TMI Blog2010 (4) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... own by the Hon ble Supreme Court in the case of HCL Comnet Systems Services Ltd.[ 2008 (9) TMI 18 - SUPREME COURT] is no more applicable in view of the amended provisions brought in the statute with retrospective effect. The relevant assessment year under consideration is assessment year 2005-06 to which amended provisions are applicable. Recently Hon ble Delhi High Court in the case of CIT v. Ilpea Paramount (P.) Ltd.[ 2010 (2) TMI 45 - DELHI HIGH COURT] after considering the decision of the Hon ble Supreme Court in the case of HCL Comnet System Services Ltd. (supra) held that amendment brought in section 115JA was brought with retrospective effect, accordingly, provision for doubtful debts are nothing but provision for diminution in the value of the asset covered under clause ( g ) of the said Explanation. It was accordingly, held that such provision is required to be added while computing book profit u/s 115JA. Similarly, amendment in section 115JB was also brought by the same Finance Act with effect from assessment year 2001-02, therefore respectfully following the order of the Hon ble Jurisdictional High Court, we do not find any infirmity in the orders of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss accounts. 4. Learned AR also placed on record copy of extract of memorandum explaining provisions in the Finance Bill, 1987, copy of extract of budget speech of the Finance Minister introducing Finance Bill, 1987, copy of extract of memorandum explaining provisions in the Finance Bill, 1996, memorandum explaining provisions in Finance Bill, 2000 and Finance Bill (No. 2) Act, 2009. Shri Dinodia also placed on record copy of Accounting Standard regarding revenue recognition as provided under AS-9 and also copy of Accounting Standard regarding accounting of investment as provided under AS-13. 5. Learned AR further submitted that clause ( i ) in Explanation to section 115JB of the Act is not applicable to provision for doubtful debts and in any case the clause cannot be applied with retrospective effect and in this regard he submits as under: ( a )Clause ( i ) to Explanation to section 115JB provides for adjustments on account of amount set aside as provision for diminution in value of any asset. The scope of above clause is to be understood in the context of the scope of the provisions of section 115JB of the Act and particularly, determination of book profit. The se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on account of diminution in value of assets, and, therefore, same is not covered in clause ( i ) of Explanation to section 115JB of the Act. ( b )Provisions of section 115J, then sections 115JA and 115JB of the Act had been inserted in the Income-tax Act with a view to levy tax on zero tax companies. It was felt by the Government that there are larger number of companies, which are though declaring dividend on the basis of their book profit but not paying any tax. Therefore, tax should be levied on such companies on the basis of their book profits. In this regard, reference can be made to Memorandum explaining the provisions of various Finance bills and also the Speech of Finance Minister vide which aforesaid sections were inserted in the Act or amended subsequently. Copies of relevant extracts from Memorandum and Speech are given in the Paper Book on pages 1 to 7. Objects of insertion of above provisions had also been stated and discussed by the Hon ble Supreme Court in the case of Surana Steels (P.) Ltd. v. CIT [1999] 237 ITR 777, a copy of which decision is also given in the Paper Book on pages 36 to 45 and reference can be made to the discussion on pages 31-32. Ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of sale of the products and gain at the stage of reversal of same in the books of account. This cannot be the intention of the Act. Therefore, clause ( i ) cannot be intended to cover provision for doubtful debts. 6. Shri Dinodia has also drawn our attention to the memorandum explaining provision in Finance Bill, 1987 with regard to levy of minimum tax on book profit. As per para 80 of the said memorandum at page 14 of ITR 165, it was stated that it is fair and proper that prosperous company should pay at least some tax. Accordingly, provision was made for minimum alternate tax on companies. Our attention was also drawn to the AS 9 issued by the Institute of Chartered Accountant of India on (revenue recognition), according to which revenue is the gross inflow of cash receivables or other consideration arising in the course of the ordinary activities of an enterprise from the sale of goods, from the rendering of services, and from the use by others of enterprise resources yielding interest, royalties and dividends. As per AS-9, revenue is measured by the charges made to customers or clients for goods supplied and services rendered to them and by the charges and rewards a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 115JB by the Finance Act, 2009 by insertion of new clause ( i ). According to the amended provision, amount set aside as provision for diminution in value of any asset is required to be added in the book profit. Clause ( i ) has been inserted retrospectively with effect from 1-4-2001 meaning thereby from assessment year 2001-02, such provision for bad debts is to be added in the book profit while computing book profit under section 115JB. The ratio laid down by the Hon ble Supreme Court in the case of HCL Comnet Systems Services Ltd. ( supra ) is no more applicable in view of the amended provisions brought in the statute with retrospective effect. The relevant assessment year under consideration is assessment year 2005-06 to which amended provisions are applicable. Recently Hon ble Delhi High Court in the case of CIT v. Ilpea Paramount (P.) Ltd. [IT Appeal No. 1178 of 2008 vide order dated 18-2-2010] after considering the decision of the Hon ble Supreme Court in the case of HCL Comnet System Services Ltd. ( supra ) held that amendment brought in section 115JA was brought with retrospective effect, accordingly, provision for doubtful debts are nothing but pro ..... 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