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TMI Blog2014 (1) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... bad debts – Relying upon CIT vs. HCL Comnet Systems and Services Ltd. [2008 (9) TMI 18 - SUPREME COURT] – the AO presumably has not made an adjustment u/s. 115 JB of the Act on the issue of provision for doubtful debts – the order of the CIT(A) for the reopening was on a mere change of opinion and hence is bad in law – Decided against revenue. - I.T.A. No. 4349/Del/2011 - - - Dated:- 19-7-2013 - A.D. Jain And J. Sudhakar Reddy, JJ. For the Appellant : Shumana Sen, CIT-DR For the Respondent : Pradeep Dinodia, CA and R.K. Kapoor, CA ORDER:- PER : J. Sudhakar Reddy This is an appeal filed by the Revenue directed against the order of the Ld.CIT(A)-XIII, New Delhi dated 08.05.2012 pertaining to the Assessment Year 2005- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.2.72 crore has been taken to reserve that has been generated on transfer of capital of transferor company. Give reason why said amount was not added back u/s 115JB? In response the above queries, the appellant filed its reply dt. 20.12.2007. The replies filed for query no.20 and 21 were as under: Answer to query no.20: Details of provision for gratuity and leave encashment stand already filed vide item no.7 of our letter dt. 20.11.2007. As regards the amount of Rs.54,39,526/- reduced in the calculation of book profit u/s 115JB of the Act, it is submitted that the same has been reduced as per clause (iii) of s.115JB which is reproduced below for your ready reference:- (iii) the amount of loss brought forward or unabsorbed d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of retrospective amendment to the act. Prior to the amendment explanation I (c) of Sec. 115 JB of the IT act clearly provide that the net profit should be increased by the provision made for any unascertained liability. b. This is not a case where the reopening is on a change of opinion as the Ld.A.O. has not formed any opinion at the time of original assessment. c. That the claim of the assessee that provision for bad debts is an ascertained liability is incorrect, as this is just a contingent liability. 6. The assessee carried the matter in appeal. The First Appellate Authority upheld the contentions of the assessee that the reopening is bad in law for the reason that:- a. The reopening was done on a change of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds adjustment of provision for bad debts. Hence it can be safely presumed that the Assessing Officer had not suggested any adjustment to book profits u/s 115 JB on account of diminution in the value of an asset i.e. provision for bad debts. 10.1. The Special Bench of the ITAT (Calcutta) in the case of JCIT vs. Usha Martine Industries Ltd. (2007) 105 TTJ 543 (SB) and the Hon'ble Delhi High Court in the case of CIT vs. M/s. Eichir Ltd. (2006) 287 ITR 170 (Del) and Hon'ble Supreme Court in the case of CIT vs. HCL Comnet Systems and Services Ltd. (2008) 305 ITR 409 (SC), Judgment dated 23.09.2008 held the issue in favour of the assessee. 10.2. The assessment order was originally passed u/s. 143(3) on 31.12.2007. By that date the Hon'ble Del ..... X X X X Extracts X X X X X X X X Extracts X X X X
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