2023 (9) TMI 1740

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.... the Assessing Officer (AO) under Section 147/143(3)/263 of the Income Tax Act, 1961 (the Act) concerning Assessment Year 2011-12. 2. The ground of appeal raised by assessee reads as under: "1. On the facts and in the circumstances of the case and in law, the Ld. CITA) has erred in deleting the addition to book profits of Rs. 4,12,23,820/- on account of provision for Bad Debts." 3. Briefly stated, the case of the assessee was re-opened under Section 148 read with Section 147 of the Act for the reason that 'book profits' declared by the assessee for the purpose of MAT provisions of Section 115JB was alleged to be under reported by making wrong claim towards provision for doubtful loans and advances/debts since the same wa....

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....ide of balance sheet. Only the nomenclature used was 'provision for bad debts'. Hence, it was not just a provision but an actual write off of bad debts and very much allowable in view of decision of the Supreme Court in Vijaya Bank Vs. CIT [2010] 323 ITR 166 (SC). However, it was added back in computation of normal profit inadvertently and the appellant has also paid tax on this without agitating. 6.4 However, it has agitated adding back of this amount in the book profit. It submitted that invoking of 115JB(2) explanation 1(c) as unascertained liabilities by the AO is not correct because bad debts are receivable and not payable amounts. Writing off /provision for bad debts does not create liabilities. Therefore, there is no....

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...., it is not hit even by Sec. 115JB(2) explanation 1(i). 6.7 Keeping in view the finding of facts as above and judicial decisions relied on by the appellant, the addition does not appear justified. The same is deleted. The ground is allowed." 6. Aggrieved by the relief granted by the CIT(A), the Revenue has preferred appeal before ITAT. 7. We have considered the rival submissions and perused the first appellate order as well as the re-assessment order and other material placed on record. The case laws referred to and relied upon in course of hearing have also been taken into account. 8. On perusal of the re-assessment order, it is observed that the AO has referred to Clause-(c) to Explanation 1 appended to Section ....