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TMI Blog2013 (8) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... ply of assemblies, Metallurgical equipments, providing consultancy and technical services in design and engineering related to Steel industry. The assessee had filed its return of income declaring total income of Rs. Nil/- . The assessment was completed by making following additions: i) Provision for contractual obligations of Rs. 64,692,683/-. ii) Provision for doubtful debts in the P&L Accounts of Rs. 39,872,234/-. 5. The assessee's appeal against the above noted additions was dismissed by ld. CIT(A). Being aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us and has taken following grounds of appeal:- "1. On the facts and circumstances of the case and in law, the order passed by Ld. Commissioner of Income-tax (appeals) (CIT(A)) is bad in law. 2.1 That the Ld. CIT(A), without properly appreciating the facts of the case & provisions of the Act, has erred in confirming the disallowance amounting to Rs. 6,46,92,683/- in respect of Provisions for Contractual Obligations and treating the same as contingent liability. 2.2 Without prejudice to the above, the Ld. CIT(A) has erred in not adjusting/ reducing an amount of Rs. 1,62,12,482/-, being amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ascertaining the facts, the Tribunal's order cannot be applied. He submitted that matter may be restored back to the file of Assessing Officer for examining the issue in the light of the Tribunal's decision. Ld DR further submitted that the date of Tribunal order is 12.03.2008 and the date of assessment order is 23.12.2008. Therefore, the assessee should have brought the Tribunal's order to the notice of the Assessing Officer instead of placing the same before Ld. CIT(A). 9. We have considered the rival submissions and have perused the record of the case. We find substance in the submission of the Ld DR that since the Tribunal's order is dated 29.12.2008 the same should have been brought to the notice of the Assessing Officer. Ld counsel in the course of hearing submitted that there is reference to Tribunal's order in the assessment order but we do not find any such reference in the assessment order. Further, Ld CIT(A) has also not taken into consideration the effect of decision of Tribunal and has merely confirmed the Assessing Officer's action. Under such circumstances, it would be in the interest of justice that the matter be restored back to the file of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,36,462. The said disallowance is deleted. The Assessing Authority is directed to allow the amount in full." 10. In the result this issue is allowed for statistical purposes. 11. The second issue vide ground No 3.1 and 3.2. is regarding disallowance of bad and doubtful debts to the extent of Rs. 37,995,597/- Assessing Officer noted that assessee had debited an amount of Rs. 39,872,234/- as provision for doubtful debts in Profit and Loss account. He observed that this provision was also similar to the provision for contractual obligations and treating the same contingent in nature, disallowed the assessee's claim. Ld. CIT(A) dismissed the assessee's appeal. 12. Ld counsel for the assessee referred to the balance sheet contained at Page No. 1 of the paper book and pointed out that no separate liability has been shown in balance sheet in regard to the provision for bad debts and the assessee has shown net asset position in this regard. He referred to the decision of the Hon'ble Supreme Court in Vijaya Bank Vs. Commissioner of Income-tax (2010) 190 Taxman 257 (SC) wherein Hon'ble Supreme Court has considered the following questions:- 2. Whether it is imperative for the assessee-b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r April 1, 1989, a distinct dichotomy is brought in by way of the said Explanation to section 36(1) (vii). Consequently, after April 1, 1989, a mere provision for bad debt would not be entitled to deduction under section 36(1)(vii). To understand the above dichotomy, one must understand `how to write off'. If an assessee debits an amount of doubtful debt to the profit and loss account and credits the asset account like sundry debtor's account, it would constitute a write off of an actual debt. However, if an assessee debits `provision for doubtful debt' to the profit and loss account and makes a corresponding credit to the `current liabilities and provisions' on the liabilities side of the balance-sheet, then it would constitute a provision for doubtful debt. In the latter case, the assessee would not be entitled to deduction after April 1, 1989." 14. Ld counsel submitted that the assessee had written off the bad debts as per the decision of Supreme Court in the case of Vijaya Bank (supra) and, therefore, the requirement of writing off of bad debts was fulfilled. Ld. DR relied on the order of the lower revenue authorities. 15. We have considered the submissions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - being amount written back to the Profit and Loss account and suo-mottu offered to tax by the appellant during the relevant year assessment year. 4. That the Ld. CIT(A) has erred on facts and in law in not granting set off of brought forward business loss and unabsorbed depreciation as claimed by the appellant in its return of income. 5. That the Ld. CIT(A) has erred in upholding the levy of interest u/s 234B of the Act. 6. That the appeal within time since the order was received on 24th February 2010." 21. The first issue vide ground Nos. 2.1 to 2.3 is in regard to provision for contractual obligations and second issue vide Ground Nos. 3.1 to 3.3 is in regard to provision for bad and doubtful debts. Both these issues are identical to the issues considered in Assessment Year 2005-06 vide ITA No. 1814/Del/2010. Therefore, for the reasons given in the above decision, both grounds are allowed for statistical purpose. 22. Now we take up the Department's appeal vide ITA No. 1910/Del/2012 for the Assessment Year 2005-06. 23. The department has taken following grounds of appeal:- "1. The Ld CIT(A) erred in law and on the facts of the case in cancelling the penalty of Rs. 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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