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TMI Blog2021 (8) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner therefore deserves to be allowed and is accordingly allowed. - W.P. No. 8620 of 2014 And M.P. No. 1 of 2014 - - - Dated:- 24-3-2021 - Honourable Mr.Justice C.Saravanan For the Petitioner : Mr.G.Baskar For the Respondent : Mr.A.P.Srinivas Senior Standing Counsel ORDER The petitioner has challenged the impugned speaking order dated 07.03.2014 in this writ petition. The said order overrules the objections of the petitioner for reopening of the assessment for the Assessment Year 2006-2007. 2. In this case, the petitioner had filed returns for the Assessment Year 2006-2007 on 04.11.2006 and filed computation of Book Profits under Section 115JB of the Income Tax Act, 1961, (hereinafter referred to as the IT Act). The assessment was also completed under Section 143(3) of the IT Act by an order dated 10.12.2008. 3. After the assessment was completed, the Finance Act, 2009 was amended, wherein, certain amendments were made to Section 115JB of the IT Act with retrospective effect from 01.04.2001. The feeble attempt was made by the Assessing Officer namely the Deputy Commissioner of Income Tax by issuing notice under Section 154 of the IT Act, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minated in the impugned order. In the impugned order, the respondent ordered as follows:- The objections raised by you for the reopening of assessment u/s.148 is considered and it was not acceptable for the following reasons:- 1. The reasons given to you for reopening the assessment was that based on the latest amendment to the IT Act by the Finance Act 2008 w.e.f. 01.04.01, book profit u/s. 115JB requires to be increased by the amount or set-aside as provision for diminution in the value of any asset, and hence, the provision for bad and doubtful debts to the tune of ₹ 29,35,473/- debited in the P L A/c requires to be added for the purpose of arriving book profit . Thus, the reopening of the notice is in accordance with law. The intention of the legislature is that the provisions should be applied with particular date and for giving effect to that amendment, the re-opening notice was issued. 2. The case laws submitted in support of your claim is perused. In my opinion, wherever the legislature does not want the application of law retrospectively, the provisions are provided in the Act, as given in section 14A of the I.T.Act. In this case, there is no specific p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the IT Act. 9. The issue was clarified only by the decision of the Hon'ble Supreme Court in Commissioner of Income Tax Vs HCL Comnet Systems Services Ltd , (2008) 305 ITR 409 and it is thereafter in the following financial year vide Finance Act, 2009, the explanation to Section 115JB of the IT Act was amended to give effect to the decision of the Hon'ble Supreme Court. It is therefore submitted that the assumption of jurisdiction under Section 148 of the IT Act, i.e., after a lapse of four years period was without jurisdiction notwithstanding the fact that section has been amended with effect from 01.04.2001 vide Finance Act, 2009. 10. Defending the impugned order, the learned senior standing counsel for the respondent submits that the assumption of jurisdiction cannot be questioned as the law was not only amended with retrospective effect but also the decision of the Hon'ble Supreme Court cited by the petitioner in Southern Technologies Ltd., Vs Joint Commissioner of Income Tax , 320 ITR 577 was rendered in the context of business of non-banking financial company. It is submitted that other case cited by the petitioner in Viyaja Bank Vs Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JA, the AO can increase the net profit determined as per the P L a/c prepared as per Parts II and III of Schedule VI to the Companies Act only to the extent permissible under the Explanation thereto. 10. As stated above, the said Explanation has provided six items, i.e., item Nos.(a) to (f) which if debited to the P L a/c can be added back to the net profit for computing the book profit. In this case, we are concerned with item No.(c) which refers to the provision for bad and doubtful debt. The provision for bad and doubtful debt can be added back to the net profit only if item (c) stands attracted. Item (c) deals with amount(s) set aside as provision made for meeting liabilities, other than ascertained liabilities. The assessee's case would, therefore, fall within the ambit of item(c) only if the amount is set aside as provision; the provision is made for meeting a liability; and the provision should be for other than ascertained liability, i.e., it should be for an unascertained liability. In other words, all the ingredients should be satisfied to attract item (c) of the Explanation to Section 115JA. In our view, item (c) is not attracted. There are two types of debt . ..... X X X X Extracts X X X X X X X X Extracts X X X X
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