TaxTMI 
TaxTMI 
2014 (8) TMI 972
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....ofit and loss account, has claimed the deduction for provision for bad and doubtful debts at Rs. 13,62,479. 3. The Assessing Officer held that in terms of Explanation (c) to the second proviso to section 115JA, the provision for unascertained liabilities is to be added to the book profit and it cannot be claimed as deduction. In so far as certain bad debts that have been claimed separately in the profit and loss account as bad debts, the same were written off. Since the provision for bad debts does not represent any ascertained liability, in the case of the assessee, the Assessing Officer added the same to the net profit as per the profit and loss account for the purpose of computing book profit in terms of section 115JA and that order w....
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....al before the Income-tax Appellate Tribunal and the Tribunal relied upon the larger Bench decision of the Income-tax Appellate Tribunal, Calcutta, in the case of Joint CIT v. Usha Martin Industries Ltd. reported in [2006] 105 TTJ 543 (Kolkata) wherein the Calcutta Tribunal came to the conclusion that clause (c) of the Explanation to section 115JB is not applicable to the provision for doubtful debts. Paragraph 3 of the order is reproduced hereunder: "3. A similar issue was considered by the Special Bench of the Income-tax Appellate Tribunal, Calcutta, in the case of Joint CIT v. Usha Martin Industries Ltd. [2006] 105 TTJ 543 (Kolkata), wherein it h....
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.... provision for bad and doubtful debts could not be added back, without taking into account the amendment made by the Finance (No. 2) Act, 2009, with effect from April 1, 1998, with the insertion of clause (i) under Explanation 1 to section 115JA/115JB ?" 8. We have put the learned counsel for the respondent on notice on the above plea and heard both the counsel. 9. Mr. T. S. Ravikumar, learned counsel for the Revenue, contended that clause (c) of the Explanation to section 115JB is applicable to the facts of the present case and placed reliance upon the judgment in Tax Case (Appeal) No. 2511 of 2006, dated October 30, 2012, wherein, similar question of law was answered in favour of the Revenue. &....
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....reported in CIT v. ILPEA Paramount P. Ltd. [2011] 336 ITR 54 (Delhi), which considered the effect of insertion of clause (g) in the Explanation contained in section 115JA(2) of the Income-tax Act, 1961, with retrospective effect from April 1, 1998. As regards the provision for gratuity, it held that it could not be added to the book profits. The Delhi High Court pointed out that by virtue of the Finance (No. 2) Act, 2009, clause (g) has been inserted in the Explanation in section 115JA(2) of the Income-tax Act with retro spective effect from April 1, 1998, and the provision for doubtful debts and the provision for doubtful advances which are nothing but pro vision for diminution in the value of the asset, are specifically covered under clau....
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.... will accordingly apply in relation to the assessment year 1998-99 and sub sequent years. The amendment to section 115JB has been made applicable with retrospective effect from April 1, 2001, and will accordingly apply in relation to the assessment year 2001-02 and sub sequent years." 12. The objection raised by the learned counsel for the respondent-assessee that this amendment would come into effect for the assessment year 1999- 2000 cannot be sustained as evidenced from the reading of section 115JA itself, i.e., deemed income relating to certain companies that "where in the case of an assessee, being a company, the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or ....