TaxTMI 
TaxTMI 
2012 (4) TMI 855
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....ct. 3. The facts relating to the said issue are stated in brief. The ld. CIT noticed that the assessee has created a provision for doubtful debts to the tune of Rs. 84,18,720/-. But the same was not added to the net profit while computing the "Book Profit" u/s 115JB of the Act. It is also pertinent to note that the AO also did not notice/examine the same. The Ld. CIT took the view that the above said provision has been made towards unascertained liability and hence the same is liable to be added to the book profits. Accordingly, he set aside the assessment order with the direction to re-do the assessment in the light of discussions made in the revision order passed by him. The assessee is aggrieved by the order of Ld. CIT and hence is in appeal before us. 4. The Ld. CIT has considered the provision for doubtful debts as unascertained liability. It is pertinent to note that the Finance (No. 2) Act, 2009 has inserted clause (i) after clause (h) to Explanation 1 to sec. 115JB with retrospective effect from 1.4.2001. According to the said clause (i), the amount or amounts set aside as provision for diminution in the value of any asset is required to be added to the net profit in ....
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....to sec. 115JB. The Ld. A.R also drew our attention to the decision dated 29-08-2011 rendered by Hon'ble Karnataka High Court in the case of CIT vs. M/s Yokogawa India Ltd in ITA No. 1062 of 2008, wherein the High Court has held that the Explanation to Sec. 115JB is not attracted if the bad debt or doubtful debt is reduced from the loans and advances or the debtors from the asset side of the Balance sheet. Accordingly, the Ld. A.R contended that the view entertained by the ld. CIT is unsustainable in law and hence the revision proceeding initiated by him u/s 263 is not valid. 8. On the other hand, the Ld. D.R strongly placed her reliance on the order passed by Ld. CIT. 9. We have heard the rival contentions and carefully perused the record. The scope of revision proceedings initiated under section 263 of the Act was considered by Hon'ble Bombay High Court, in the case of Grasim Industries Ltd. V CIT (321 ITR 92) by taking into account the law laid down by the Hon'ble Supreme Court. The relevant observations are extracted below: Section 263 of the Income-tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act ....
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....295 ITR 282." 10. In the instant case, the AO did not examine the applicability of provisions of sec. 115JB in respect of the amount debited to the Profit and Loss account under the head "Provision for doubtful debts". In the Profit and loss account, it is grouped under the head "Administrative and Other expenses". The contention of the assessee is that though the AO did not examine the same, yet the view entertained by the ld. CIT is not sustainable in law. For this proposition he has placed strong reliance on the decision of Hon'ble Supreme Court in the case of Vijaya Bank, supra. He has also drawn support from the decision of Hon'ble Karnataka High Court in the case of M/s Yokogawa India Ltd, supra. 11. We notice that the decision of Hon'ble Supreme Court in the case of Vijaya Bank was rendered in the context of the provisions of sec. 36(1)(vii) of the Income tax Act. After April 1, 1989, the assessee has to actually write off the debt as bad in his books of account in order to claim deduction of bad debts u/s 36(1)(vii) of the Act. The question that was raised before the Hon'ble Apex Court in the context of sec. 36(1)(vii) of the Income tax Act was "whether the reduction ....
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....e methodology adopted by the assessee therein amounts to actual write off of debt which has become bad. In the instant case, we are concerned with the provisions of sec. 115JB of the Act. In view of the particular principles of interpretation discussed above, we are of the view that it is not permissible to logically extend the ratio of the decision of Hon'ble Supreme Court in the case of Vijay Bank, supra for the purpose of interpreting sec. 115JB of the Act. If we so extend, it may not work in the instant case. We shall explain the reasons in the ensuing paragraphs. 13. Under the provisions of sec. 115JB of the Act, the assessee is required to prepare the Profit and Loss account for the purposes of sec. 115JB in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956. When the Profit and Loss account is prepared in accordance with the Companies Act, in our view, the meaning of the terms "amount or amounts set aside as provision for diminution in the value of any asset" has to be understood only in accordance with the Companies Act. The term "Provision" has been defined in Part III to Schedule VI as under:- "7. (1) For the purposes ....
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....se its jurisdiction. It has further been held that the decision of the High Court does not extend beyond its territorial jurisdiction. The relevant discussion on the binding nature or otherwise of the judgment of a non-jurisdictional High Court has been made in paragraph (d) as under (page 738 of 206 ITR): "(d) The decision of one High Court is neither binding precedent for another High Court nor for courts or Tribunals outside its own territorial jurisdiction. It is well-settled that the decision of a High Court will have the force of binding precedent only in the State or territories on which the court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have only a persuasive effect. By no amount of stretching of the doctrine of stare decisis can judgments of one High Court be given the status of a binding precedent so far as other High Courts or courts or Tribunals within their territorial jurisdiction are concerned. Any such attempt will go counter to the very doctrine of stare decisis and also the various decisions of the Supreme Court which have interpreted the scope and ambit thereof. The fact that there is o....