9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2000 (3) TMI 37 - MADRAS HIGH COURTExtract: .......ot able to agree with the conclusion arrived at by the Tribunal in directing the assessing authority to rectify the alleged mistake of inclusion of the unascertained liability in the book profit and communicating the same to the respondent under section 143(1)(a) of the Act. In the result, this appeal is allowed. There will be no order as to costs.
Issues involved: Appeal against disallowance of provision for doubtful debts under section 115J of the Income-tax Act, 1961 for the assessment year 1989-90.
Summary: The respondent company filed its return of income showing a provision for doubtful debts of Rs. 46,64,750, claimed as exempt from taxable profit. The Deputy Commissioner disallowed the provision, stating it was not for ascertained liabilities as per section 115J(1)(c) of the Act. The respondent filed a petition under section 154 for rectification, which was refused. The Commissioner of Income-tax (Appeals) upheld the disallowance, leading to an appeal before the Income-tax Appellate Tribunal. The Tribunal found the issue debatable and directed the assessing authority to rectify the mistake under section 154. The main contention was whether the provision for doubtful debts was an ascertained liability under section 115J. The respondent argued the provision should be sustained, while the appellant contended it was not an ascertained liability and should be included in the book profit. The Tribunal allowed the appeal, leading to the current appeal before the High Court. The High Court analyzed relevant legal principles and previous court decisions. It held that a provision for unascertained liability cannot be excluded from book profit under section 115J. Citing Supreme Court decisions, the Court emphasized the distinction between reserves and provisions for known liabilities. The Court disagreed with the Tribunal's decision and allowed the appeal, stating the assessing authority was correct in including the provision in the book profit. In conclusion, the High Court allowed the appeal, with no order as to costs.
|
