TMI Blog2014 (1) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal No. 708 (Mum.) of 2011 - - - Dated:- 19-6-2013 - B.R. Mittal And Rajendra , JJ. For the Appellant : Ms. Neeraja Pradhan. For the Respondent : R.C. Jain. ORDER:- PER : B.R. Mittal The Department has filed this appeal for assessment year 2005-06 against order of ld. CIT(A)-XVII, Mumbai dated 29.10.2010 taking following grounds: "1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in relying on the case of Apollo Tyres 255 ITR 273 which was rendered in the context of section 115J and not in the context of section 115JB which was inserted by Finance Act 2000 w.e.f. 1.4.2001; 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that the provision of Rs.75,00,000/- for doubtful loans and advances is an ascertained liability and no adjustment was required to be made in computing the book profits, relying on the decision of the Apex Court in the case of Apollo Tyres 225 ITR 273 without appreciating the fact that Explanation 1(c) of section 115JB expressly stipulates such disallowance; 3. The appellant pays that the order of the CIT(A) on the above ground be set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the computation of income u/s 115JB was not justified. This is also contrary to the decision of the Hon'ble Supreme Court in the case of Apollo Tyre (Supra). In view of these facts and circumstances, we set aside the computation of income u/s 115JB and allow the ground of the assessee. The remaining issue is against charging of interest u/s 234D". The addition was hence not warranted. 7.2 The submission has been considered. As such provision is an ascertained liability, the argument that no adjustment was required in respect of this item is accepted. The AO is directed to re-compute profits u/s 115JB accordingly.' Hence, Revenue is in appeal before the Tribunal. 4. During the course of hearing, the ld. DR referred the amendment made by the Finance (No.2) Act, 2009 and submitted that a retrospective amendment has been made by inserting Clause(i) to Explanation (1) to Sub-Section (2) of Section 115JB of the Act with retrospective effect from 1.4.2001 and accordingly the provisions for doubtful debts and provision for doubtful advances have to be added by computing the book profit. The ld. DR also referred the decision of Mumbai Bench "C" of the Tribunal in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . At the outset, we may state that the said decision of the Tribunal dated 12.2.2010 (supra) is not relevant while deciding the issue before us. In the said case, the Tribunal vide paragraph 30 has considered the issue relating to the provisions of gratuity and provisions of leave encashment made by the assessee wherein the contention of the ld. AR was accepted that the said provisions made by the assessee towards gratuity and leave encashment were on the basis of ascertained liability. We consider it prudent to state paragraphs 26 to 30 of the said order (supra) which are as under : "26. The next issue relates to confirming the addition to book profits u/s 115JB at Rs.15,57,553/-. The AO made computation of income u/s 115JB on account of provision for gratuity at Rs.6,68,143/- and on account of provision of leave encashment at Rs.8,89,410/- totalling to Rs.15,57,553/-. 27. The CIT(A) also confirmed the action of AO. 28. It was submitted before the Tribunal by the ld. AR of the assessee that the decision of the lower authorities is contrary to the decision of Supreme Court in the case of Apollo Tyres (255 ITR 273). It was further submitted that these provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (2) of the said Section. Thus, the said amendment to add back the provisions for diminution in the value of any assets is to be added to the net profit as shown in the profit and loss account for the purpose of computation of book profit has been made retrospective from 1st Day of April, 1998 as per section 115JA and whereas as per section 115JB it is made effective retrospectively from 1.4.2001. Since in the assessment year under consideration Section 115JB of the Act is applicable, the said amendment made by inserting a new clause (i) in Explanation (1) to Sub-section (2) of Section 115JB will apply in relation to from the assessment year 2001-02 and for subsequent assessment years while computing book profit for levy of Minimum Alternate Tax. In view of the above amendment it is relevant to state that the decision of the Hon'ble Apex Court in the case of CIT v. HCL Comnet Systems Services Ltd. [2008]305 ITR 409(SC) was overruled wherein, Their Lordships of the Hon'ble Apex Court have held that provisions made for bad and doubtful debts are not for meeting liability; that provision for doubtful debts and doubtful advances did not fall within clause (c ) of the said Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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