TMI Blog2017 (9) TMI 1296X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus the provision for bad and doubtful debts cannot be termed as a provision for liability but is in the nature of diminution in the value of asset.- Decided in favour of Assessee. MAT Computation - Deduction u/s. 10B for determination of book profit under section 115JB - Held that:- Ajanta Pharma (2010 (9) TMI 8 - SUPREME COURT ) was a case in which very similar issue in the context of the deduction under section 80HHC of the Act came up for consideration for reduction while computing book profit for the purpose of section 115JB of the Act. Section 80HHC of the Act also as is well known recognizes proportionately the income arising from the export turn-over for deduction. In this context the Supreme Court held that while reducing the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (III) Whether on the facts and circumstances of the case and in law, the ITAT was justified in upholding the assessee s claim for weighted deduction u/s. 35(2AB) of the Income Tax Act in relation to the expenditure for registration of Foreign Trade Marks and Patents? (IV) Whether on the facts of the case and in law, the Income Tax Appellate Tribunal was justified in reversing the decision of the A.O. on the question of allocation of R D expenses for computing profit eligible for deduction u/s. 80IB of the Income Tax Act, 1961? (V) Whether on the facts of the Case, the ITAT was right in law in deleting disallowance of expenses incurred by the assessee on behalf of M/s. Sun Pharmaceuticals Industries of which the assessee was a partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e where the assessee made a provision for bad or doubtful debt. With insertion of clause (i) to the explanation with retrospective effect, any amount or amounts set aside for provision for diminution in the value of the asset made by the assessee, would be added back for computation of book profit under section 115JB of the Act. However, if this was not a mere provision made by the assessee by merely debiting the Profit and Loss Account and crediting the provision for bad and doubtful debt, but by simultaneously obliterating such provision from its accounts by reducing the corresponding amount from the loans and advances on the asset side of the balance sheet and consequently, at the end of the year showing the loans and advances on the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit of the eligible business under section 10B of the Act should be reduced or only that profit which is computed for the purpose of deduction in terms of sub-section (1) read with sub section (4) of section 10B of the Act. The Tribunal held that the issue is covered in favour of the assessee by virtue of the judgement of the Supreme Court in case of Ajanta Pharma Ltd. vs. Commissioner of Income-Tax reported in [2010] 327 ITR 305 (SC) . 5. Ajanta Pharma (supra) was a case in which very similar issue in the context of the deduction under section 80HHC of the Act came up for consideration for reduction while computing book profit for the purpose of section 115JB of the Act. Section 80HHC of the Act also as is well known recognizes p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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