TMI Blog2016 (3) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... ), the assessee is not required to establish that debts actually gone bad once the assessee has written off the amounts in the books of account. The CIT(A) has allowed the claim of the assessee by taking note of the fact that in the books of account, assessee has made entries in respect of reversal of provision for bad and doubtful debts made in the assessment year 2004-05. Therefore, in view of the above facts and circumstances of the case, we do not find any error or illegality in the impugned order of the CIT(A). The same is upheld. - ITA No.838/Bang/2015, Cross Objn.No.189/Bang/2015 - - - Dated:- 10-2-2016 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER and SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER For The Revenue : Shri Praveen Kumar, JCIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and allowed the claim of the assessee in respect of the said amount. It was also observed that this issue cannot be examined in proceedings u/s 154. 4. Before us, learned Departmental Representative submitted that the CIT(A) has considered fresh material and documents without giving an opportunity to AO before allowing the claim of the assessee. Thus, learned Departmental Representative has submitted that the assessee failed to furnish requisite details in support of the claim before the AO in the proceedings u/s 154, whereas before CIT(A), assessee has filed new evidence in support of the claim which was accepted by the CIT(A) without giving an opportunity to AO. Therefore, there is a violation of rule 46A of the IT Rules. He has rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder: a. During the Financial year 2003-04 ('A. Y.2004-.05) the assessee company made a provision for bad and doubtful debts for ₹ 1,32,94,610/- 'and debited the same to the Profit and Loss account and credited to provision for and doubtful debts and shown in the Balahce sheet on the Liability d . At the tine of tax computation, the entire provision made for bad and doubtful debts debited to the profit and loss account was added to the profit shown in the profit and loss account and taxes on the same was paid. We are enclosing herewith the computation of total and taxable income for the A. Y.2004-05 marked as annexure-2. b. In the A. Y. 2009-10 the assessee company out of the total provision made for bad and doubtful de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the same was added back in the computation of income. f. Since, a provision is not an allowable expenditure under the I.T. Act, any provision reversed would also be not an income which would be chargeable to tax under the Income Tax Act. Accordingly, the Assessee has adopted the same yard stick in the computation of total income for A.Y.2009-10 by reducing the provision reversed and credited to the Profit and Loss account from the profit shown as per the profit and loss account. g. Any provision made in the books and the reversal thereof in any of the years, is income neutral under the Income Tax Act. h. The company during the A. Y. 2009-10 has written off debtors amounting to ₹ 98,00,327/- since the same were no longe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has written off a sum of ₹ 98,00,327/- out of the total provision made for bad and doubtful debts of ₹ 1,32,94,610/-. Thus, in the books of account, the assessee has reversed provision to the extent of said amount which was not recoverable and passed entries by debiting provision for bad and doubtful debts and credited to the profit and loss account. This treatment of reversing provision in the books of account cannot effect the allowability of the claim of the assessee in respect of bad debts written off during the year. The AO has disallowed the claim of the assessee on the ground that the submissions are not supported by contemporary evidence. It is pertinent to note that the entire record was available with the AO and parti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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