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2021 (11) TMI 922 - AT - Income TaxRevision u/s 263 by CIT - Addition on provision of section 41(1) - excess provision made for bad and doubtful debts on ICD was written back in respect of recovery of ICD - HELD THAT:- As during the impugned year assessee was engaged in the process of recovery of loans and interest which was granted earlier and no fresh lending was done in the impugned year. Thus, in the impugned year when the excess provision made for bad and doubtful debts on ICD was written back in respect of recovery of ICD from Som Distilleries Limited, the same was deducted from the net profit as per the audited financial statements in computing income under the head profit and gains from business or profession - no benefit claimed by the assessee in terms of section 41(1) of the Act in respect of the impugned amount. It is also evident that there is no tax advantage derived by the assessee in respect of the impugned amount. It is worth noting that provisions of section 41(1) are attracted only when any allowance or deduction has been claimed in respect of loss, expenditure or trading liability and the assessee has obtained in cash or in any other manner any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof. We find that Ld. Pr.CIT has grossly erred in applying the provisions of section 41(1) in the present case which in no situation is applicable in the facts of the present case. We find that during the course of the assessment proceeding, the Ld. AO specifically asked Vide questionnaire issued on 17.04.2017, to explain large any other deduction claimed in sch. BP creating a loss without any income in Profit & Loss Account and explain mismatch between income/receipt credited to Profit & Loss Account considered under other heads of income and income from heads of income other than business/profession, which was replied. AO conducted proper enquiry to verify the withdrawal of provision of ICD and allowed the claim on being satisfied with the details and explanation. Thus, the decision of ld. AO cannot be held to be erroneous. We find that the ld. AO has applied his mind while conducting the assessment proceedings. Under these circumstances, where a detailed enquiry has been conducted on particular issue and the Ld. AO has made proper application of mind on the details filed by the assessee and have conducted sufficient enquiry the assessment order cannot be held to be erroneous so far as prejudicial to the interest of revenue. We accordingly quash the impugned revisionary order framed u/s 263 of the Act and restore the assessment order u/s 143(3) - Decided against revenue.
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