9911796707
TMI Blog2014 (9) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case, the Hon'ble ITAT was legally justified in upholding the order of the Ld. Commissioner of Income Tax (Appeals)-III. Lucknow deleting the addition of Rs. 1,16,86,817/- made to the assessee's income by the Assessing Officer being provision for debts and nonperforming assets (NPA) while computing the book profit u/s 115JA of the I.T. Act, 1961. The brief facts of the case are that during the assessment year under consideration, the assessee company was dealing with the auto finance. For the assessment year under consideration, it has shown the total income of Rs. 4,67,590/- after adjusting brought forward unabsorbed losses. The A.O. has levied the tax on book profit under Section-115-JA which was at 30%. The A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btors and hire purchase cases. According to him, the assessee's company has made the provision but not has written off bad debts as per Section-36(1)(vii), so the claimed deduction is not allowable. On the other hand, Sri S.D. Singh, learned Senior Advocate assisted by Sri K.D. Vyas, learned counsel for the assessee had justified the impugned order passed by the Tribunal. He submits that it is not for the assessee to establish that debt had become bad in the previous year. It has been written off as irrecoverable in the books of accounts for the previous year which is sufficient to claim as a bad debt. According to the learned counsel, for the purpose of computing income under Section-115-JA, the said amount should be allowed as deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yond the net profit shown in the profit and loss account except to the extent provided in the Explanation to section 115JA. The Explanation has provided six items, viz., items (a) to (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 amount set aside for meeting liabilities other than ascertained liabilities. The assessee's 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 ascer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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