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TMI Blog2012 (6) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... led an application under Rule 27 of the Income tax Appellate Rules, 1963 wherein it has challenged the decision of CIT(A) to hold the reassessment proceedings u/s 147 by ACIT as valid. On the point of its right as per Rule 27 of the Rules, apart from various other decisions, it placed reliance on the following decisions: Ravindrakumar Sharma Vs State of Assam - AIR 1999 SC 3571 CIT Vs Mahalakshmi Textiles Mills Ltd 66 ITR 710 (SC) ACIT Vs Bank of Tokyo (Delhi ITAT). 4. The Ld. D.R. did not seriously oppose the application moved under Rule 27. 5. The brief facts of the case are that the Assessee is a company engaged in the business of providing cellular services in the state of Gujarat. It filed its return of income for AY 2003-04 on 30.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The A.O. has relied upon the decision of Hon. Madras High Court in the case of ACIT v. Beardsell Ltd. 244 ITR 256, wherein it was held that the provision for doubtful debt cannot be termed as ascertained liability. The appellant has submitted that the action of the A.O. was not justified. Reliance has been placed by the assessee on the decision of ITAT Calcutta Spl. Bench in the case of Usha Martin,105 TTJ 550 (Kol), wherein the Hon. ITAT by considering the decision of Madras High Court in the case of CIT v. Beardsell, supra, held that provision for bad and doubtful debt is not a provision for unascertained liability but is in relation to assets and, therefore, no adjustment can be made to the book profit under Explanation (c) to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diminution in the value of assets and hence the same are to be added back in computing book profit in view of the retrospective amendment introduced in s. 115JB by insertion of cl. (i) in Explanation to s. 115JB(2) which specifically mentions the amount or amounts set aside as provision for diminution in the value of any asset. 9. The Ld. A.R. on the other hand cited the decision of High Court of Karnataka in the case of CIT vs. Yokogwa India Ltd. (2012) 17 Taxmann Com.15 (Kar.) (IT Appeal No.1062 of 2008) of August 29, 2011. In this case the question before the Hon'ble High Court was as under:- "Whether the Appellate Authorities were correct in holding that the provisions made for bad and doubtful debts cannot be added back in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the Apex Court had an occasion to consider his explanation. It accepted the argument on behalf of the Revenue to the effect that the explanation makes it very clear that there is a dichotomy between actual write off on the one hand and provision for bad and doubtful debt on the other. A mere debit of the profit and loss account would constitute a bad and doubtful debt, but it would not constitute actual write off and that was the very reason why the explanation stood inserted. Prior to the Finance Act, 2001 many assessees used to take the benefit of deduction under Section 36(1)( (vii) of the 1961 Act by merely debiting the impugned bad debt to the profit and loss account and, therefore, the Parliament stepped in by way of Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rospective the benefit given by the Tribunal and the appellate Commissioner to the assessee is in no way affected. In that view of the matter, we do not see any merit in this appeal." 11. We have considered the rival contentions, the case laws cited and perused the documents on record. It is an a fact that the assessee had made provision for bad and doubtful debts and the same has been charged to the Profit and loss account for the year ended 31st March 2003. In the Balance sheet as on 31st March 20023 of the assessee, it can be seen that the provision of bad and doubtful debts has been reduced from the gross debtors and the net sundry debtors are shown as asset in the balance sheet. Thus the provision for bad and doubtful debts cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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