TaxTMI 
TaxTMI 
2016 (4) TMI 380
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.... have been assessed as income from business and the authorities below were not justify to tax such income under the head other sources. At any rate without prejudice the interest income assessed under the head other sources is very excessive. 4. That without prejudice to ground No.3 above, if the interest income is treated as income from other sources, the same deserves to be adjusted first against the business loss of this year and therefore, from this angle also, the income tax levied on interest income was duly illegal. 5. That the levy of interest under section 234B is illegal and at any rate, without prejudice wary excessive. 6. That the appellant reserves its right to add, amend/modify the grounds of appeal. 3. In ITA No.3064/Del/2012 the assessee has raised the following grounds:- 1. That no justification subsisted on the part of the authorities below to hold that provision for bad and doubtful debts amounting to Rs. 599044/-- was to be added back while working out the profit u/s 115JB of the income tax act. 2. That the income declared by the salons u/s 115 JB of the income tax act ought to have been accepted and made the basis of assessment. At any rate without prejud....
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....t in the case of CIT Vs. Yokogawa India Ltd 17 Taxmann.com 15. Therefore the assessee is in appeal before us. 8. . The ld AR of the assessee submitted that the assessee has debited to profit and loss account Rs.I0275041 - and has also reduced this amount from sundry debtors. For this he drew our attention to Page 8 of the Paper book wherein under the head "Administrative and other cost" same is reflected. He also submitted that in Schedule E of the Annual Account shows that this amount has been reduced from the sundry debtors. He further submitted that now the issue is squarely covered in favour of the assessee by decision of the Hon'ble Karnataka High Court in the case of CITVs. Yokogawa India Ltd. 9. Against this the ld DR relied on the orders of the lower authorities and submitted that as the language of law is very clear the amount is rightly added by the AO and confirmed by the learned Commissioner of Income-tax (Appeals). 10. We have carefully considered the rival contention. Accordingly with retrospective effect from 1-4-2001 the clause (i) to explanation [1] of section 115JB (2) has been inserted which provided for increasing the book profit of the assessee by amount....
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....d and doubtful debts, is only to provide for a possible non-recovery of the debt; according to the companies, a provision made for the diminution in the value of the debt due to possible non-recovery or the debt going bad cannot be treated as a provision made for meeting an unascertained liability. The matter ultimately reached various Benches of the Income-tax Appellate Tribunal and on account of the importance of the issue, a Special Bench of the Tribunal was constituted which ruled in Joint CIT v. Usha Martin Industries Ltd. [2006J 105 ITJ (Kol.) 543 (SB) ; [2007J 288ITR (AT) 63 (Kol) [SBJ that such a provision cannot be considered as a provision for meeting an unascertained liability and that in truth and substance it was a provision for the diminution of the value of the debt and, therefore, it fell outside clause (e) of the Explanation and the book profit cannot be increased by the amount of the provision. This view of the Special Bench of the Tribunal was upheld by the Delhi High Court in a case where a similar issue had arisen and this judgment is reported as CIT v. Eicher Ltd. [2006J 287ITR J 70 (Delhi). The controversy was eventually resolved by the Supreme Court in the j....
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....d to be a provision for liability. " 4. After the judgment of the Supreme Court was rendered in favour of the company-assessees, the Finance (No.2) Bill, 2009, was introduced in the Lok Sabha on July 6, 2009, to give effect to the financial proposals of the Central Government for the financial year 2009-10. The Bill proposed an amendment to section 115JB as follows (see page 85 of 314 ITR (St.) ; "45. Amendment of section 115JB-In section 115JB of the Income-tax Act,- (a) in sub-section (1), with effect from the 1st day of April, 2010, (i) for the words, figures and letters 'the 1st day of April, 2007', the words, figures and letters 'the 1st day of April, 2010' shall be substituted; (ii) for the words 'ten per cent.', at both the places where they occur, the words 'fifteen per cent. ' shall be substituted; (b) in sub-section (2), after the second proviso, in Explanation 1, after clause (h), for the words, brackets and letters 'if any amount referred to in clauses (a) to (h) is debited to the profit and loss account, and as reduced by', the following shall be substituted and shall be deemed to have been substituted with effect fro....
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....ome-tax Act provides for levy of minimum alternate tax (MAT) on the basis of book profits of a company. As per Explanation 1 after sub-section (2), the expression 'book profit' means net profit as shown in the profit and loss account prepared in accordance with the provisions of Part II and Part III of Schedule VI to the Companies Act, 1956, as increased or reduced by certain adjustments, as specified in that section. It is proposed to insert a new clause (i) in Explanation 1 after sub- section (2) of the said section so as to provide that if any provision for diminution in the value of any asset has been debited to the profit and loss account, it shall be added to the net profit as shown in the profit and loss account for the purpose of computation of book profit. Similar amendment is also proposed in section 115JA of the Income-tax Act by way of insertion of a new clause (g) in the Explanation after sub-section (2) of the said section. The amendment to section 115JA is proposed to be made effective retrospectively from 1st day of April, 1998, and will, accordingly, apply in relation to the assessment year 1998-99 and subsequent years. The amendment to section 115J....