TaxTMI 
TaxTMI 
2022 (2) TMI 974
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....ices for network planning, designing and ancillary services for telecom companies. The assessee filed its return of income for assessment year 2015-16 on 13-10-2016 declaring loss of Rs. 8,16,165/-. During assessment proceedings assessing officer observed from the Profit & Loss account¸ under the head 'Other expenses' an amount of Rs. 14,95,00,000/- debited to Profit & Loss account being provision for advance and another amount of Rs. 7,09,55,966/- being provision for trade receivables. Assessing Officer observed that assessee itself had disallowed the provision for advance of Rs. 14.95 crores in the computation of income but the provision for trade receivables was not added back. The assessing officer observed that provisions are not....
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....nies has raised no objections. Having regard to this decision, provision for bad debts, would be in accordance with the mandatory accounting standards a debit to the P&L account in respect thereof would be a proper charge against the profits and it would not be open for the AO to add back the same in absence of any qualificatory remark from auditors/shareholders of the company. Your honour's kind attention is drawn to the decision of the Supreme Court in the case of Vijaya Bank vs. CIT (323 ITR 166) (Refer Page A/o.9 of LPB) wherein it has been held that "where besides debiting the P&L account and creating a provision bad and doubtful debt, the assessee correspondingly / simultaneously obliterated the said provision fr....
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....ered the matter carefully. The dispute is regarding allowably of deduction on account of bad debts u/s.36(1)(vii). The AO disallowed the claim on the ground that the assessee had made only provision in the P&L account and had not actually written off individual debtor's account as required u/s.366(1)(vii) in view of the Explanation to the said section applicable from April 1, 2001. We however, find the this aspect has already been considered by the Hon'ble Supreme Court in the case of Vijaya Bank' (supra), in which it has been held that for allowably of deduction on account of bad debt it was not necessary for the assessee to close individual account of each debtor in its books suffice if the amount had been reduced from the deb....
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....tified in adding back the provision for bad and trade receivables under clause (c) of the Explanation to section 115JA for the purpose of computing book profit u/s. 115JA. it may also be mentioned that the Mumbai Tribunal In Maharashtra State Electricity Board v. JCIT (82 ITD 422) has also held that provision for bad and trade receivable is merely a provision for re-stating the value of assets and that it was not a provision for setting aside any amount to meet any liability. The same view is taken in the decision of the Delhi High Court in CIT v. Eicher Ltd. (287ITR 170). The Jurisdictional Tribunal' decision in the case of Tribunal Chemicals & Plastics India Ltd. v ACIT- 8(3) (ITA No.3338/M/2008) where it has been he....
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....multaneous reduction from the debtors account is made, then same amounts to writing off in the books of account and-should be allowed as deduction u/s.36(1)(vii). This principle has been reiterated by the Hon'ble Bombay Court in the case Tainwalla Chemicals and Plastics (supra)." In view of the foregoing, the appellant prays that the said assessment order be quashed as bad in law or m alternative, the disallowance made by the AO be deleted." 3. After considering the detailed submissions of the assesseeLd.CIT(A) dismissed the ground raised by the assessee with the following observations:- 5.2,8 The appellant's case is squarely covered by the facts of Elite Industries (supra). The fact that the appellant has not written of....
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....orders passed by the lower authorities. 6. Considered the rival submissions and material placed on record. We observe from the Profit & Loss Account submitted before us clearly indicate that the trade receivables which stood as on 31/03/2014 is substantially reduced as on 31/03/2015 which clearly indicates that assessee should have received the payment from the trade receivables or assessee must have written off the above said balances. From the P&L Account, the details submitted under the head 'Other expenses' which carried narration 'Provision for trade receivables'. However, when compared with the balance-sheet figure of trade receivables, it clearly indicate that assessee has actually wrote off the trade receivables and claimed ba....