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TMI Blog2014 (1) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... s 115JB. The reasons given by the learned CIT(Appeals) while taking the above view are incorrect, unjustified and unwarranted." 3. The brief facts of the case are that during the assessment proceedings under Section 143(3) of the Income Tax Act, 1961, the AO noticed that the assessee had claimed a sum of Rs. 26,89,564/- under the head provision for doubtful advances in the profit & loss account. The AO observed that this provision being made for doubtful advances is not in the nature of expenditure which has been actually incurred and that the assessee ought to have added back this sum in the computation of income as well as in the computation of book profit u/s. 115JB. The assessee had not added back the same in the computation of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) states "amount or amounts set aside as provision......." In other words, the amendment envisages setting aside of something like a fund, something that will become available in future when required. What the amendment seeks to rope in is not a mere provision but an amount set aside as a provision. Further, the appellant contended that it is important to compare the language of clause (i) and other clauses in the same Explanation namely (a), (d) and (h). Clause (a) refers to amounts of income tax paid or payable and the provision therefor." It does not say amount of income tax paid or payable and the amount set aside as provision therefore. Similarly, clause (d) refers to "the amount by way of provision for losses of subsidiary companies. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Doubtful Advances (13,914,565) (11,225,001)" From these extracts it is clear that the appellant has set apart Rs. 26,89,564/- as provision for doubtful advances and the provision has been kept as separate in the Balance Sheet. Hence, the appellant's arguments are not correct. The A.O.'s action is in accordance with the provisions of section 115JB explanation 1(i) of the I.T. Act and the A.O.'s action is upheld." 5. Before us, the learned AR has again reiterated his contention and has further stressed that the learned CIT(A) has failed to correctly appreciate and interpret the clause (i) to Explanation 1 of Section 115JB. 6. We have considered the submissions made by the learned A.R. Before proceeding further, it would be appropriate to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said word 'set aside' cannot be ignored as such, as the legislature has intended to assign a particular meaning to it. He has relied upon the dictionary meaning of the word 'set aside' to stress the point that it denotes to the amounts which have been separated out as a deposit or as a reserve fund, which can be used later on for the purpose of the subject matter mentioned in clause (i). According to him, only that amount is required to be included into the book profit which has been separated out as a reserve fund and kept or deposited some where else and not the amounts for which only the provision has been made. His case is that the assessee had made a provision for the diminution of value of assets but had not created or separated out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such type of fund can ever be required for its use at appropriate time. With the passage of time and also depending on the extent of its use, the value of the asset is reduced in the account books and for that purpose, there is no requirement to create a separate fund in this respect. The case of the assessee is that only the value of certain assets had been reduced and the provision was made for that reduction. It may be observed that no provision was made by the assessee for improvement in the value of the asset. If the contention of the learned AR is to be accepted, then the wording should have been like that "amounts set aside to the provision made for improvement in the value of the asset," and not 'for diminution in the value of any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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