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2022 (3) TMI 567

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....u/s 12A of the I.T. Act, 1961. The assessee has also been granted approval u/s 80G(5)(vi) by DIT(E). Assessee filed its return of income for A.Y. 2014-15 on 03.11.2014 declaring Nil income. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 22.12.2016 and the total Excess of Income over Expenditure was computed at Rs. 5,74,04,860/- by inter alia disallowing the claim of provision for doubtful debts amounting to Rs. 3,32,58,322/-. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 01.01.2018 in Appeal No.269/2016-17 granted substantial relief to the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before us and has raised....

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....ebts written off and not of doubtful debts in respect of which a provision is created purely on the basis of estimation and apprehensions. He accordingly disallowed the amount of Rs. 3,32,58,322/- as application of income. 6. Aggrieved by the order of AO, assessee carried the matter before CIT(A). Before CIT(A), it was inter alia submitted that the amount claimed as deduction was a quantified and ascertained amount and it was with respect to the outstanding from various individuals institutes which could not be recovered by the assessee for the year altogether and therefore it was written off after seeking the approval governing body. It was further submitted that though the claim was described as "provision for doubtful debts" but in fact....

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....ovisions based on estimation and appreciations. As regards the judgment of the Supreme Court it was submitted that the same pertained the provisions of section 115JA which provided for the provisions for doubtful debts to be included in the figure of books profit. Reliance has also been placed on the decision of the Hon'ble Delhi High Court in the case of DIT(E) Vs. NASSCOM (supra) regarding allowability of provisions of doubtful debts. 5.2.2 The Hon'ble Delhi Court, in the case of DIT (E) vs. NASSCOM (supra) relied upon by the appellant have observed as under: "40. ...Be that as it may, under the commercial principles it has always been recognized that a provision, reasonably made for a loss or an outgoing, can be deducted fr....

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....leted since the income available for application to charitable purposes is to be computed in accordance with commercial principles. Ground of appeal no. 2 is allowed." 8. Aggrieved by the order of CIT(A), Revenue is before us. 9. Before us, Learned DR supported the order of AO. 10. Learned AR on the other hand reiterated the submissions made before the lower authorities and supported the order of CIT(A). 11. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the denial of claim of Rs. 3.32 crores (rounded off) as application of income on account of provisions for doubtful debts. We find that CIT(A) after considering the submissions of the assessee has giv....