TMI Blog2019 (6) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... bar Industrial Co Ltd [ 2000 (2) TMI 10 - SUPREME COURT] existence of twin conditions, viz., the assessment order should be erroneous and it should be prejudicial to the interests of revenue, should be shown in the revision order passed u/s 263 - when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law. In the instant case, the view taken by the AO in not adding the Provision for doubtful debts is supporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss account to the Net profit while computing book profit u/s 115JB of the Act is erroneous and prejudicial to the interests of revenue. The provision for doubtful debts debited to profit and loss account was ₹ 832.23 lakhs. The ld CIT took the view that the provision for doubtful debts should have been added to the net profit as required under clause (i) of Explanation 1 to sec. 115JB, as the same is not actual write off. The ld CIT also took the view that the provision for doubtful debts is only a prudential write off and the same cannot be equated with irrevocable write off as envisaged in sec. 36(1)(vii) of the Act. 3. Before ld CIT(A), the assessee submitted that the claim, though mentioned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rroneous. Accordingly the ld CIT set aside the asst. order and remitted the same to the file of the AO for examining the above said issue afresh after giving due opportunity of being heard to the assessee. 4. Aggrieved, the assesse has filed this appeal before us. 5. The ld AR submitted that the assessee had also claimed the impugned amount of Provision for doubtful debts as deduction under normal provisions of the Act u/s 36(1)(vii) of the Act. The claim of the assessee was that the provision for doubtful debts has been reduced from the value of sundry debtors in the Balance sheet and the same would amount actual write off in terms of provisions of sec. 36(1)((vii) as per the decision rendered by Hon ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Systems Ltd (2013)(40 Taxmann.com 124) that the provision for doubtful debts need not be added to the net profit under clause (i) of Explanation (1) to sec. 115JB of eh Act. Accordingly the ld AR submitted that the view taken by the AO gets support from the decision rendered by Hon ble jurisdictional high court in the case of Kirloskar Systems Ltd (Supra) and hence the asst. order cannot be termed as erroneous and prejudicial to the interest of the Revenue. 6. On the contrary, the ld DR submitted that the ld CIT(A) has passed reasoned order and she has taken support of the decision rendered by ld CIT(A) in the case of VIjaya Bank for asst. year 2009- 10 wherein the decision rendered by Hon ble Supreme Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpreted by the Supreme Court in several judgments to which it is now necessary to turn. In Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the Supreme Court held that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it is only when an order is erroneous that the section will be attracted . The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression prejudicial to the interests of the Revenue , the Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law. 9. In the instant case, the view taken by the AO in not adding the Provision for doubtful debts is supported by the binding decision rendered by Hon ble Karnataka High Court in the case of Kirloskar Systems Ltd (supra). The order passed by Hon ble Karnataka High Court is binding on the authorities below it. Accordingly, the view taken by the AO cannot be termed as erroneous and prejudicial to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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