Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (5) TMI 910 - AT - Income TaxDisallowing the claim of the appellant to reduce the reversal of provision for bad and doubtful debts from the book profits computed under section 115JB - HELD THAT:- If we apply the purposive test of the enactment being considered here. To recapitulate the provision of the act mandates that if assessee writes back provision for bad debt made in appeal years, the deduction of the same from the book profit is permissible if the provision created in the earlier year has been added back to the book profit. In this regard, the CBDT circular No. 550 explains that such an action in earlier year should have gone to increase the book profit of the said year. We are of the considered opinion that in this regard if the assessee is not called upon to pay any tax on book profit as taxes on normal computation are higher even after the aforesaid exercise of increase of the book profit by the amount of provision for the concerned year, the exercise would be an empty exercise and revenue neutral. This means that the assessee would not have been called upon to pay any extra tax whatsoever had this exercise been done. The explanation invoked by the authorities below is not applicable on the facts of this case. Even for argument sake, we consider the view that there are two views possible, we are of the considered opinion that the view in favour of assessee is on an overwhelming higher side. In this view of the matter, as expounded by the Hon’ble Court’s Constitution bench in the case of Dilip Gandhi [2018 (8) TMI 271 - ITAT MUMBAI] if two views are possible in a statutory tax provisions, the one in favour of the assessee should be adopted. Accordingly, in the background of the aforesaid discussion and precedent, we are of the considered opinion that the order of the ld. CIT(A) is not sustainable. Accordingly, we set aside the order of the ld. CIT(A) and decide the issue in favour of the assessee. Interest u/s.234C - As assessee submitted that interest is leviable on returned income and not on assessed income. That this submission was made but not considered by the ld. CIT(A) - HELD THAT:- Upon careful consideration we find that this issue is consequential, the A.O. shall consider the same as per law.
|