earth Movers v. CIT 245 ITR 428 (SC); (b)Commissioner of Inland Revenue v. Mitsubishi 222 ITR 697 (Privy C.); (c)CIT v. Indian Transformers Ltd. 270 ITR 259 (Ker.); (d)CIT v. Vintec Corporation (P.) Ltd. 278 ITR 337 (Delhi).' 2.11 learned Departmental Representative made his reply submissions as follows:- (i) technical assessment cited point out to only certain common problems that could arise in future and did not give rise to ascertainable or ascertained liability. (ii) Actual expenditure incurred by assessee against provision when compared to head-wise provisioning made by technical experts varied substantially. (iii) Hon'ble Madras High Court in case of CIT v. Rotork Controls India Ltd. (293 ITR 311), after considering all decisions cited by learned AR, had held that where nature of liability was yet to be crystallised and was loaded with uncertainty of event which can give rise to liability, there is no justification to accept such claim of assessee. (iv) In none of cases cited by learned AR, has liability under warranty clause determined based on fixed percentage of turnover and, therefore, accepting claim of percentage on turnover for provisioning could not be sustained.' 2.12 We have considered order of Assessing Officer, CIT(A)'s order, submissions and grounds made before Assessing Officer as well as before CIT(A), relevant pages of paper book referred to by learned AR, and learned DR as also submissions and case laws brought to our notice. undisputed facts are that assessee had started new activity in t h e form of construction of terminals on behalf of clients in relevant previous year. M/s. IOC is first client who employed assessee to construct two terminals at two different locations. Assessee has been hitherto before in business of running terminals and was new to field of building and maintaining terminals, that too on turnkey basis. It is also not disputed that there is warranty clause in agreement whereby assessee has undertaken to make good any defects arising during defect liability period. On perusal of its technical assessment for possible warranty liability, we find that such assessment was vetted by M/s. Dalal Consultants and Engineers Ltd., independent agency. types of defects and performance failures that could arise under various components of project has been succinctly summarized by technical consultants in its report. 2.13 That assessee has already provided 10 per cent of contract value as security deposit is also not disputed. It is also clear from clause 15 of agreement (Paper book 222) that security deposit would be adjusted against expenses incurred by M/s. IOC in case of failure of assessee to maintain facility as per terms of contract for warranty period. Assessee had followed percentage completion method for accounting its income, which is prudent one as evident from Accounting Standard-7 of ICAI and no doubt vide section 211(3d) of Companies Act, 1956, Company is bound to follow Accounting Standards promulgated by ICAI. Assessee-company was, thus, having no option but to follow this accounting standard. This accounting standard itself is based on 'principle of prudency' in maintenance of accounts, whereby n entity is prevented from projecting excessive profits without considering all possible outgoes. In type of contract that assessee had with M/s. IOC, no doubt recognition of revenue on percentage completion basis is itself estimation, since such profits are so estimated even before project is complete. Therefore, it is only prudent that all possible expenditures are also taken into account. Since accrual system has to be followed by Company, it is very much necessary that liabilities that are crystallised though difficult to be quantified are accounted for. 2.14 In case of Bharat Earth Movers v. CIT [2000] 245 ITR 428, Hon'ble Supreme Court has given guiding principle, where such liabilities have arisen though not quantifiable with certainty. According to Hon'ble Supreme Court, deduction is allowable once business liability has arisen, though it could be quantified and discharged only at future date. However, that case dealt with be quantified and discharged only at future date. However, that case dealt with provisioning for liability on account of encashment of earned leave of employees. Since such liability had already arisen and could reasonably be quantified in proportion to entitlement of each employee and their length of service, subject to outer limit of eligibility, Hon'ble Supreme Court held provisions thereof as reasonable. To be specifically noted is that, here, there was methodology available for making reasonable estimate of such liability. 2.15 Hon'ble Delhi High Court in CIT v. Vinitec Corpn. (P.) Ltd. [2005] 278 ITR 337, held that even where actual quantification and discharge of liability is deferred to future date, once assessee is maintaining its accounts in mercantile system, liability so accrued, though to be discharged on future date would be proper deduction while working out profit and gains of his business, having regard to accepted principles of commercial practice in accountancy. In this case, provisioning for warranty was on account of sale of goods with warranty and Hon'ble High Court found that such provisioning was done on basis of past data, whereby actual expenses relatable to warranty was 3.59 per cent, 5.07 per cent, and 2.10 per cent for assessment years 1997- 98, 1998-99 and 1999-2000, respectively. Here also, it can be noted that there was indeed past history based on which reasonable estimate could be made. 2.16 In case of Mitsubishi Motors New Zealand Ltd. (supra), which dealt with warranty provisioning for vehicles sold, it was observed by Privy Council that taxpayer in year of sale was under legal obligation to make such provisions under those warranties, even though it would not be required to do such work until following year. Past statistical information that 63 per cent of all sold vehicles could contain defects warranty repairs during warranty period, was accepted and provisioning allowed. Thus, here also past data was used for making provisions. It is noteworthy that PC also observed that merely theoretical contingencies are to be disregarded. 2.17 Order of Hon'ble Kerala High Court, in CIT v. Indian Transformers Ltd. [2004] 270 ITR 259, allowed provisioning for warranty based on past data which showed that:- (i) ten transformers sold by concerned assessee to M/s. BHEL had failed and (ii)Actual expenses on account of warranty period repairs for preceding year was Rs. 7.99 lakhs against provision of Rs. 3.5 lakhs. 2.18 common vein running through all above cases is that there was sufficient past data with assessee to justify reasonableness of warranty provisioning done. 2.19 On necessity of past data for determining whether provisioning was justified in case of CIT v. Rotork Controls India Ltd. [2007] 293 ITR 311 (Mad.) is very relevant. In this case, assessee could not adduce data on actual incidence of liability under warranty, based on any past data as percentage of turnover. Hon'ble High Court came to conclusion in this case that existence of elements of certainty were not there and that liability could not be substantiated by party concerned. dictum evolving out of judgment of Hon'ble High Court is that unless actual expenses incurred against provisioning could be substantiated for justifying quantum or unless basis for provisioning was given such provisioning could not be done. 2.20 Here, assessee was for first time executing work of type. Hence, no past data was available with it to justify quantum. In fact furnishing of such past data was impossible for assessee. warranty clause for maintaining facility it was setting up, for period of 12 months, was very much there in agreement and M/s. IOC had power to make good expenses incurred by it, in case assessee failed to meet its warranty obligations, out of 10 per cent security deposit with it. Since past data was not available, assessee did best it could do in such circumstances for estimating it's liability. It made technical assessment and had it vetted by independent agency. Against 5.73 per cent arrived at by such technical evaluators, which was vetted by independent contractors, as possible warranty expenses, assessee in fact had made only 5 per cent provisioning. Though cited cases, supra, were not on warranties in any construction projects, nevertheless, possibility of damages and work to be done on account of various defects pointed out by principal, would only be higher in view of inherent uncertainties involved in project of this magnitude. Thus, liability was very much ascertained as on end of relevant previous year. Just because, assessee is having no prior statistical data regarding warranty expenses, cannot by itself make him ineligible from making claim, especially when he has just started this line of activity and, hence, impossible for him to have such past data. What can be done at best in this scenario, is to look for technical assessment of possible warranty expenses and also expenses incurred on account of warranty in period later to relevant previous year. Here, assessee has technical assessment which has been vetted by independent agencies where warranty expenses during defect liability period has been estimated at 5.97 per cent (Paper book 63). Industrial experience in this regard has also been filed by assessee which gives instances of failure/development of defects which have actually occurred in oil industry in this line of activity (Paper book 66). Assessee had also submitted details of expenses incurred for rectification of various damage during defect liability period, subsequent to 31-3-2001, which comes to Rs. 3,06,79,133, (Paper book 13 and 14) as against warranty provisioning of Rs. 4,83,72,135. Revenue has not controverted these figures except for that, heads under which actual expenses for rectification for damages were spent and heads under which technical assessments were done varied. It is true that there are inter-head variation between technical estimates and actual spendings, but that is well-explained from fact that one is estimate and other actuals. Thus, assessee has been able to justify provisioning and its quantum in reasonable manner. 2.21 In all cases referred to supra, including Madras High Court decision in Rotork Controls India Ltd.'s case (supra) what can be discerned is that warranty provisioning is allowable, if supported by sufficient data to justify such provisioning and is based on statistical or other relevant data. We have no hesitation in facts of case to hold that 5 per cent of warranty provisioning done by assessee was made against ascertained liability, very much reasonable and made on relevant data. Hence, we hereby set aside CIT(A)'s order confirming non-allowance of deduction of performance warranty of Rs. 4,83,72,135 in computing income of assessee under normal provision of Income-tax Act. Assessing Officer is directed to allow deduction of provision for warranty as claimed by assessee for computing its income under normal provisions of Act. 2.22 As regards addition of same amount in computing book profits as per section 115JB, it is necessary to see type of addition allowed under clauses (a) to (f) of Explanation to clause (2) of section 115JB. These explanations run as follows:-(a) amount of income-tax paid or payable, and provision there for; or (b) amounts carried to any reserves, by whatever name called [other than reserve specified under section 33AC]; or (c) amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or (d) amount by way of provision for losses of subsidiary companies; or (e) amount or amounts of dividends paid or proposed; or (f) amount or amounts of expenditure relatable to any income to which [other than provisions contained in clause (23G) thereof] apply.' 2.23 Under clause (a) above, amounts set aside to provisions made for meeting liabilities other then ascertained liabilities has to be added for deleting book profit. Impliedly ascertained liabilities cannot be added. Since it has already been held by us vide Para 2.21 above, that provision for warranty made by assessee-company is ascertained liability, it follows that Assessing Officer cannot make any addition thereof to net profit of assessee-company for arriving at its book profits for purpose of section 115JB. Therefore, we set aside order of CIT(A) and Assessing Officer on this aspect and delete addition of Rs. 4,83,72,135 made by Assessing Officer to net profit for computing assessee's book profit under section 115JB. Thus, Grounds 1 and 2 of assessee are allowed. 3. In Ground No. 3, assessee is aggrieved that CIT(A) has not deleted interest levied under section 234D. 3.1 learned Authorised Representative submitted that date of refund was received by assessee on 11-2-2003 and intimation under section 143(1) was dated 10-1-2003. Since assessment order was found on 31-12- 2003, according to him, interest under section 234D could not be charged for date prior to 1-6-2003 being date on which that section was enacted. Issue of chargeability of interest where refunds were granted prior to 1-6-2003, being date on which said section was enacted, has already been referred to Special Bench of this Tribunal. Hence, we feel it appropriate to set aside CIT(A)'s order on this aspect so that Assessing Officer can decide it afresh. Therefore, this ground of assessee is allowed, CIT(A)'s order set aside, and matter remitted back to Assessing Officer for deciding matter afresh, taking into consideration Special Bench directions in this regard. 3.2 Hence, Ground 3 of assessee is allowed, to extent stated above. 4. In result, appeal of assessee is partly allowed for statistical purpose. II ITA 7412/Mum./2004 5. Revenue has raised two grounds against CIT(A)'s order. Both are confined to same issue and relate to CIT(A) deleting addition of Rs. 1,00,18,189 for computing net profit under section 115JB of Act. This amount was preliminary and deferred revenue expenditure written off by assessee during relevant previous year. 5.1 Facts relating to this issue run as follows. Assessee-company had in its P&L account, fully written off, what was remaining in balance under head 'Preliminary and deferred revenue expenditure'. In Note Number 5 of Schedule 17 to its audited P&L account and Balance-sheet it is stated that such write off, as against its earlier accounting policy of amortising such expenses over period of 10 years and 5 years, had resulted in profit for year being lower by Rs. 1,00,18,189. Assessee was required by Assessing Officer to explain why this amount should not be added back for computation of book profit in accordance with section 115JB of Act. Assessee replied that book profit vide section 115JB means net profit as per P&L account as increased by certain provisions and liabilities as per clauses (a) to (f) of Explanation to clause (2) of section 115JB. Assessee also cited decision of Hon'ble Supreme Court in Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273 and submitted before Assessing Officer that in light of this decision, such addition ought not be made, Assessing Officer, however, did not accept these contentions since according to him, Hon'ble Supreme Court in case of Apollo Tyres Ltd. (supra) was concerned with addition made by Assessing Officer of arrears of depreciation debited by assessee for computation of book profit and, hence, not applicable to assessee's case, since here it was 'write off of preliminary and deferred expenditure' in one go consequent to change in accounting policy. 5.2 In its appeal before CIT(A), assessee contended that Assessing Officer erred in not specifying provisions of section 115JB based on which such addition was made, and that section 115JB did not provide for any adjustments t o be made to net profit as per accounts, due to any change in method of accounting, as compared to preceding year. It was also submitted that clauses (a) to (f) of Explanation to clause (2) of section 115JB did not specify any such addition to be made while computing book profit, from net profit as shown in P&L account. It was also submitted before CIT(A) that assessee's P&L account was prepared in accordance with Parts II and III of Schedule VI to Companies Act, following same accounting standards as were adopted for preparing accounts for purpose of its Annual General Meeting and vide proviso to section 115JB(2), for computing book profit for purpose of section 115JB it was necessary to start form net profit as per P&L account adopted by company in its AGM.5.3 Assessee also kly relied on Hon'ble Supreme Court decision in Appollo Tyres Ltd.'s case (supra). 5.4 Learned CIT(A) accepted contentions of assessee and deleted this addition. For coming to this conclusion learned CIT(A) based himself on following:(i) Use of words 'in accordance with provisions of Parts II and III of Schedule VI of Companies Act' in section 115J was made for limited purpose of empowering Assessing Officer to rely on authentic statement of accounts of company as decided by Hon'ble Supreme Court in Apollo Tyres Ltd.'s case (supra). (ii)Sub-section (1A) of section 115J does not empower Assessing Officer to embark upon fresh enquiry in regard to entires made in books of account by company. (iii)By changing its accounting policy, in writing off balance in 'preliminary and deferred revenue expense', assessee had not violated any of Accounting Standards or guidelines of ICAI. (iv)Explanation to section 115JB has not prescribed any adjustment of like nature to be made to net profit for computing book profit and in view of Hon'ble Supreme Court's decision, cited supra, Assessing Officer was prohibited from making any such adjustment to book profit. 5.5 Before us, learned Departmental Representative relied on assessment order and submitted that adjustment was correctly carried out by Assessing Officer since preliminary and deferred revenue expenditure written off, actually pertained to earlier years and there was specific qualification made by Auditors vide Note Number 3 of Schedule 17 to audited account for year ended 31-3-2001. Learned AR, on other hand, kly supported order of CIT(A) and reasonings given by him. 5.6 We have perused mentioned orders as also submissions made. It is undisputed fact, as emanating form Note 3 to Schedule 17 of assessee's audited account that it had made write off of Preliminary and deferred revenue expenditure which had resulted in profit for year being lower by Rs. 1,00,18,189. Assessing Officer has proceeded to make addition of this amount, based on this audit note, to net profit of assessee, for purpose of computing book profits under section 115JB. Under Explanation to section 115JB, as it stood at relevant time book profit for purpose of that section, means net profit as shown in P&L account prepared under sub- section (2) thereof, as increased by following amount, if any such amounts are debited in such P&L account, namely:- (a) amount of income-tax paid or payable, and provision there for; or (b) amounts carried to any reserves, by whatever name called [other than reserve specified under section 33AC]; or (c) amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or (d) amount by way of provision for losses of subsidiary companies; or (e) amount or amounts of dividends paid or proposed; or (f) amount or amounts of expenditure relatable to any income to which [other than provisions contained in clause (23G) thereof] apply.' Items mentioned at clauses (i) to (vii) of this Explanation need to be reduced, but those are not relevant for deciding issue at hand. It can be seen from above clauses (a) to (f) stated above that 'Preliminary and deferred revenue expenditure' does not fall under any of it. Now we have to see whether assessee has started from 'net profit' as shown in P&L. account prepared as per provisions of Parts II and III of Schedule VI to Companies Act, 1956, adopting same accounting policies, accounting standards, and depreciation method/rates, as used for preparing such accounts laid before its AGM. There has been no finding by Assessing Officer that assessee had not followed this mandate regarding accounting policies/standards. Accounting Standards and policies of ICAI nowhere states that there cannot be change in accounting policy by company. What auditors have done is to give in their note effect of such change in assessee's profit, in instant case. This in no way means that assessee had not followed provision of Parts II and III of Schedule VI to Companies Act, 1956 in preparation of its accounts. There is no case for revenue that assessee had adopted any different set of standards or policies vis-a-vis accounts laid by it before AGM. By writing off balance remaining under its head 'Preliminary and deferred revenue expenditure' assessee was only doing what was prudent, in that, it was removing from asset side of its Balance-sheet non-productive item, and which in any case was not asset at all. Therefore, it was not doing anything contrary to any ICAI guidelines. CIT(A) was very much right in following law laid down by Hon'ble Supreme Court in Appollo Tyres Ltd.'s case (supra), according to which, but for limited power of making increase and reductions as provided in Explanations to section 115J, Assessing Officer has to accept results as declared by Company if accounts have been properly maintained in accordance with Companies Act and certified so by authorities under that Act. This principle is very much applicable for book profit computation under section 115JB also. Thus, we find no reason to interfere with order of learned CIT(A) deleting addition of Rs. 1,00,18,189 being preliminary deferred revenue expenditure written off by assessee, made by Assessing Officer in relevant previous year for computing book profit for purpose of section 115JB. Hence, Grounds 1 and 2 of revenue are dismissed. 6. In result, appeal of revenue is dismissed. To sum-up assessee's appeal is partly allowed for statistical purposes and revenue's appeal is dismissed. *** INDIAN OILTANKING LTD. v. INCOME TAX OFFICER