TMI Blog2022 (8) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... trade receivables and investments as reflected in the balance-sheet at the end of the year and this being so, we hold, respectfully following the decision of the Hon ble Gujarat High Court in the case of Vodafone Essar Gujarat Ltd that it is not merely a case of provision but an actual write off which would not be hit by clause (i) of Explanation to Section 115 JB of the Act. We accordingly delete both the additions made by the Assessing Officer and confirmed by the learned CIT(A) to the book profit of the assessee-company under Section 115JB of the Act on account of provision for doubtful debts and provision for diminution in the value of investment and allow ground Nos. 2 3 of the assessee s appeal. - ITA No. 1261/Ahd/2019 - - - Dated:- 3-8-2022 - SHRI P.M. JAGTAP, VICE-PRESIDENT AND MS. MADHUMITA ROY, JUDICIAL MEMBER Assessee by: Shri Tushar Hemani, Sr Advocate And Shri Parimalsinh B. Parmar, AR Revenue by: Shri Mukesh Thakwani, Sr. DR ORDER PER P.M. JAGTAP, VICE-PRESIDENT : This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals)-1, Ahmedabad [ CIT(A) in short] dated 07.06.2019 and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the year under consideration was filed by it on 14.10.2013 declaring a total income of the assessee at Rs.1,56,89,960/-. In the assessment originally completed under Section 143(3) of the Act vide an order dated 28.12.2015, the total income of the assessee was determined by the Assessing Officer at Rs.2,43,30,933/- after making certain additions and disallowances. Thereafter, it was noticed by the Assessing officer that the assessee-company in its Profit and Loss Account had debited Rs.6,03,098/- and Rs.31,00,000/- on account of provision for doubtful debts and provision for diminution in value of investment respectively. Since both these provisions, according to the Assessing Officer, were liable to be added for the purpose of computation of book profit under Section 115JB of the Act, which was neither done by the assessee in its return of income nor even by the Assessing Officer in the assessment originally completed under Section 143(3) of the Act, the assessment was reopened by the Assessing Officer and a notice under Section 148 of the Act was issued by him to the assessee after recording the reasons and after taking approval of the competent authority. During the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the assessee relying mainly on the decision of Hon ble Gujarat High Court in the case of CIT vs. Vodafone Essar Gujarat Ltd, [2017] 397 ITR 55 (Guj.), to contend that it was not the case of mere provision made by the assessee for doubtful debts and diminution in the value of investment but such provision was actually reduced from the corresponding amounts of debts and investments as appearing on the asset side of the balance-sheet. The learned CIT(A) did not find merit in this submission of the assessee and proceeded to confirm both the additions made by the Assessing Officer to the book profit of the assessee-company under Section 115JB of the Act on account of provision for bad debts and provision for diminution in the value of investment for the following reasons given in paragraph Nos. 4.3 and 5.4 of his impugned order:- 4.3 I have carefully considered the facts of the case, assessment order and submission of the appellant. The Assessing officer has made the addition of provision for doubtful debts of Rs.6,03,908/- in the book profit. The appellant contended that the provision for doubtful debts is ascertained liability and therefore, no adjustment as per clause ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Reliance Welfare Association Circle which is not applicable in the appellant's case as the facts are different. The Hon'ble Tribunal in the above cited case has noted that the diminution in the value of investment in the above case is actually charged as the assessee had credited the difference between the sale price and fair value as on 31/03/2008 to Profit Loss Account and not the difference between sale price and its cost. In view of the above, the adjustment made by the Assessing Officer is upheld. 6. We have heard the arguments of both the sides and also perused the relevant material available on record. The learned Counsel for the assessee, at the outset, has submitted that none of the two provisions made by the assesseecompany is for any liability. He has contended that the same in fact were not provisions made by the assessee by merely debiting the profit and loss account and crediting the provision for bad and doubtful debts and diminution in the value of investment. He has invited our attention to page Nos. 39 40 of paperbook to show that the provision for doubtful debts and provision for diminution in the value of investment was actually reduced by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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