TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 154
X X X X Extracts X X X X
X X X X Extracts X X X X
...., "book profit" would mean the net profit as shown in the profit and loss account for the relevant previous year prepared under subsection( 2) as increased by "the amount or amounts set aside as provision for diminution in the value of any asset". The judgement of the Supreme Court in case of Commissioner of Income Tax v. HCL Comnet Systems and Services Ltd. reported in (2008) 305 ITR 409(SC), holds the field on the question of adding back the provision made towards irrecoverability of bad debts for the purpose of computing book profit, in which it was held that any provision made towards irrecoverability of debts cannot be said to be a provision for liability. The decision of the Supreme Court in case of HCL Comnet Systems and Services Ltd....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ory notes leading to the said amendment does not refer to the decision of the Apex Court in the case of HCL Comnet Systems and Services Ltd. (supra). This, however, would not in any manner take away the fact that by virtue of clause (g) to the explanation, the said decision would no longer apply in the present case since the Apex Court had examined the position from the angle of the existing statutory provisions. 17.0 We are unable to see any demarcation between the provisions which would reduce the value of the assets against a situation where the value of the assets may come down to 'Nil'. In either case there would be diminution in the value of assets. Even when the value of the assets is brought down to 'Nil' from the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch. 4. Having perused both the judgements in cases of Deepak Nitrite Limited(supra) and Indian Petrochemicals Corporation Ltd. (supra), we find that there is a conflict between the two judicial pronouncements between two Division Benches. One takes a view that by virtue of insertion of clause(i) to explanation(1) of subsection( 2) of section 115JB, any provision for bad and doubtful debts would have to be added while computing the income of the assessee for MAT provisions. The other taking a view that provision for bad and doubtful debts not being ascertained, liability cannot be added back with the aid of clause(c) to explanation(1) of subsection( 2) of section 115JB of the Act. 5. Learned counsel for the assessee however, submitted that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion for bad and doubtful debts made in the account of the assessee. The Supreme Court held and observed that said explanation would not govern a situation where there was an actual write off by the assessee in his books in the manner explained in the judgement. Counsel for the assessee would therefore, contend that in the present case also the same legal philosophy would apply and clause(i) of explanation below subsection( 2) of section 115JB would not come into play. 7. Undisputedly, the decision of the Supreme Court in case of Vijaya Bank (supra), was not rendered in context of newly inserted clause(i) of explanation(1) below subsection( 2) of section 115JB. In that sense it cannot be said that the decision of this Court in case of Deep....