2020 (10) TMI 1343 - AT - Income Tax

Disallowance of Provision on Foreseeable Losses u/s 115JB - HELD THAT - Upon perusal of the order dated 01/03/2018, it is quite discernible that a finding has been rendered by the bench in the order that the determination of foreseeable loss was fair, proper and justified. Finally, the matter was concluded in assessee s favor in wherein it was held that claim of provision for foreseeable losses for Rs.201.01 Lacs was an allowable claim. This being so, the provisions could not be termed as unascertained liabilities for the purpose of computing Book Profits u/s 115JB. Therefore, the same was not to be added back while computing Book Profits u/s 115JB. Ground stands allowed in assessee s favour.

Summary

Issues:
Disallowance of Provision on Foreseeable Losses under Section 115JB of the Act.

Analysis:
The appeal was recalled to adjudicate Ground No. 4, which pertained to the disallowance of provision for project losses under Section 115JB of the Act. The assessee contended that the disallowance was unjustified and should be allowed. The Authorized Representative for Assessee argued that the disallowance was made while computing income under normal provisions and Book Profits u/s 115JB. The Coordinate Bench had already ruled in favor of the assessee regarding Ground No. 3 in a previous order. The AR emphasized that since Ground No. 3 was decided in favor of the assessee, Ground No. 4 should also be decided likewise. The Tribunal found that the provision for foreseeable losses was fair and justified, concluding that it was an allowable claim and not to be added back while computing Book Profits u/s 115JB. Therefore, Ground No. 4 was allowed in favor of the assessee, and the appeal was allowed.

The judgment highlighted the importance of proper adjudication of grounds raised by the parties. The Tribunal carefully considered the arguments presented by both the Authorized Representative for Assessee and the Departmental Representative. The decision was based on the interpretation of provisions related to the disallowance of provision for project losses under Section 115JB of the Act. The Tribunal's analysis focused on the fairness and justification of the provision for foreseeable losses, ultimately leading to a favorable outcome for the assessee. The judgment serves as a reminder of the significance of thorough examination and interpretation of relevant legal provisions in tax matters to ensure a just and equitable decision.