TMI Blog2022 (2) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... y wrote off the trade receivables and claimed bad debt. Just because the narration used by the assessee as provision for trade receivables, but in fact, it is only actual loss / expenditure claimed by the assessee which can be classified under the head bad debts as per section 36(1)(vii) of the Act, we have to consider substance over the form and the intention of the assessee has to be appreciated and not the nomenclature noted to claim the expenses, it has merely mentioned the term provision it does not mean that it becomes provision. Therefore, we direct the assessing officer to delete the addition as it actually pertains to bad debts written off in the books of account. - Decided in favour of assessee. - I.T.A No. 2151/Mum/2019 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee before CIT(A) are reproduced below:- The Ld. AR has, inter alia filed its submissions which are reproduced hereunder: Broadly, the appellant places reliance on the following contentions: The provisions for trade receivable is debited to P L account under the head other expenses and in the balance sheet, trade receivables have been reflected net of provision for trade receivable. Where besides debiting the P L account and creating a provision for trade receivables, the appellant has simultaneously obliterated the said provision from its accounts by reducing corresponding amount from debtors on the assets side of the balance sheet, there is an actual write off of debtors by the appellant and hence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sheet is shown as net of the provision for impugned bad debt the assessee will be entitled to the benefit of deduction u/s.36(1)(vii) as there is an actual write off by the assessee in his books. The Supreme Court has clearly rejected the Department arguments that every debtors should be squared up. It held that if the individual account are to be closed then the debtor/defaulter in each of those suits would rely upon the financial statements and contend that no amount is due and payable in which event the suit may be dismissed. In view of the above, we most humbly submit that our case clearly falls within the ratio laid down by the Supreme Court in Vijaya Bank's case (supra) and therefore, the amount debited to P L accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention to the decision of the Apex Court in the case of HCL Comnet Systems Services Ltd. (174 Taxman 118) (Refer Page No.24 of LPB) which reads as under: There are two types of debt a debt payable by the assessee is different from a debt receivable by the assessee. A debt is payable by the assessee where it has to pay the amount to others, whereas the debit receivable by the assessee is an amount which it has to receive from others. In the instant case, debt under consideration was' debit receivable by the assessee. The provision for bad and doubtful debt, therefore, was made to cover up the probable diminution in the value of asset, i.e. debt which was an amount receivable by the assessee. Therefore, such a provision could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the book profits under section 115JB of the Act. Now the Tribunal's decision is upheld by the Jurisdictional Bombay High Court in same case of Tainwala Chemicals Plastics India Ltd. (34 Taxmann.com 159) (Refer Page No.29 of LPB). The relevant extract reads as under- In so far as question (k) is concerned the grievance of the Revenue is that for the purpose of computing profits U/S.115JB, the provision of trade receivable had to be added. In view of our decision to question (c) above, issue of adding back the provisions for the purpose of computing book profits does not survive. This is particularly so in view of the fact' that the Tribunal has recorded a finding of fact that the provision had been written off. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture but mere provision and hence, not allowable as expenditure u/s. 37(1). In light of the above discussions. I confirm the disallowance of provision of expenses made by the Ld. AO. This ground of appeal is dismissed. 4. At the time of hearing, learned AR brought to our notice pages 51 52 of the paper book to submit that in the year ending 31/03/2014 the trade receivables stood at ₹ 7,32,64,747/- whereas as at 31/03/2015 it has been reduced to ₹ 22,06,123/- and he brought to our notice the other expenses claimed by the assessee which includes provision for trade receivables, which assessee has claimed as bad debts. However, in the Profit Loss Account, under the head Other expenses the narration mentioned is as pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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