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TMI Blog2022 (8) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... fact while upholding the reassessment u/s. 143(3) r.w.s. 147 of the Act as valid and justified without appreciating the fact that the same was bad in law and invalid in as much as the same being based on invalid notice issued u/s. 148 of the Act on mere change of opinion. 2. The Ld. CIT(A) has erred in law and on facts in confirming the adjustment of Rs. 6,03,098/- in respect of provisions of doubtful debts to the "Book Profit" u/s. 115JB of the Act without proper consideration and appreciation of the facts and the legal decisions relied upon. In view of the fact that provision for doubtful debt made by the appellant is an ascertained liability, the adjustment made by the AO to the "Book Profit" u/s. 115JB of the Act is contrary to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pare parts. The return of income for the year under consideration was filed by it on 14.10.2013 declaring a total income of the assessee at Rs.1,56,89,960/-. In the assessment originally completed under Section 143(3) of the Act vide an order dated 28.12.2015, the total income of the assessee was determined by the Assessing Officer at Rs.2,43,30,933/- after making certain additions and disallowances. Thereafter, it was noticed by the Assessing officer that the assessee-company in its Profit and Loss Account had debited Rs.6,03,098/- and Rs.31,00,000/- on account of provision for doubtful debts and provision for diminution in value of investment respectively. Since both these provisions, according to the Assessing Officer, were liable to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs.31,00,000/- for the year ended on 31.03.2013." 4. The stand of the assessee was not found tenable by the Assessing Officer. According to him, the amount(s) set aside for provision made for meeting liability was liable to be added for the purpose of computing book profit. He also relied on the amendment made in Section 115JB of the Act by the Finance Act, 2009, with retrospective effect from 01.04.2001, whereby it was made clear that the amounts set aside as provision for diminution in value of the asset was required to be added to the book profit. He accordingly added the provision for doubtful debts amounting to Rs.6,03,098/- and the provision for diminution in the value of investment amounting to Rs.31,00,000/- to the book profit u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the case, assessment order and submission of the appellant. The Assessing officer has made the addition of provision for doubtful debts of Rs.6,03,908/- in the book profit. The appellant contended that the provision for doubtful debts is ascertained liability and therefore, no adjustment as per clause (c) to explanation 1 can be made in the computation of book profit u/s. 115JB. The appellant has relied upon the decision of Hon'ble Gujarat High Court in the case of CIT-4 V/s Vodafone Essar Gujarat Ltd. It is seen from the computation submitted by the appellant that the appellant had opening balance of provisions for doubtful debts of Rs.14,43,781/-. It has added the provisions for doubtful debt of Rs.6,03,098/- and reversed provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en that Section 115JB has been amended by Finance Act, 2009 with retrospective effect from 01/04/2001 by which Clause (i) has been added as per which the amount set aside as provision for diminution in the value of any asset is to be added in the book profit to be computed u/s. 115JB. The Assessing Officer, therefore, has correctly made the adjustment in the book profit. The appellant relied upon the decision of Hon'ble ITAT "D" Bench in the case of Reliance Welfare Association Circle which is not applicable in the appellant's case as the facts are different. The Hon'ble Tribunal in the above cited case has noted that the diminution in the value of investment in the above case is actually charged as the assessee had credited the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act by inserting clause (i) to Explanation with retrospective effect was taken note of by the Hon'ble Gujarat High Court whereby any amount set aside for provision for diminution in the value of asset made by the assessee was liable to be added back for computation of book profit under Section 115JB of the Act. Hon'ble Gujarat High Court, however, made a distinction between a mere provision and actual write off and held that actual write off could not be hit by clause (i) of the Explanation to Section 115JB of the Act. Explaining further, it was held by the Hon'ble Gujarat High Court that a mere provision is made by merely debiting the Profit and Loss Account and crediting the provision for bad and doubtful debts; but if such provision is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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