Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (6) TMI 1386 - ITAT CHENNAIReopening of assessment u/s 147 - deduction u/s.36(1)(viia) - HELD THAT:- As rightly relied upon by the Ld.DR on the Hon’ble Supreme Court judgment in the case of [1997 (10) TMI 5 - SUPREME COURT] re-opening of the case on the basis of factual error pointed out by the Audit Party is permissible under law. What is brought to the notice of the AO by the Audit Party was the factual error and it is a fact that the assessee had claimed the deduction against the provisions made by under NPA and there was prima facie case for under assessment - Therefore, we do not find any error in the re-opening of assessment and uphold the issue of notice u/s.148 - CIT(A) also relied on the decision in the case of CIT v. Raman & Co [1967 (7) TMI 2 - SUPREME COURT] and we uphold the order of the Ld.CIT(A) and dismiss the ground of the appeal of the assessee on this issue. Addition made u/s.36(1)(viia) - assessee has created NPA provisions and claimed the deduction in respect of the provisions for bad and doubtful debts - AR argued that the assessee has already made the provision in the earlier years which was unadjusted and brought forward in the books - HELD THAT:- In Income Tax, each year is an independent and the income has to be computed as per the system of accounting regularly followed by the assessee. Therefore, the deduction can be made by the assessee only on the basis of the expenditure debited to the Profit & Loss A/c from the previous year relevant to the AY under consideration. No expenditure which is not debited to the Profit & Loss A/c in the year under consideration is permissible for deduction. In the instant case, the assessee has not debited the expenditure relating to the provisions for bad and doubtful debts. Therefore, the deduction u/s.36(1)(viia) is permissible to the extent of the amount debited to the Profit & Loss A/c or as per the permissible limits specified u/s.36(1)(viia) whichever is less. The contention of the assessee that the reserves already created in the earlier years is available in the books of accounts which remained unadjusted is not an acceptable proposition and not as per the Income Tax Act - the deduction is permissible only to the extent of provisions actually created in the books of accounts for the relevant Assessment Year. Decided against assessee.
|