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2016 (6) TMI 300 - AT - Income TaxAddition of “Provision for doubtful debts” to the Book profit u/s 115JB - MAT computation - Held that:- It is in the knowledge of every one that the accounts are prepared under the Companies Act in accordance with the Principles of Accounting by following various accounting standards and practices. Under the accounting terminologies “Provision for doubtful debts” and “writing of bad debts” has got distinct meaning. Both the terms stand on different footing and the accounting world also understand their meaning differently. Accordingly, in our considered view, the meaning of the above said expressions should be understood and applied in the same manner while computing book profit u/s 115JB of the Act. Accordingly, the provision for doubtful debts shall represent a provision made to take care of the diminution in the value of “Sundry debtors” and the same cannot be understood as actual write off as ‘Bad debts’. It is well settled proposition of law that the decision rendered by nonjurisdictional High Court has got persuasive value only. Accordingly, we are of the view that the Ld CIT(A) was justified in confirming the addition of “Provision for doubtful debts” to the Book profit - Decided against assessee Chargeability of interest u/s 234B of the Act on the addition so made by Ld CIT(A) on the basis of subsequent amendment - Held that:- The various decisions relied upon by the assessee expresses the view that the assessee should be fastened with interest liability in respect of the addition made on the basis of subsequent amendment, since the assessee could not have foreseen the liability at the time of estimating his income for the purpose of payment of advance tax. Hence, we find merit in the additional ground urged by the assessee. Accordingly, we direct the AO not to levy interest u/s 234B of the Act on the addition relating to “Provision for doubtful debts” made while computing book profit u/s 115JB of the Act. - Decided in favour of assessee
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