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2020 (12) TMI 1249 - AT - Income TaxMAT Computation u/s 115JB - computation of book profit/MAT against the action of AO in adding back the provision for diminution in investment and provision for NPA (Non-Performing Assets) - Whether clause (i) of Explanation (1) to sub-section (2) of section 115JB of the Act could be attracted in the facts of this case? - HELD THAT:- Provision for diminution in Investments would amount to an actual “write off” of Provision from the Assets side and therefore would not attract clause (i) of the Explanation to subsection (2) of section 115JB of the Act as held by the Hon'ble Gujarat High Court in the case of Vodafone Essar [2017 (8) TMI 451 - GUJARAT HIGH COURT] since Assets side of the Balance Sheet has also been accordingly reduced in the present case of the assessee, so, we agree that provision for diminution in investment was not a mere provision but it was actual write off and so, clause (i) of Explanation (1) of sub-section (2) of section 115JB of the Act is not attracted to the facts of this case and so we uphold the action of Ld CIT(A) on this issue. Non-performing asset - Not only a mere 'Provision for Non-Performing Assets' was created by the assessee by debiting the Profit and Loss account but simultaneously the corresponding amount from ‘Loans and Advances’ shown on the Asset side of the Balance Sheet was also reduced/adjusted. In other words, the ‘Loans and Advances’ were recorded in the books as net of provision. Thus, in view of the above facts, the said Provision for diminution in non-performing assets would amount to an actual write off of Provision from the Assets side and therefore would not get attracted by clause (i) of the Explanation to subsection (2) of section 115JB of the Act as held by the Hon'ble Gujarat High Court in the case of Vodafone Essar [2017 (8) TMI 451 - GUJARAT HIGH COURT] since the Assets side of the Balance Sheet has also been accordingly reduced in the present case of the assessee. Thus, we note that the accumulated closing provision of ₹ 2620.53 million was reduced from the current assets, loans and advances which are evident from page 36 of the paper book, which we find to be correct. Thus, the said provision was an actual write off and, therefore, it does not attract clause (i) of Explanation (1) of section 115JB of the Act. - Decided in favour of assessee.
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