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2009 (12) TMI 98 - MADRAS HIGH COURTPower to revise an order – erroneous assessment - The assessee company dealing in hire purchase, financing, equipment leasing and general financing, filed its return of income for the assessment year 2000-01 on 30.11.2000 admitting Nil income after set off of brought forward losses. The assessee admitted Nil income under section 115JA of the Income Tax Act, 1961. The return was processed under section 143(1) of the Act on 23.03.2001. The case was taken up for scrutiny and the assessment under section 143(3) of the Act was completed on 17.03.2003 determining the total income at Rs.54,24,140/- raising a demand of Rs.26,11,025/-. On perusal of records, the Commissioner of Income Tax noted that while computing the book profits under section 115JB of the Act, errors have been occurred. Hence, the assessment already made by the assessing officer found to be erroneous and prejudicial to the interest of the revenue and directed the assessing officer to modify the assessment order, adding back the provision for non-performing assets and investments, and also lease equalisation charges, to the profits of the assessee company. The Commissioner of Income Tax directed the assessing officer to disallow the deduction under section 80HHC of the Act as the profit as per the normal computation resulted in loss – held that - when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue, unless the view taken by the Income Tax Officer is unsustainable in law - Item (c) of the Explanation to section 115JA is not attracted to the provision for bad and doubtful debts. The provision for bad and doubtful debts is made to cover up probable diminution in the value of the assets, i.e., a debt which is an amount receivable by the assessee. Such a provision cannot be said to be a provision for a liability, because even if the debt is not recoverable no liability can be fastened on the assessee. Any provision made towards irrecoverability of a debt cannot be said to be a provision for liability.
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