2008 (9) TMI 18 - SC - Income Tax

AO added back the provision for doubtful debts to net profit - provision made to cover up the probable diminution in the value of asset, can’t be said to be a provision for liability, because even if a debt is not recoverable no liability could be fastened upon the assessee - provision made towards irrecoverability of the debt can’t be said to be a provision for liability- AO was not justified in adding back the provision for doubtful debts under clause (c) of the Explanation to Section 115JA