2018 (3) TMI 1919 - AT - Income Tax

Disallowance towards provision for loss on contract - HELD THAT - Since this issue is pending before the AO for the A.Y. 2009-10 therefore we set aside the finding of the CIT(A) on this issue and remand this issue before the AO to decide the matter of controversy afresh in view of the direction raised by the Hon ble ITAT 2016 (7) TMI 270 - ITAT MUMBAI for the A.Y. 2009-10 - Accordingly this issue is decided in favour of the assessee against the revenue. Provision for doubtful debts while computing book profits u/s 115JB - HELD THAT - We are of the view that the claim of the assessee is liable to be allowed in the interest of justice. No distinguishable material has been produced before us. The claim of the assessee has been decided by following the law settled in M/S. VIJAYA BANK VERSUS COMMISSIONER OF INCOME TAX ANR. 2010 (4) TMI 46 - SUPREME COURT and YOKOGAWA INDIA LTD. 2011 (8) TMI 766 - KARNATAKA HIGH COURT . Taking into account all the facts and circumstances of the case we decide this issue in favour of the assessee against the revenue.

Summary

Issues Involved:
1. Disallowance of provision for loss on contract
2. Disallowance of provision for doubtful debts

Issue No. 1 - Disallowance of provision for loss on contract:
The assessee challenged the disallowance of an amount towards provision for loss on contract. The Commissioner (Appeals) confirmed the disallowance, leading to the assessee filing an appeal. The Tribunal noted that a similar issue was remanded before the AO in a previous year's case. Referring to the earlier order, the Tribunal set aside the finding of the CIT(A) and remanded the issue before the AO for fresh examination. The Tribunal decided this issue in favor of the assessee against the revenue.

Issue No. 2 - Disallowance of provision for doubtful debts:
The assessee contested the addition back of the provision for doubtful debts while computing book profits under section 115JB of the Act. The Tribunal observed that a similar provision had been allowed in a previous case by the ITAT, relying on decisions of the Supreme Court and the High Court. The Tribunal found no distinguishable material and decided in favor of the assessee against the revenue. The Tribunal allowed the claim of the assessee in line with the legal precedents cited. Consequently, the appeal filed by the assessee was partly allowed.

Conclusion:
Both issues raised by the assessee regarding the disallowance of provision for loss on contract and provision for doubtful debts were decided in favor of the assessee against the revenue. The Tribunal remanded one issue for fresh examination by the AO and allowed the other issue based on legal precedents. The appeals filed by the assessee were partly allowed in both cases.