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TMI Blog2022 (1) TMI 1369X X X X Extracts X X X X X X X X Extracts X X X X ..... :- Full Bench of the Gujarat High Court in the case of CIT Vs. Vodafone Essar Gujarat Ltd. [ 2017 (8) TMI 451 - GUJARAT HIGH COURT] held that with insertion of clause (i) to the explanation with retrospective effect, any amount or amounts set aside for provision for diminution in the value of the asset made by the assessee, would be added back for computation of book profit under section 115JB - if this was not a mere provision made by the assessee by merely debiting the Profit and Loss Account and crediting the provision for bad and doubtful debt, but by simultaneously obliterating such provision from its accounts by reducing the corresponding amount from the loans and advances on the asset side of the balance sheet and consequently, at the end of the year showing the loans and advances on the asset aside of the balance sheet as net of the provision for bad debt, it would amount to a write off and such actual write off would not be hit by clause (i) of the explanation to section 115JB. ITAT justification to remit back the issue of disallowance out of provision for doubtful loans and disallowance out of bad debts provision claimed in MAT to the file of the AO for verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 410227250/- for the purpose of computing book profit u/s. 115JB, the book profit of the assessee is to be increased by the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities. Whether in such circumstances, the write back of investment of ₹ 410227250/- for the purpose of computing book profits u/s. 115JB is correct in law. 5. Whether in the facts and in circumstances of case, the ITAT was justified in law to remit back the issue of disallowance out of provision for doubtful loans to subsidiary to the file of the Assessing Officer for verification without assigning any reasons and inspite of the facts that loan and advance are not revenue expenses and the details/ information provided by the assessee has already been considered during the assessment proceedings. 6.Whether in the facts and in circumstances of case, the ITAT was justified in law in remitting back the issue of disallowance out of bad debts provision claimed in MAT to the file of the Assessing Officer for verification without assigning any reasons and inspite of the fact that the details/ information provided by the assessee has already been conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing officer and by the tribunal and having heard learned counsel for the revenue, we find no error in the view expressed by the tribunal. As noted, the assessee had made investment in its subsidiary company in order to expand its business with a view to earn higher profit. The investment was thus driven by business expediency. The tribunal therefore committed no error. No question of law arises. Under the circumstances this question is also not entertained. So far as the question No.4 is concerned, the issue pertains to the addition made by the assessing officer of the write off investment in the subsidiary company for the purpose of calculation of book profits under Section 115JB of Income Tax Act, 1961. According to the assessee, this was an actual write off and not a mere provision for diminution in value of the investments. The tribunal having accepted the stand of the assessee, the revenue is in appeal. The discussion of the tribunal in the impugned order reads as under:- 5.5 We have heard the rival contentions and perused the materials available on record. It is noted prima facie from the available records that the assessee had made provisions in the financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt is obliterated from the accounts by reducing corresponding loans and advances on the asset side, the same would amount to a write off. It was concluded as under : ...Therefore, after the Explanation the assessee is now required not only to debit the P L A/c but simultaneously also reduce the loans and advances or the debtors from the assets side of the balance sheet to the extent of the corresponding amount so that, at the end of the year, the amount of loans and advances/debtors is shown as net of the provisions for the impugned bad debt. Therefore, in the first place if the bad debt or doubtful debt is reduced from the loans and advances or the debtors from the assets side of the balance sheet the Explanation to s. 115JA or JB is not at all attracted. 22. In case of Kirloskar Systems Ltd., the Karnataka High Court adopted the same principle. 23. By way of culmination of above judicial pronouncements and statutory provisions, the situation that arises is that prior to the introduction of clause(i) to the explanation to section 115JB, as held by the Supreme Court in case of HCL Comnet Systems and Services Ltd. , the then existing clause (c) did not cover a case where ..... X X X X Extracts X X X X X X X X Extracts X X X X
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