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2017 (8) TMI 1073 - GUJARAT HIGH COURTAddition of bad debts claim - Held that:- The claim of bad or doubtful debt would be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made in clause (viia) in case of an assessee to which such clause applies. The fact that clause (viia) applies to the assessee is not in dispute. However, Mr.Soparkar for the assessee submitted that the assessee had not claimed any part of the provision made for bad or doubtful debts in its account and that therefore the first proviso to clause (vii) in any case had no applicability. He submitted that the Assessing Officer therefore advisedly did not proceed on such basis and that the Commissioner of Income Tax (Appeals) erred in invoking the said provision. He would draw our attention to the observations of the Tribunal in the impugned judgment, in which, in this context, it was stated that proviso to section 36(1) (vii) refers to section 36(1)(viia) and the provisions made under such subclause which admittedly is not the case here. In our opinion if that is the case, reliance of the Commissioner of Income Tax (Appeals) on the proviso to section 36(1)(vii) also would be redundant. However, by way of abundant caution, it is clarified that while granting the deduction on the said sum of ₹ 11.72 crores it may be verified that the assessee is not in any manner, getting table deduction. Disallowance of excess provision returned back - Held that:- Section 41(1) of the Act in plain terms provides for adding back of an allowance or deduction which has been made by the assessee in any year in respect of loss expenditure or trading liability and subsequently during any previous year such liability ceases. The primary requirement of applicability of this provision therefore is where an allowance or reduction has been made in the assessment for any year in respect of such loss or expenditure or trading liability. When no such allowance or deduction was made, question of applicability of section 41(1) of the Act would not arise.
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