TMI Blog2014 (1) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... bad-debts not considered – Computation of book profit u/s 115JA of the Act - The assessee had claimed the amount as provision for bad and doubtful debts - though the assessee called the amount a provision, what was effectively done was only a write-off of bad debts – Following M/s. Vijaya Bank Versus Commissioner of Income Tax & Anr. [2010 (4) TMI 46 - SUPREME COURT] - where there is a debit in the Profit & Loss account as provision for bad and doubtful debts, but if a corresponding amounts stood obliterated from loans and debts on the asset side of the balance sheet, it is not necessary for the assessee to show that the write-off is effected in each and every individual account of the debtors - Even though the amendment to the Act has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R. did not have any objections to the admission of the additional ground. We therefore admit the additional ground filed by the assessee. 4. Facts apropos are that assessee had filed its return for impugned assessment year declaring a loss of Rs. 10,81,521/- and income of Rs. 19,87,128/- under the normal provisions and under Section 115JA. Originally, the return was subjected to process under Section 143(3) of the Act. Thereafter, a notice was issued under Section 148 on 9.2.2005. As per the A.O., while computing the book profit, assessee had charged Rs. 13.77 lakhs in its Profit Loss account as provision for doubtful debts. Relying on clause (c) of Explanation to Section 115JA of the Act, Assessing Officer reached an opinion that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer while computing the 115JA profits. However, he did not give any specific finding on the ground taken by the assessee that such provisions were in fact bad debts written off as irrecoverable. 6. Now before us, learned A.R. submitted that assessee was never given the reason for reopening by the lower authorities. According to him, there was no reason for reopening whatsoever eventhough the original return was only subjected to processing under Section 143(1) of the Act. Unless and until the Revenue could show that there was a reason for reopening the assessment, the reopening was bad. On merits, learned A.R. submitted that though assessee had termed the sum of Rs. 13.77 lakhs as a provision, in fact, it was only bad debts written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Assessing Officer, cannot now say that there was no reason for such reopening. No doubt, if the assessee had asked such reason, Assessing Officer was bound to give such reason to the assessee and by virtue of the decision of Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd. v. ITO 259 ITR 19, Assessing Officer was duty bound to dispose of the objection, if any raised by the assessee, before completing the assessment. Assessee having not raised any objection before Assessing Officer and having never asked for the reason, we cannot accept that there was no reason for reopening. A presumption cannot be taken that Assessing Officer had no reason with him when he resorted to the reopening. In any case, in view of the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aid of the assessee. Nevertheless, the said decision was given in the context of claim under normal provisions of the Act, viz. Section 36(1)(vii) of the Act. However, as pointed out by the learned A.R., Hon ble Karnataka High Court in the case of CIT v. Yokogawa India Ltd. (204 Taxman 305), has held that if bad or doubtful debt is reduced from loans and debtors shown in the balance sheet, Explanation to Section 115JA or 115JB is not at all attracted. Thus eventhough the amendment to the Act has been made retrospectively, assessee can always claim that the provision for doubtful debts was in fact reduced from debtors account and this was no more a provision for diminution in value of assets or provision for any unascertained liability. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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