TMI Blog2014 (1) TMI 1765X X X X Extracts X X X X X X X X Extracts X X X X ..... debited by assessee is indeed deducted from the total debts and only the net balance shown in the balance-sheet then by virtue of decision of the Hon’ble Karnataka High Court in the case of Yokogawa India Ltd. (2011 (8) TMI 766 - KARNATAKA HIGH COURT ) there cannot be any addition of such amount under section 115JB of the Act. However, as mentioned by us, this aspect is not clear. Hence we are of the opinion that the issue regarding provision for doubtful debts requires a fresh look by the Assessing Officer. We, therefore, set aside the order of authorities below in so far as this aspect is concerned, and remit the matter back to the file of Assessing Office for consideration afresh in accordance with law. Allowability of aircraft flying rights charges - Held that:- As decided in assessee's own case for previous assessment year we find that the assessee adduced necessary material to indicate that the aircraft was taken on hire for its business purposes. The Assessing Officer is not competent to decide the business expediency of incurring any expenditure. Be that as it may, it is observed that the Assessing Officer did not deny that log book of the aircraft was not furnished but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount set aside as a provision for diminution in the value of any asset, was required to be added to the book profits. According to him, Clause (i) of Explanation 1 to Section 115JB(2) was clear in this regard. 6. Now before us, ld. AR strongly assailing the orders of the authorities below submitted that assessee had reduced the provision of ₹ 251.01 lakhs made by it for diminution in the value of investments, from the total amount of investment. According to him, total investment came to ₹ 3056.53 lakhs and after deducting the provision the net value of investment was ₹ 2805.52 lakhs. This alone was shown in its balance sheet as on 31.03.2007. Similarly according to him, out of total sundry debtors of ₹ 23,366.55 lakhs debts outstanding for a period exceeding six months came to ₹ 4,446.29 lakhs. The said amount was arrived at after deducting the provision of ₹ 1063.70 lakhs. In other words, according to him, only the net amounts after the provisions were shown in the balance-sheet. Relying on the decision of the Hon ble Karnataka High Court in the case of CIT vs.- Yokogawa India Ltd. (2012) 204 Taxman 305 , AR submitted that retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not attracted to the facts of the case. Item (c) in Section 115J A and 115-JB(1) are identical. In order to attract the Explanation the debt which is doubtful or bad should satisfy the requirement contemplated in Item (c) of the Explanation. It is the amount or amounts set aside as provisions made for meeting the liability other than the ascertained 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 Explanation (i). It is in that context the appellate Commissioner 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 ( supra) where the Apex Court had an occasion to consider his explanation. It accepted the argument on behalf of the Revenue to the effect that the explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment, it no longer remained a provision. Effectively it was a write off. This view is supported by the decision of the Hon ble Apex Court in the case of Vijaya Bank vs.- CIT(2010) 323 ITR 166 . Therefore, the claim of assesee with regard to diminution in value of investment has to succeed. 9. Vis-a-vis the claim in respect of provision for bad and doubtful debts, relevant Schedule 7 of its Balance-sheet is reproduced hereunder:- Schedule 7 Sundry debtors (unsecured) As at 31.03.2007 As at 31.03.2006 Debts outstanding for a period exceeding six months considered good 4,446.29 4,263.29 Doubtful 1063.70 439.00 Less : Provision 1063.70 ----- 439.00 ------ 4,446.20 4,263.29 Other debts Considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ITA No. 566/Kol/2009, the Tribunal has accepted the assessee s claim on this issue by following the earlier order of the Tribunal. Relevant discussion is made in para-3 of the Tribunal order (a copy of which is available on record). Respectfully following the precedent, we uphold the impugned order in granting the deduction in respect of retainership fee paid to M/s Sreebala (P) Ltd. This ground is not allowed . 8. The last ground is against the deletion of addition under the head Aircraft flying rights charges . The facts apropos this ground are that the assessee claimed deduction of ₹ 3.40 crores in respect of Aircraft flying rights charges . On being called upon to justify the deduction, the assessee stated that it entered into an agreement dated 17-11-2003 with M/s. Spencer Travel Services Ltd. (STSL for short), whereby the assessee agreed to obtain the exclusive flying rights of an aircraft. In consideration of the same, the assessee agreed to pay a sum of ₹ 3.40 crores per annum to STSL towards flying rights charges. It was explained that assessee was largest carbon black manufacturer in the country having manufacturing facilities at several places an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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