TaxTMI 
TaxTMI 
2016 (3) TMI 212
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.... the assessment year 2009-10. 2. In this case, assessment was completed u/s 143(3) on 13/12/2011 determining the total income at Rs. 1,25,09,850/-. Subsequently, the AO proposed to rectify a mistake in the order by invoking the provisions of sec.154 on the issue of claim of bad debts written off of Rs. 98,00,327/-. The assessee objected to the contemplated action of the AO in disallowing the claim of bad debts written off by the assessee by filing the letter dated 18/11/2013. The AO did not accept the contention of the assessee and disallowed the claim of Rs. 98,00,327/- by passing the order dated 20/1/2014 u/s 154. 3. The assessee challenged the action of the AO before the CIT(A) and submitted that this amount of Rs. 98,00,327/- was ....
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....ade by the assessee in the assessment year 2004-05 and was written off during the year under consideration. Thus, during the year under consideration, assessee has reversed the provisions to the extent of Rs. 98,00,327/- in the books of account. However, same amount has been claimed as bad debt written off in the computation of income. He has also referred to the affidavit filed by the assessee in this respect and submitted that the assessee has stated on solemn oath that no new document or evidence was filed in support of the claim before the CIT(A) but the documents and evidence which were filed before the assessing authority were placed before the CIT(A). Thus, learned AR of the assessee has submitted that the entire relevant document an....
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.... Y. 2004-05 marked as annexure-3. c. To treat the amount as bad debts, as per the accounting principles, the amount' created as provision earlier has to be reversed and the same amount has to be charged off to profit and loss account. The company has adopted the same principles and accordingly reversed the earlier provisions made towards the doubtful debts amounting to Rs. 98,00,327/- by crediting the same to profit and loss account under the other income and at the same time written off the debtors who have become bad from the books by transferring the same to profit and loss account as bad debts. d. The effect of the above entries in the profit and loss account is contra since it is already accounted as an expense in....
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....l of provision. An alternate way to represent would have been to shows as reduction from taxable profit the Reversal of Provision of Rs. 98,00,327/- and not claim a deduction in computation of the Bad debts written off of Rs. 98,00,327/-. The net effect of the final taxable income/loss would have been the same. Thus, there is no error in the taxable income/loss computed as per the assessment order". It is clear from the reply filed by the assessee that the assessee has duly explained that during the financial year 2003-04 relevant to assessment year 2004-05, assessee-company made a provision for bad and doubtful debts of Rs. 1,32,94,600/- and debited same to the profit and loss account but the assessee did not claim said amount in the re....
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....red to establish that debts actually gone bad once the assessee has written off the amounts in the books of account. The CIT(A) has allowed the claim of the assessee by taking note of the fact that in the books of account, assessee has made entries in respect of reversal of provision for bad and doubtful debts made in the assessment year 2004-05. Therefore, in view of the above facts and circumstances of the case, we do not find any error or illegality in the impugned order of the CIT(A). The same is upheld. 7. In the cross objections the assessee has raised the only ground as under: "The Commissioner of Income-tax-Appeals has erred in not giving an order in respect of ground No.3 of Form 35 (filed with CIT(A)-III dated 21st Feb....