TaxTMI 
TaxTMI 
2021 (1) TMI 413
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.... the appeal pertains to the Assessment year 2009-10. The appeal was admitted by a bench of this Court vide order dated 27.02.2015 on the following substantial questions of law: "(i) Whether the Tribunal is justified in law in holding that the appellant is not entitled to the reduction of the amount of Rs. 14,77,53,747/- credited to the profit & loss account on account of reversal of provision for bad and doubtful debts under section 115JB of the Act, on the facts and circumstances of the case? (ii) Without prejudice, whether the Tribunal in law failed to take note of the fact of retrospective amendment by Finance (No.2) Act, 2009 with effect from 01.04.2001, by which the computation of book profit as per MAT provisions req....
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....d is an undertaking of Government of Karnataka. The assessee is engaged in financing industrial units in the State of Karnataka. The assessee filed the return of income for the Assessment Year 2009-10 on 30.09.2011 declaring 'NIL' income under normal provisions of the Act. Thereafter, the assessee returned income of Rs. 13,60,88,457/- under the provisions of Section 115JB of the Act. The return of the assessee was selected for scrutiny and assessment was completed under Section 143(3) of the Act. The Assessing Officer vide order dated 21.11.2011 determined the loss at Rs. 1,73,60,700/- under the normal provisions of the Act and determined the book profits under Section 115JB of the Act at Rs. 30,01,07,991/-. 3. The assessee there....
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....btful debts to the net profits for the purpose of computation under Section 115JB of the Act in the years prior to insertion of clause (i) to Explanation to Section 115JB of the Act as those years have already elapsed and the assessee cannot give effect to a provision, which was inserted at a later point of time. 5. Alternatively, it is submitted that the assessee could not have added back the provision for doubtful debts to the net profit as even if the same is added to the net profits, the resultant book profit is still negative. It is also contended that though the assessee was prevented from adding back the provision for bad and doubtful debts to the net profit due to reasons beyond its control, it has at the first subsequent opportu....
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....ure incurred on the exempt income has been calculated under Rule 8D of the Rules. It is also urged that he provisions of Section 115JB of the Act are attracted in the fact situation of the case. It is also argued that Section 10(2A) of the Act exempts income of a person being partner of a firm being separately assessed and its share in the total income of the firm, whereas, Section 10(35) exempts income exempts income by way of units of mutual funds. It is also contended that income referred to in Section 10A of the Act is exempt and income not includable in total income referred to in Section 14A is with respect to exempt income under Section 10 of the Act. Therefore, any expenditure incurred for earning the exempt income under Section10 o....
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....It is also contended that clause (i) in Explanation to Section 115JB(2) has been inserted by Finance Act, 2009 with retrospective effect i.e., from 01.04.2001 and therefore, no fault can be found with the view taken by the authorities. It is also urged that the decisions relied upon by the learned Senior counsel for the assessee were rendered prior to 2009. 8. We have considered the submissions made by learned counsel for the parties and have perused the record. The Supreme Court in 'CIT VS. HCL Comnet Systems and Services Ltd.', (2008) 305 ITR 409 (SC) held that provisions for bad and doubtful debts cannot be added under Explanation to Section 115JB of the Act. In order to ensure that provision for bad and doubtful debts debited....