TaxTMI 
TaxTMI 
2014 (1) TMI 305
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....or addition, while computing book profit under Section 115JA of Income-tax Act, 1961 (in short 'the Act'), could not have been considered so, since such amounts were reduced from current assets. 2. Appeal has been filed by the assessee with a delay of 11 days. Condonation petition has been filed. Reasonable grounds have been shown for the delay. Learned D.R. did not object. Delay is condoned and appeal is admitted. 3. In respect of additional ground, learned A.R. submitted that such ground was omitted from the original grounds only due to inadvertence. Learned D.R. did not have any objections to the admission of the additional ground. We therefore admit the additional ground filed by the assessee. 4. Facts apropos are that assessee had f....
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....vis claim of provision for bad and doubtful debts, ld. CIT(Appeals) held that though Apex Court in the case of CIT v. HCL Comnet Systems & Services (305 ITR 409) took a view that similar provisions were only for diminution in value of assets, Parliament had, by Finance Act, 2009, inserted clause (i) in Explanation 1 to Section 115JA of the Act with retrospective effect from 1st April, 2001, which nullified the effect of the decision of Hon'ble Apex Court. Therefore, according to him, the addition for provision for bad and doubtful debts was rightly done by the Assessing Officer while computing the 115JA profits. However, he did not give any specific finding on the ground taken by the assessee that such provisions were in fact bad debts writ....
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....f bad debt, wrongly classified by the assessee. According to learned A.R., a wrong classification could not be a reason for making an addition. 7. Per contra, learned D.R., strongly supporting the orders of authorities below, submitted that assessee having itself shown the amount as provision for bad and doubtful debts, could not now turn around and say that it was actually a claim of bad debts. 8. We have perused the orders and heard the rival submissions. Insofar as reopening is concerned, we are of the opinion that assessee having never asked for the reason from Assessing Officer, cannot now say that there was no reason for such reopening. No doubt, if the assessee had asked such reason, Assessing Officer was bound to give such reason ....
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....ssee called the amount a provision, what was effectively done was only a write-off of bad debts. Hon'ble Apex Court in the case of Vijaya Bank (supra) has held that where there is a debit in the Profit & Loss account as provision for bad and doubtful debts, but if a corresponding amounts stood obliterated from loans and debts on the asset side of the balance sheet, it is not necessary for the assessee to show that the write-off is effected in each and every individual account of the debtors. We are of the opinion that this decision of Hon'ble Apex Court comes to the aid of the assessee. Nevertheless, the said decision was given in the context of claim under normal provisions of the Act, viz. Section 36(1)(vii) of the Act. However, as pointe....