TMI Blog2019 (4) TMI 1583X X X X Extracts X X X X X X X X Extracts X X X X ..... 15JA - HELD THAT:- Issue decided in M/S. INTEGRATED FINANCE CO. LTD. VERSUS THE DEPUTY COMMISSIONER OF INCOME-TAX [ 2019 (2) TMI 1439 - MADRAS HIGH COURT] held the settled position in law as on date is that with effect from 01.04.1998 any amount set aside as provision for diminution in value of asset would be liable to be added back to the ''book profits'' in terms of s.115JA - Decided against assessee. Allowability of Provision for Non Performing Assets - HELD THAT:- The said issue is covered by a decision of a Co-ordinate Bench of this Court in the case of T.N.Power Finance Infrastructure Development Corpn. Ltd. v. Joint Commissioner of Income Tax, [ 2005 (10) TMI 38 - MADRAS HIGH COURT] held that Appellate Tribunal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding that the provision for Non Performing Assets is not allowable, even though the same was based on the directions from the RBI ? 4. Whether the Tribunal failed to note that when, despite the High Court's interim order, the income from NPAs was included in the taxable income, the Department could disallow the provision for NPAs ? 5. Whether the order of the Tribunal is liable to be set aside in view of the order of interim injunction granted by this Court in respect of the provision for Non Performing Assets ?'' 2. The Assessee-Company has since gone into liquidation and, therefore, Mr.Gopalakrishnan, learned Counsel for Official Liquidator, has represented the Assessee-Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to say that the Respondent claimed deduction by virtue of Guidance Note rather it only applied the method of bifurcation as prescribed by the expert team of ICAI. Further, a conjoint reading of Section 145 of the IT Act read with Section 211 (un-amended) of the Companies Act make it clear that the Respondent is entitled to do such bifurcation and in our view there is no illegality in such bifurcation as it is according to the principles of law. Moreover, the rule of interpretation says that when internal aid is not available then for the proper interpretation of the Statute, the court may take the help of external aid. If a term is not defined in a Statute then its meaning can be taken as is prevalent in ordinary or commercial parlance. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be part of 'book profits' in terms of Explanation (c) to s.115JA of the Act. The Bench held that such provision would only represent a probable diminution in the value of the asset not a provision for liability. Thus, Explanation (c) to s.115JA would not be attracted in such instances and the amount was not liable to be added back in the computation of book profits. 10. The aforesaid judgment of the Supreme Court was overcome by way of a legislative amendment and Finance (No.2) Act 2009 inserted clause (g) in Explanation to s.115JA with retrospective effect from 01.04.1998 to read as follows : 115JA Deemed Income relating to certain companies. ..... Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has directed the assessee to provide for non performing assets, that direction cannot override the mandatory provisions of the Income-tax Act contained in Section 36 (1) (viia) which stipulate for deduction not exceeding 5 per cent of the total income only in respect of the provision for bad and doubtful debts which are predominately revenue in nature or trade related and not for provision for non-performing assets which are of predominately capital nature, and held that the Assessing Officer was right in disallowing the provision of ₹ 30 lakhs debited in the profit and loss account of the assessee towards non-performing assets. 6. In this view of the matter, we are of the view that the Appellate Tribunal was right i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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