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2017 (8) TMI 451 - HC - Income TaxMAT computation - Provision for bad and doubtful debts - to be treated as provision for liability or not - computation of book profit for the purpose of MAT liability u/s 115JB - Held that:- Referring to statutory provisions, the situation that arises is that prior to the introduction of clause(i) to the explanation to section 115JB, as held in case of HCL Comnet Systems and Services Ltd. (2008 (9) TMI 18 - SUPREME COURT) the then existing clause (c) did not cover a case where the assessee made a provision for bad or doubtful debt. 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 of the Act. However, 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. The judgment in case of Deepak Nitrite Limited (2011 (8) TMI 1209 - GUJARAT HIGH COURT) fell in the former category whereas from the brief discussion available in the judgment it appears that case of Indian Petrochemicals Corporation Ltd. (2016 (9) TMI 110 - GUJARAT HIGH COURT), fell in the later category. There is no conflict between the two judgments and both operate in different fields.
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