TaxTMI 
TaxTMI 
2017 (6) TMI 1386
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....of income declaring total income of Rs.NIL on 30.09.2008 and subsequently revised the return of income was filed and admitting the total income of Rs.7,81,94,570/- on 31.03.2010. The assessment was completed accepting the revised return of income on 28.12.2010. Subsequently, the assessment was re-opened u/s.147 the act to examine the claim of deduction u/s.36(i)(vii)(a). The AO re-opened the assessment as per the reasons recorded in Page No.2 of the Assessment Order as under: It was observed from profit and loss account for the year ended 31.03.2008 relevant to A.Y.2008-09 that provision for bad debts was made in the profit and loss account to the extent of Rs.8,74,58,800/- as NPA provisions. However, deduction u/s.36(i)(vii)(a) was claim....
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....nt made u/s.143(3) dated 28.12.2010 and give a categorical finding with regard to the deduction u/s.36(1)(viia). The AO cannot re-open the assessment on the same reason which was already considered by him in the Assessment Order originally passed. The issue with regard to the provisions for bad and doubtfulness claimed u/s.36(1)(viia) was examined by the AO and the consequent audit objection would amount to interpretation of law. The audit party is barred from interpretation of law as per the settled case laws. Therefore, Ld. Counsel vehemently opposed that the issue of notice u/s.148 is mere change of opinion required to be quashed. On the other hand, the Ld.DR argued that though the AO discussed in the Assessment Order regarding the deduc....
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.... provision u/s.36(1)(viia) was brought to the notice of the AO by Audit Party of the Income Tax Department and consequent to the audit objection, the AO re-opened the assessment by issue of notice u/s.148. The assessee has made the provision for Rs.7,72,84,858/- and claimed the deduction of Rs.19,49,25,398/- which is patently appears to be incorrect. This factual position has not been considered by the AO at the time of assessment. As rightly relied upon by the Ld.DR on the Hon'ble Supreme Court judgment in the case of 237 ITR 30 re-opening of the case on the basis of factual error pointed out by the Audit Party is permissible under law. What is brought to the notice of the AO by the Audit Party was the factual error and it is a fact that t....
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....claim the deduction u/s.36(1)(viia). The Ld.Counsel contended that since the assessee has claimed the deduction u/s.36(1)(viia) from the existing NPA provisions which was brought forward, there is no case for making any addition by the AO. On the other hand, the Ld.DR argued that in the Income Tax proceedings of each year are independent and the income has to be computed in accordance with the system of accounting followed by the assessee for every year independently. The brought forward and spill over provisions cannot be considered for computing the income of the year under consideration unless and otherwise provided in the Income Tax Act. Even in Sec.36(1)(viia), the words used is in respect of any provision for bad and doubtfulness debt....
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....diture which is not debited to the Profit & Loss A/c in the year under consideration is permissible for deduction. In the instant case, the assessee has not debited the expenditure relating to the provisions for bad and doubtful debts. Therefore, the deduction u/s.36(1)(viia) is permissible to the extent of the amount debited to the Profit & Loss A/c or as per the permissible limits specified u/s.36(1)(viia) whichever is less. The contention of the assessee that the reserves already created in the earlier years is available in the books of accounts which remained unadjusted is not an acceptable proposition and not as per the Income Tax Act. This view is clarified by the CBDT in Circular No.17/2008 which was relied upon by the Ld.CIT(A) in P....