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TMI Blog2018 (6) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... l debts debited to Profit and Loss Account and reduced from debtors account at the end of the year tantamount to write-off of debt is highly debatable and this can only be arrived after a long drawn process of reasoning and it is not an obvious and patent mistake apparent on record. Hence, we direct the Assessing Officer to delete the adjustment made under Clause (i) of Explanation 1 to Section 115JB in respect of provision for doubtful debts computed while passing the order u/s. 154 of the Act. - Decided in favour of assessee. - ITA NO.5089/MUM/2016 - - - Dated:- 15-6-2018 - SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI N.K. PRADHAN, HON'BLE ACCOUNTANT MEMBER For The Assessee : Shri S.C. Tiwari Shri Rutuja N. Pawar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso direct him to do what he has failed to do. 3) Each ground of appeal hereinabove is independent and without prejudice to each other. 4) The order of Commissioner (Appeals) being contrary to law, evidence and fact of the case should be set aside, amended or modified. 5) The appellant craves leave to reserve to itself the right to add, to alter or amend or annul any of the grounds of appeal at or before the time of hearing and to produce such further evidences, documents and papers as may be necessary. 3. Briefly stated the facts are that, assessee filed return of income on 26.09.2009 declaring Nil income. The assessment was completed on 20.12.2011 u/s. 143(3) of the Act determining the income under normal provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to profit and loss account so as to reduce the profit of the year, the Profit and Loss Account so credited should be debited and the amount of loans and advances/debtors should be reduced and loans and advances or sundry debtors of the assessee at the end of the year in the balance sheet should be net of provision for doubtful debts. Therefore, it was contended that the assessee write off its debt and doubtful debts and has followed the procedure laid down by the Hon'ble Supreme Court and therefore this amount was not required to be added under clause (i) of Explanation -1 to section 115JB of the Act. 5. It was further contended that whether assessee has written off bad and doubtful debts or made a provision for bad and doubtful de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition stipulated in the Judgment of the Hon'ble Supreme Court in the case of Vijaya Bank v. CIT (supra). Therefore, it is submitted that when once the provision for doubtful debts has been debited to Profit and Loss Account and reduced from debtors account and it tantamount to write off debt and it is no more a provision and in which case no adjustment is required to be made under clause (i) to Explanation-1 to Section 115JB of the Act. In support of his contentions, Ld. Counsel for the assessee relied on the following decisions. i. Vijay Bank v. CIT [190 Taxman 257 (SC)] ii. CIT v. Kirloskar Systems Ltd., [40 taxmann.com 124 (Kar.)] iii. CIT v. Vodafone Essar Gujarat Ltd., [85 taxmann.com 32 (Guj)] 7. Ld. Counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned bad debts, the same is allowable as bad debts. In the case on hand, assessee not only debited the provision for doubtful debts to the Profit and Loss Account, it was simultaneously reduced from the debtors account and the amount and loans and advances/debtors was shown as net of provisions at the end of the year and therefore it amounted to actual write off of debt. In the circumstances, it cannot be treated as provision for doubtful debts which can be added under clause (i) of Explanation 1 to section 115JB of the Act. In the case of CIT v. Indian Petrochemicals Corpn. Ltd., [74 taxmann.com 163] the Hon'ble Gujarat High Court rejected the Revenue s appeal involving a question of adding back provision for doubtful debts in te ..... X X X X Extracts X X X X X X X X Extracts X X X X
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