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Issues involved: Appeal against order relating to Assessment Year 1998-99 challenging disallowance of provision for diminution in the value of investments u/s 115JA of the I.T. Act.
Summary: The appeal was filed by the Revenue against the order of the ld. CIT(A) upholding the disallowance made by the Assessing Officer on account of provision for diminution in the value of investments while calculating income u/s 115JA of the I.T. Act. The assessee had excluded the income from diminution in the value of investments at a specific amount while computing income under Section 115JA, which the Assessing Officer disagreed with. The Ld CIT(A) also upheld the action of the Assessing Officer, stating that the provision made for diminution in the value of shares is not an ascertained liability. The assessee argued that the provision of diminution in the value of assets is outside the scope of the explanation to section 115JA of the I T Act and cited relevant case law in support. The Tribunal, after considering the submissions and relevant legal positions, held in favor of the appellant, stating that the provision for bad and doubtful debt is not a provision for liability but for diminution in the value of assets, and thus, the grounds raised by the appellant were allowed. The appeal filed by the appellant was ultimately allowed. This judgment highlights the interpretation and application of provisions related to the calculation of income under Section 115JA of the I.T. Act, specifically concerning the treatment of provisions for diminution in the value of investments. The Tribunal's decision was based on the conformity of the appellant's computation of book profit with the decision of the Special Bench of the Tribunal, emphasizing the distinction between provisions for liability and diminution in asset value in determining taxable income.
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