TMI Blog2016 (4) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee back to the file of AD to decide the same on merit after affording reasonable opportunity of hearing to assessee. - ITA No.3063/De1l20 12, ITA No.3064/De1l2012 - - - Dated:- 7-3-2016 - SHRI A. T. VARKEY, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Sh.Sanjeev Sapra, CA Mohit Sapra, CA For The Revenue : Sh.Susan George, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. These are the appeals filed by the assesseeon similar grounds and therefore the same are disposed off by this common order. 2. In ITA No.3063/Del/2012 the assessee has raised the following grounds of appeal:- 1. That no justification subsisted on the part of the authorities below to hold that prOVISIOnfor bad and doubtful debts amounting to ₹ 1027504/- was to be added back while working out the profit under section 115 JB of the income tax act. 2. That the income declared by the Appellant u/s 115JB of the income tax act ought to have been accepted and made the basis of assessment. At any rate without prejudice, the income assessed under section 115 JB is very excessive. 3. That the interest income of ₹ 8924317 ought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act on Rs.l,91,11,225/-. The assessment was completed u/s 143(3) of the Act and adjustment were made to the book profit of the assessee on account of provision of bad doubtful debts of Rs.I027504/-. In the normal computation of the total income interest income of ₹ 8924317 1- shown by the assessee under the head income from business whereas the AOhad treated it as income from other sources. 6. The first ground of appeal is against adjustment of book profit by increasing it by Rs.I027504I - on account of provision for bad and doubtful debts. The AO has made this addition because of amendment under the provision of section 115JB(2) of Finance Act, 2009 with retrospective effect 01.04.2001. Therefore the AO was of the view that book profit is required to be increased by the amount set aside as provision for diminution in the value of any asset. He was also of the view that provision of bad and doubtful debt is falling within that clause. Hence he adjusted the book profit. 7. Aggrieved by the order of AO the assessee preferred an appeal before the learned Commissioner of Incom\:~ (Appeals), who in turn rejected the contention of the At.,;despite the assessee relying on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia limited V Union of India and others. Though this decision is regarding validity of retrospective applicability of the introduction of clause (i) w.e.f 1-4-2001 but it has given some insight about this provision introduced. Hon high court has held that:- 3. It may be noticed that under clause (c) the amount or amounts set aside to provisions made for meeting liabilities, other than the ascertained liabilities was/were to be added to the book profit as shown in the profit and loss account. A controversy arose as to whether the provision for bad and doubtful debts made in the profit and loss account can be added to the book profit under the aforesaid clause. The Income-tax authorities took the view that such a provision was made for meeting a liability other than an ascertained liability and, therefore, the book profit had to be increased by the amount of the provision. The case of the companies which were liable to tax under section 115JB was that a provision for bad and doubtful debts cannot be regarded as a provision made for meeting a liability, let alone an unascertained liability, because a debt is not a liability but is an asset of the company and what in effect the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty ; and the provision should be for other than an ascertained liability, i.e., it should be for an unascertained liability. In other words, all the ingredients should be satisfied to attract item (c) of the Explanation to section 115JA. In our view, item (c) is not attracted. There are two types of 'debt'. A debt payable by the assessee is different from a debt receivable by the assessee. A debt is payable by the assessee where the assessee has to pay the amount to others whereas the debt receivable by the assessee is an amount which the assessee has to receive from others. In the present case, the 'debt' under consideration is a 'debt receivable' by the assessee. The provision for bad and doubtful debt, therefore, is made to cover up the probable diminution in the value of the asset, i.e., debt which is an amount receivable by the assessee. Therefore, such a provision cannot be said to be a provision for a liability, because even if a debt is not recoverable no liability could be fastened upon the assessee. In the present case, the debt is the amount receivable by the assessee and not any liability payable by the assessee and, therefore, any provision made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come as computed under the Income-tax Act in respect of any previous year relevant to the assessment year commencing on or after 1st April, 2010, is less than fifteen per cent. of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable for the relevant previous year shall be fifteen per cent. of such book profit. This amendment will take effect from April 1, 2010, and will, accordingly, apply in relation to the assessment year 2010-11 and subsequent years. It is further proposed to insert a new clause (i) after clause (h) in the Explanation 1 to sub-section (2) of the said section so as to provide that any provision for diminution in the value of any asset will also be included in the computation of book profit under the said section. This amendment will take effect retrospectively from April 1, 2001, and will, accordingly, apply in relation to the assessment year 2001-02 and subsequent assessment years. 5. In the Memorandum Explaining the Provisions in the Finance (No.2) Bill, 2009, the Central Board of Direct Taxes stated as follows (see page 213 of 314ITR (St.)) : Clarification regarding add ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of AO. 15. Both the parties have agreed that identical issue has been decided by the co-ordinate bench of this Tribunal in ITANo. ITA No. 1316/Del/2011, ITA No. 1720/Del/2011, ITA No. 1317/Del/2011, ITA No. 1721/Del/2011, ITA No. 5081/Del/2011, ITA No. 4364/Del/2011 dated 24.11.2015, wherein this issue is set aside to the file of AO.- 16. We have carefully considered the rival contentions and found that identical issue has been decided by us in those appeals as under :- 30. Ground No 3 of the appeal of assessee is against interest income as declared at ₹ 38,41,383/- ought to have been assessed as business income and not under the head -income from other sources. Before us LD AR submitted that part of the income of the interest is earned because of the amount was necessarily required to be kept by the assessee under lien of issuing bank guarantee to the Ministry of Information and Broadcasting. Ld. DR submitted that bank interest is chargeable to tax in the hands of the assessee under the head of =other sources' only. 31. We have considered the rival submission as well as a the orders of lower authorities on the issue. Before eIT (A) the details of such i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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