TMI Blog2014 (2) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... the “Book Profit” - Held that:- In the instant case, we are concerned with the provisions of sec. 115JB, wherein the book profit is required to be computed from the audited accounts prepared under the provisions of the Companies Act. Under the accounting principles, on the basis of which the accounts are prepared under the Companies Act, the terms “Bad debts” and the “Provision for bad and doubtful debts” have distinct meaning and has got different accounting treatment. Hence, in our view, the decision rendered by Hon’ble Supreme Court in the case of Vijaya Bank (2010 (4) TMI 46 - SUPREME COURT ) under the normal provisions of Income tax Act, cannot be applied to the provisions of sec. 115JB of the Act. We notice that the Co-ordinate bench in the case of Tainwala Chemicals & Plastics India Ltd. [2011 (4) TMI 840 - ITAT MUMBAI ] , did not consider the applicability of the Companies Act to the book profit computed under sec. 115JB Act. In view of the foregoing, in our view, the Ld CIT was justified in upholding the addition of “Provision for bad and doubtful debts” to the book profit. Computation of interest u/s 234B and 234C - Held that:- We set aside the order of Ld CIT(A) on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signature. Accordingly, the said ground is dismissed as not pressed. Ground no.5 is general in nature and does not require any adjudication. The remaining grounds relate to the following three issues: i) Validity of reopening of assessment u/s 147 of the Act ii) Validity of adding the provision for doubtful debts to the book profit computed Shakti Insulated 2 Wires Ltd u/s 115JB of the Act, and iii) Correctness of the computation of interest u/s 234B and 234C of the Act. 3 The facts relating to the case are stated in brief: The assessee filed its original return of income on 31.10.2005 declaring nil income. The return was processed u/s 143(1) of the Act on 14.3.2006. Subsequently, the AO has noticed that the assessee has claimed deduction of ₹ 86,70,954/- under the head Provision for bad and doubtful debts and did not disallow the same. The assessee also did not add the same to the net profit, while computing the book profit u/s 115JB of the Act. Hence, the AO reopened the assessment by issuing notice u/s 148 of the Act on 23.3.2010. In the reopened assessment, the AO added the amount of ₹ 86,70,954/- claimed under the head Provision for bad and doubtf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Supreme Court in the case of Rajesh Jhaveri Stock brokers vs DCIT reported in 291 ITR 500 and also in the case of Indian Eastern Newspaper Society vs CIT reported in 119 ITR 996 to come to the conclusion that the reopening of assessment was valid in the instant case; since the original return of income was processed only u/s 143(1) of the Act. We also notice that the ld CIT(A) also placed reliance on the decision of the Hon ble Bombay High Court in the case of Rallies India Ltd (citation not given). 4.3 In the instant case, we have already noticed that the return of income has been processed only u/s 143(1) of the Act. Hence, in our view, the decision rendered by Hon ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (supra) squarely applies in the instant case. The Ld A.R placed reliance on the decision of Co-ordinate Mumbai bench in the case of Aipitia Marketing (P) Ltd to contend that the re-opening of assessment is not valid, even if the return had been processed u/s 143(1) of the Ace, if there is no fresh material before the AO. In our view, the said decision is not applicable in the instant case, since the reassessment is warranted due to the retrospecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, we uphold his order on this issue. 6. The next issue relates to the computation of interest u/s 234B and 234C of the Act. The ld AR submitted that clause (i) to Explanation 1 to sec. 115JB was inserted by Finance (No.2) Act 2009 were retrospective effect from 1.4.2001. The Ld A.R further submitted that the assessee, while computing the current income for the purpose of computing the advance tax to be paid, could not have foreseen the amendment that will be made in future with retrospective effect. Hence, the advance tax paid by the assessee fell short. Accordingly he submitted that the interest u/s 234B and 234C could not be levied on the tax component attributable to the addition of Provision for bad and doubtful debts . In this regard, he placed reliance on the decision of Co-ordinate bench of Tribunal, wherein one of us was the party, in the case of Garware Polyester ltd (2013)(33 taxmann.com 164)(Mum). The assessee also placed reliance on the decision of Delhi bench of Tribunal in the case of DCIT Vs. Uttam Sugar Mills Ltd (2012)(20 taxmann.com 223). 6.1 We heard Ld D.R and also have gone through the decision relied upon by the Ld A.R. We notice the Co-ordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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