TMI Blog2016 (6) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be added in order to compute book profit. Therefore, after the Explanation the assessee is now required not only to debit the P&L as/c but simultaneously also reduce the loans and advances or the debtors from the assets side of the balance sheet to the extent of the corresponding amount so that, at the end of the year, the amount of loans and advances/debtors is shown as net of the provisions for the impugned bad debt. Therefore, in the first place if the bad debt or doubtful debt is reduced from the loans and advances or the debtors from the assets side of the balance sheet the Explanation to s. 115JA or JB is not at all attracted. See Yokogawa India Ltd.[2011 (8) TMI 766 - KARNATAKA HIGH COURT] - ITA NO. 245/2015 - - - Dated:- 7-6- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same cannot be considered as provision but is the write off of bad debts without appreciating that as per the accounting standards the provisions are either shown separately in the balance sheet or may be reduced from the concerned asset/liability as per the practice followed by the assessee for writing its books of accounts? 2. Whether the Tribunal is correct in debiting the P L account, the assessee as reduced the amount from the debtors thereby reducing the value of the asset without appreciating that provision of clause (i) of explanation 1 to section 115JB require that the net profit as shown in P L account should be increased by the amount, or amount set aside as provision for diminution in the value of asset if any debite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L account and reduction of the provision from the debtors is only a requirement under the Companies Act? 2. We have heard Mr. K.V.Aravind, learned counsel appearing for appellants-revenue and Mr.A.Shankar, learned counsel appearing for respondent-assessee. 3. We may record that the Tribunal, while considering the appeal, at paragraphs 25 and 26 has observed thus: 25. We have perused the orders and heard rival contentions. Claim of assessee is that though it had termed the sum as provision for bad debts, having deducted such amount from its gross debtors, it was equivalent to a bad debt write off. In other words, it was no more a provision. Thus, it would not fall within the ambit of clause (g) of Explanation to Section 115J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtained liabilities. In the instant case also the bad and doubtful debt for which a provision is made which is in the nature of diminution in the value of any asset would not fall within item (c) of Expln. (1). It is in that context the CIT(A) as well as the Tribunal has granted relief to the assessee, Realising the fatality of the said argument, it is contended now that Item (i) cannot amount to satisfaction as provision for diminishing in the value of assets is substituted, in case of the assessee falls under Item (c). In meeting the aforesaid case, the learned counsel for the assessee brought to our notice the judgment of the apex Court in the case of Vijaya Bank vs. CIT (supra) where the apex Court had an occasion to consider his expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, after the Explanation the assessee is now required not only to debit the P L as/c but simultaneously also reduce the loans and advances or the debtors from the assets side of the balance sheet to the extent of the corresponding amount so that, at the end of the year, the amount of loans and advances/debtors is shown as net of the provisions for the impugned bad debt. Therefore, in the first place if the bad debt or doubtful debt is reduced from the loans and advances or the debtors from the assets side of the balance sheet the Explanation to s. 115JA or JB is not at all attracted. In that context even if amendment which is made retrospective the benefit given by the Tribunal and the CIT(A) to the assessee is in no way affected. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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