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2017 (5) TMI 1092 - ITAT AHMEDABADReopening of assessment - wrong claim of carry forward of unabsorbed depreciation - Held that:- It is difficult to accept the cause/justification recorded by the AO in this regard. Admittedly, the AY 2006-07 is merely a transient year where the carry forward of earlier year has been brought forward to this year and again carried forward to next year for set off in the appropriate assessment year. AY 2006-07 only seeks to disclose the pending entitlement of the assessee in respect of unabsorbed depreciation rightfully or wrongfully. This has no impact on the “chargeable income” of the AY 2006-07 which is alleged to have escaped assessment. Therefore, the precondition for invoking jurisdiction under section 147 in so far as this reason is concerned is untenable in law and cannot be upheld. - Decided in favour of assessee. Failure to increase the book profit computed under section 115JB of the Act on account of bad debts reserves debited to P&L Account - Held that:- A bare reading of Explaantion-1(c) to section 115JB would suggest that the aforesaid clause is meant to increase the book profit in respect of provisions towards unascertained liabilities. It is apparent that bad debts reserves is not on account of any provision towards any liability far less unascertained liabilities. The provision, as pleaded by the assessee, is in the nature of amounts set aside for diminution in the value of sundry debtors which is an asset rather than a liability. Therefore, the entire basis for the formation of belief to invoke section 147 is a damp squib. As a Corollary, the reasons recorded are not in sync with section 147 of the Act and are marred by wrong application of law and therefore cannot be sustained. - Decided in favour of assessee.
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