9911796707
TMI Blog2016 (6) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... n paragraph-5 of the Circular dated 10.12.2015 contends that as it was a common order of the Tribunal in respect of a different assessment year and in the other matter where the value of tax effect was exceeding Rs. 20,00,000/- (Rupees twenty lakhs), ITA No.244/2015 was preferred and this Court vide order dated 10.03.2016 disposed of the appeal. He submitted that as such, the present matter will be covered by the aforesaid decision of this Court but as it is a common order, the present appeal can be said as maintainable even if the tax effect is less than the prescribed limit. 4. In view of the above, we have further found it proper to consider the main matter. 5. The appellant-Revenue has preferred the present appeal by raising the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw: 1. Whether the Tribunal was correct in holding that the assessee has reduced the provision so made from the sundry debtors in the balance sheet and hence the same cannot be considered as provision but is the write off of bad debts without appreciating that as per the accounting standards the provisions are either shown separately in the balance sheet or may be reduced from the concerned asset/liability as per the practice followed by the assessee for writing its books of accounts? 2. Whether the Tribunal is correct in debiting the P & L account, the assessee as reduced the amount from the debtors thereby reducing the value of the asset without appreciating that provision of clause (i) of explanation 1 to section 115JB require that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a), would come to its aid. In the case of Yokogawa India Ltd., (supra), the issue involved was very similar, though the computation was with reference to section 115JB of the Act. At para 8 of its judgment, it was held as under by Their Lordships:- "8. In the present case, the debt is an amount receivable by the assessee and not any liability payable by the assessee and, therefore, any provision made towards irrecoverability of the debt cannot be said to be a provision for liability. Therefore it was held that Item (c) of the Explanation is not attracted to the facts of the case. Item (c) in s. 115JA and 115JB(1) are identical. In order to attract the Explanation the debt which is doubtful or bad should satisfy the requirement contemplate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count and, therefore, the Parliament stepped in by way of Explanation to say that a mere reduction of profits by debiting the amount to the profit and loss account per se would not constitute actual write off. The apex Court accepted the said legal position. However it was clarified that besides debiting the P&L a/c and creating a provision for bad and doubtful debt, the assessee correspondingly/simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from loans and advances/debtors on the assets side of the balance sheet and, consequentially, at the end of the year, the figure in the loans and advances or the debtors on the assets side of the balance sheet was shown as net of the provision for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
