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TMI Blog2009 (12) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 17.03.2003 determining the total income at Rs.54,24,140/- raising a demand of Rs.26,11,025/-. On perusal of records, the Commissioner of Income Tax noted that while computing the book profits under section 115JB of the Act, errors have been occurred. Hence, the assessment already made by the assessing officer found to be erroneous and prejudicial to the interest of the revenue and directed the assessing officer to modify the assessment order, adding back the provision for non-performing assets and investments, and also lease equalisation charges, to the profits of the assessee company. The Commissioner of Income Tax directed the assessing officer to disallow the deduction under section 80HHC of the Act as the profit as per the normal c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Appellate Tribunal, Madras 'C Bench, dated 27.02.2009 made in I.T.A.No.1177/Mds/2008 for the assessment year 2000-2001, by formulating the following question of law : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in quashing the order passed under section 263 of the Income Tax Act, 1961, even though the assessing officer without application of mind, passed an order, would be erroneous if it is based on an incorrect assumption of facts or incorrect application of law or based on no sufficient materials on record?" 2. The facts are: The assessee company dealing in hire purchase, financing, equipment leasing and general financing, filed its return of income for the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal, the revenue has preferred this appeal by formulating the question of law stated above. 3. We heard Mr.T.Ravikumar, learned standing counsel for the Income Tax Department and perused the materials available on record. 4. On a perusal of the order of the Tribunal, it is evident that the Tribunal has followed the judgment of the Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT, (2000) 243 ITR 83 (SC), wherein the apex Court held that when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f), which if debited to the profit and loss account can be added back to the net profit for computing the book profit. The provision for bad and doubtful debts can be added back to the net profit only if item (c) of the Explanation is attracted. Item (c) deals with amounts set aside for meeting liabilities other than ascertained liabilities. The assessees case can fall within the ambit of item (c) only if the amount (i) is set aside as a provision, (ii) the provision is made for meeting a liability, and (iii) the provision should be for other than an ascertained liability, i.e., it should be for an unascertained liability. Item (c) of the Explanation to section 115JA is not attracted to the provision for bad and doubtful debts. The provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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