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TMI Blog2014 (10) TMI 857X X X X Extracts X X X X X X X X Extracts X X X X ..... n 115JA of the Act is attracted. It is purely a question of fact. From the material on record it is not possible to make out whether the aforesaid bad and doubtful debts are reduced from the loan and advances of the debtors from the assets side of the balance sheet. Without ascertaining the said fact it is not possible to answer the substantial question of law one way or the other. Therefore, the proper thing to do is to set aside the impugned orders and remit the matter back to the First Appellate Authority with a direction to the Authority to look into the records and then record a finding one way or the other in the light of the aforesaid judgment. That would meet the ends of justice. Therefore, the substantial question of law is not ans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st future losses, if any the assessee may incur on account of its debtors not paying the amount. Therefore, the provision for loss of assets is not an ascertained liability and the said two items came to be added back. The assessee preferred an appeal to the Commissioner of Income Tax, Appeals. The Appellate Authority held that the provision for bad and doubtful debts is an ascertained liability and therefore is allowable as deduction, by relying on the earlier order passed by the tribunal in the case of M/s. Canbank Financial Services Ltd. Further it held, provision for loss of assets is covered by Section 36(I)(viia) of the Act. Aggrieved by the same the Revenue preferred appeal to the Tribunal. The Tribunal confirmed the order of the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebt which is doubtful or bad should satisfy the requirement contemplated in item (c) of the Explanation. It is the amount or amounts set aside as provisions made for meeting the liability other than the ascertained liabilities. In the instant case also the bad and doubtful debt for which a provision is made which is in the nature of diminution in the value of any asset would not fall within item (c) of Explanation (i), It is in that context the Appellate Commissioner as well as the Tribunal has granted relief to the assessee. Realising the fatality of the said argument, it is contended now that item (i) cannot amount to satisfaction as provision for diminishing in the value of assets is substituted, in case of the assessee falls under Item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd advances or the debtors on the assets side of the balance sheet was shown as net of the provision for the impugned bad debt. Then the said amount representing bad debt or doubtful debt cannot be added in order to compute book profit. Therefore, after the Explanation the assessee is now required not only to debit the profit and loss account but simultaneously also reduce the loans and advances or the debtors from the assets side of the balance sheet to the extent of the corresponding amount so that, at the end of the year, the amount of loans and advances/debtors is shown as net of the provisions for the impugned bad debt. Therefore, in the first place if the bad debt or doubtful debt is reduced from the loans and advances or the debtors ..... X X X X Extracts X X X X X X X X Extracts X X X X
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