TMI Blog2019 (11) TMI 1800X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of doubtful debt to the profit and loss account and credits the assets account like sundry debtors account, that would constitute a write off of an actual debt. However, if an assessee debits provision for doubtful debts to the profit and loss account and makes a corresponding credit to the current liabilities and provisions on the liabilities side of the balance-sheet, then it would constitute a provision for doubtful debt. In the latter case, the assessee would not be entitled to deduction after April 1, 1989. Hence, we find no error in the order of the AO so as to render it prejudicial to the interests of the revenue. Pr. CIT is not justified in invoking the provisions of section 263 on this issue. Hence, we quash the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment made during the year is neither erroneous nor prejudicial to the interests of the revenue. 4. The learned PCIT erred in not appreciating the facts held on records and interpreting the financial statements on record. The amount provisions debited to profit and loss account and reduced from advances is clearly stated in the Financial Statements for the year. The fact that the Profit and loss account is debited with Provision for Non-Performing Assets amounting to Rs.294,76,94,000/- is clear from amount debited to the Profit and Loss account under the head 'Provisions and Contingencies' (Page no.57 of the Annual Report) read with its breakup given in Page no 64 of Annual Report. 5. The Learned PCIT ought to have taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that since the amount of Rs.294,76,94,000/-being provisions made in accounts for NPA was not allowable u/s. 36(1)(vii), allowance of deduction u/s.36 (1)(vii) resulted in excess allowance of loss to be carried forward to the tune of Rs.121,07,84,000/-having a potential tax effect of Rs.41,15,45,482/-. According to the Pr. CIT, as per explanation-1 to clause(vii) of section 36(1), any bad debt or part there-of written off as irrecoverable in the accounts of the assessee shall not include any provision for bad and doubtful debts made in the accounts of the assessee. Hence, the Pr. CIT observed that the Assessing Officer had not examined the above issue which resulted in the said order being erroneous in so far as it is prejudicial to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if an assessee debits provision for doubtful debts to the profit and loss account and makes a corresponding credit to the current liabilities and provisions on the liabilities side of the balance-sheet, then it would constitute a provision for doubtful debt. In the latter case, the assessee would not be entitled to deduction after April 1, 1989. 5.1 Hence, we find no error in the order of the Assessing Officer dated 07/12/2017 so as to render it prejudicial to the interests of the revenue. Since the view taken by the Assessing Officer is supported by the Supreme Court in the case of Vijaya Bank vs. CIT and Another (supra), the Pr. CIT is not justified in invoking the provisions of section 263 of the I.T. Act on this issue. Hence, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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