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TMI Blog2014 (1) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... provision created for liabilities other than ascertained liabilities - the assessee itself found the ascertained liability for the year at Rs.5.25 crores and added back the balance amount of Rs.7.19 crores, in the same year it clearly shows that the provision to that extent was not towards ascertained liabilities - The CIT therefore was correct in directing the Assessing Officer to add Rs.7.19 crores to the book profit under the provisions of Explanation (c) of section 115JB(2) – Decided against Assessee. - ITA No. 3296/Mum/2006 - - - Dated:- 12-6-2013 - Shri Rajendra Singh And Shri Sanjay Garg,JJ. For the Appellant : Shri Nitesh Joshi For the Respondent : Shri S. D. Srivastava ORDER Per Rajendra Singh, AM:- These proceedings have arisen consequent to order of recall passed by the Tribunal vide order dated 20.5.2011 in MA No.617/M/2010 passed in relation to order of the Tribunal in ITA No.3296/M/2006. The Tribunal had earlier disposed off the appeal in ITA No.3296/M/2006 vide order dated 15.3.2007. The Tribunal in the said order had confirmed the jurisdiction of CIT for taking action under section 263 but had omitted to adjudicate the grounds raised on merit re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case from the perusal of order of CIT it is not clear as to whether interest had been paid till the date of acquisition of the asset or thereafter. Both the parties agreed that the issue may be restored to file of AO for fresh decision after necessary examination. We, therefore set aside the order of CIT on this point and restore the matter back to AO for passing a fresh order after necessary examination of the matter and after hearing the assessee. 3. The second dispute is regarding addition of Rs.7,19,49,950/- being provision for advertisement, sales promotion and distribution of expenses while computing book profit under section 115JB. The assessee in the relevant order had debited an amount of Rs.79.82 crores under the head of "advertisement and sale promotion". The said amount also included provision of Rs.12.44 crores. At the time of filing of return for the said year, the assessee wrote back an amount of Rs.7,19,49,950/- out of the said provisions and added to the total income in the computation of income filed along with return of income. The AO in the assessment order passed while computing book profit under section 115JB, had not added the sum of Rs.7,19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork awarded to the parties would be completed within the year but the work to the extent of Rs.7.19 crores had not been executed during the year and therefore, no liability had been incurred during the year to that extent which was the reason for writing back of the provision by the assessee. Thus it was clear that provision was towards unascertained liability and had therefore to be added to the profit under provisions to Explanation (c) to section 115JB(2) . The ld. AR for the assessee in reply could not controvert the said claim of the ld. DR. 4. We have perused the records and considered the rival contentions carefully. The dispute is regarding addition of Rs.7.19 crores to the book profit on account of provision made by the assessee towards advertisement, sales promotion and distribution expenses. The assessee in the books of account had made total provision of Rs.12.44 crores on this account but at the time of filing of return of income the assessee wrote back the provisions amounting to Rs.7.19 crores and added to the total income. In the original assessment made by the Assessing Officer, the said amount had not been added to book profit. CIT however initiated proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounting and differences had already been written back by the assessee in subsequent years and brought to tax and there was thus no loss to the revenue . It was under these circumstances that the Tribunal had allowed the claim of the assessee. The Tribunal had not gone into the issue as to whether any part of the provision was towards liabilities other than ascertained liabilities as the said issue was not before the Tribunal. The decision of the Tribunal therefore does not help the case of the assessee . Reliance has also been placed on the decision of the Tribunal in case of M/s. Vishwadeep Exports Pvt. Ltd. (supra). The said case is also found to be distinguishable. The issue in that case was whether provision was made towards bad debt could be added under Explanation (c) of section 115JB(2). The Tribunal noted that the provision had been made with reference to specific parties which had actually become bad and therefore provision had to be treated as provision for ascertained liability. The Tribunal also observed that the provision for doubtful debt was not for making any liability but was towards diminution in the value of asset and therefore clause (c) of the Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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