GLOABAL MANSIONS P.LTD, MUMBAI V. ITO WD 2(1)(4), MUMBAI

ITA 1192/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1792 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: Bad and doubtful debts; Set aside
• Section: 143(3); 115JB; 143(1); 13; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJEET SINGH, JUDICIAL MEMBER ITA NO.1192/M/2017 ASSESSMENT YEAR: 2012-13 M/S. GLOBAL MANSIONS P. LTD., NOW MERGED WITH LENIENT FINVEST P. LTD., OFF NO.2, 3 RD FLOOR, CRESCENT CHAMBERS, 56 TAMRIND LANE, FORT, MUMBAI 400 023 PAN: AAACG1923H VS. ITO WD 2(1)(4), AAYAKAR BHAVAN, MUMBAI - 400020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MANISH SHAH, A.R. MS. NIYANTA MEHTA, A.R. REVENUE BY : SHRI CHAUDHARY ARUN KUMAR SINGH, D. R. DATE OF HEARING : 17.07.2019 DATE OF PRONOUNCEMENT : 13.09.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 22.11.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 27.09.2012 DECLARING TOTAL INCOME AT NIL WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUE NTLY THE CASE WAS SELECTED UNDER CASS AND STATUTORY NOTICES WERE DULY ISSUED AND SERVED UPON THE ASSESSEE. DURING THE CO URSE OF ITA NO.1192/M/2017 M/S. GLOBAL MANSIONS P. LTD. 2 ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT ASSESS EE HAS ADDED BACK PROVISIONS MADE FOR BAD AND DOUBTFUL DEB TS OF RS.3,65,57,600/- IN ITS COMPUTATION OF TOTAL INCOME BUT HAS FAILED TO ADD BACK WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT AND ACCORDINGLY THE ASSESSEE WAS C ALLED UPON TO EXPLAIN WHY THE DIFFERENT STAND IS TAKEN WHEN TH E PROVISIONS HAVE BEEN ADDED BACK IN THE NORMAL COMPUTATION WHER EAS WHILE COMPUTING THE BOOK PROFITS IN RESPECT OF THE EXPRES S PROVISIONS ENACTED FOR ENHANCING THE BOOK PROFIT AS PER CLAUSE (C) TO EXPLANATION 1 OF SECTION 115JB(2) OF THE ACT. THE ASSESSEE SUBMITTED BEFORE THE AO THAT IN NOTE NO.15 OF NOTES TO ACCOUNTS SHOWED THE DETAILS OF OPERATION AND OTHER EXPENSES WHEREIN THE PROVISIONS OF BAD AND DOUBTFUL DEBTS WERE DEBITED TO THE P & L ACCOUNT. IT WAS ALSO SUBMITTED THAT IN NOTE NO.9 W HICH IS AS REGARDS TRADE RECEIVABLE, THE SAID PROVISIONS FOR B AD AND DOUBTFUL DEBTS WERE REDUCED FROM THE TRADE RECEIVA BLES AND NET AMOUNT WAS SHOWN IN THE BALANCE SHEET. THE ASSESSE E RELIES ON THE DECISION OF VIJAY BANK VS. CIT 323 ITR 166(SC). SIMILARLY, THE ASSESSEE RELIES ON THE DECISION OF HONBLE BOMB AY HIGH COURT IN THE CASE OF KEC INTERNATIONAL LTD. VS. DCI T (33 TAXMANN.COM 243) AND CIT VS. YOKOGAWA INDIA LTD. (2 012) (341 ITR 385). HOWEVER, THE AO BRUSHING ASIDE THE SUBMI SSION OF THE ASSESSEE CAME TO THE CONCLUSION THAT PROVISIONS MAD E TOWARDS BAD AND DOUBTFUL DEBTS OF RS.3,65,57,600/- HAVE TO BE ADDED TO BOOK PROFITS UNDER CLAUSE (C) TO EXPLANATION 1 OF S ECTION 115JB OF THE ACT IN THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE ACT DATED 26.02.2105. ITA NO.1192/M/2017 M/S. GLOBAL MANSIONS P. LTD. 3 3. THE LD. CIT(A) IN THE APPELLATE PROCEEDINGS AFFI RMED THE ORDER OF THE AO BY OBSERVING AND HOLDING AS UNDER: 3 .2. I HAVE CONSIDERED THE FINDING OF THE ASSESSING OFFI CER AS WELL AS RIVAL SOLUTION OF APPELLANT, CAREFULLY. IT IS UNDISPUTED FACT THAT APPELLANT HAS SHOWN TRADE RECEIVABLE OF RS. 12,94,41,253/- OUT OF WHICH IT HA S MADE PROVISION OF DEBTS AS DOUBTFUL OF RS.3,65,57,600/-. SUCH PROVISION HAS BE EN MADE WITHOUT ANY VALID REASON. FURTHER, THIS PROVISION HAS BEEN DEBITED IN PROFIT AND LOSS ACCOUNT UNDER HEAD 'OPERATION AND OTHER EXPENSES APPEARING AT PAGE NO. 13 AND 23 OF THE PAPER BOOK. THIS PROVISION MADE FOR THE FIRST TIME IS FOU ND TO BE WITHOUT ANY REASON CLAUSE 'C' OF EXPLANATION 1 TO SECTION 115JB PROVID ES THAT THE AMOUNT SET ASIDE TO PROVISION MADE FOR MEETING LIABILITY, OTHER THAN AS CERTAINED LIABILITIES, HAS TO BE INCREASED. THUS, IT IS VERY OBVIOUS THAT PROVISION SO MADE AND DEBITED TO PROFIT AND LOSS ACCOUNT IS TO BE ADDED TO BOOK PROFIT. THE LD. ASSESSING OFFICER HAS RIGHTLY PLACED HIS RELIANCE IN THE CASE OF M/S. SHAKTI INSU LATED WIRES P. LTD. V. ITO9(1)(3) (2014) 45 TAXMANN.COM 31 {LTAT)MUMBAI. IN THIS CASE , HON'BLE ITAT HAS VERY CATEGORICALLY HELD THAT PROVISION FOR BAD AND DOUBT FUL DEBT IS NECESSARILY TO BE ADDED WHILE CALCULATING BOOK PROFIT U/S. 115JB. THE DECISION OF VIJAYA BANK V. CIT 323 ITR 166{SC) IS NOT APPLICABLE TO THE FACTS OF T HE CASE AS IT WAS RENDERED IN CONTEXT OF SECTION 36(1)(III). THUS, CONSIDERING TH E FACTS OF THE CASE AND DECISION OF JURISDICTIONAL ITAT, THE ADJUSTMENT MADE BY ASSESSI NG OFFICER OF PROVISION OF DOUBTFUL DEBT OF RS. 3,65,57,600/- IS SUSTAINED. 4. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE US THAT THE COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB OF T HE ACT ENVISAGES TAKING INTO CONSIDERATION THE PROFIT DISC LOSED IN THE P&L ACCOUNT IN ACCORDANCE WITH PART-I AND PART-II O F SCHEDULE VI TO THE COMPANIES ACT, 1956 AS A STARTING POINT AND ONLY SUCH ADDITIONS/SUBTRACTIONS CAN BE MADE PROFITS WHICH AR E PERMISSIBLE UNDER THE EXPLANATIONS TO SECTION 115JB OF THE ACT. THE AO AS WELL AS LD. CIT(A) HAVE HELD THAT PROVISI ONS FOR DOUBTFUL DEBTS WERE PROVISIONS FOR UNASCERTAINED L IABILITY AND ACCORDINGLY COVERED THE ADDITION UNDER CLAUSE (C) T O EXPLANATION 1 OF SECTION 115JB(2) OF THE ACT. THE LD. A.R. SUB MITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DEC ISION OF THE APEX COURT IN THE CASE OF CIT VS. HCL COMNET SYSTEM S & SERVICES LTD. 174 TAXMAN 118 WHEREIN IT HAS BEEN HE LD THAT PROVISION FOR BAD AND DOUBTFUL DEBTS CAN NOT BE ADD ED UNDER ITA NO.1192/M/2017 M/S. GLOBAL MANSIONS P. LTD. 4 CLAUSE (VI) OF EXPLANATION 1 TO SECTION 115JB(2) FO R THE PURPOSE OF COMPUTING BOOK PROFIT. THE LD. A.R. ALSO RELIED ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF CIT VS. YOKOGAWA INDIA LTD. (2012) (341 ITR 385) IN WHICH I T HAS BEEN HELD THAT WHILE COMPUTING THE BOOK PROFITS IN ACCOR DANCE WITH SECTION 115JB OF THE ACT, THE PROVISIONS FOR BAD AN D DOUBTFUL DEBTS CAN NOT BE ADDED IN THE BOOK PROFITS AS THE S AME IS NOT AN UNASCERTAINED LIABILITY. THE LD. A.R. ALSO RELIED ON THE CASE OF ACIT VS. VODAFONE ESSAR GUJARAT LTD. IN ITA NO.1999 /AG 2008 IN WHICH THE AHMEDABAD BENCH HAS HELD THAT THERE IS NO REQUIREMENT TO ADD BACK THE PROVISIONS FOR BAD AND DOUBTFUL DEBTS WHILE COMPUTING THE BOOK PROFITS IN ACCORDANC E WITH CLAUSE (C) TO EXPLANATION 1 OF SECTION 115JB(1) OF THE ACT AND THE SAID DECISION HAS BEEN AFFIRMED BY THE FULL BENCH D ECISION OF THE HONBLE GUJARAT HIGH COURT AS REPORTED IN 397 ITR 3 55 AND THEREFORE THE LD. A.R. SUBMITTED THAT THE ADDITION AS MADE BY THE AO AND AFFIRMED BY THE LD. CIT(A) UNDER CLAUSE (C) TO EXPLANATION 1 OF SECTION 115JB(2) OF THE ACT MAY BE DELETED. AS REGARDS THE APPLICABILITY OF CLAUSE I OF EXPLANATIO N 1 TO SECTION 115JB THE LD. A.R. SUBMITTED THAT IT IS NOT THE CAS E OF THE REVENUE THAT ADDITION IS MADE UNDER CLAUSE(I) OF EX PLANATION OF SECTION 115JB AND THEREFORE THE QUESTION DOES NOT A RISE OF ADDITION UNDER SECTION (1) TO THE SAID SECTION . TH E LD. A.R. ALSO MADE WITHOUT PREJUDICE SUBMISSION THAT IN THE FINAN CIAL STATEMENT THE SAID PROVISIONS FOR BAD AND DOUBTFUL DEBTS WERE DEBITED IN THE P&L ACCOUNT UNDER THE HEAD ADMINISTR ATIVE AND OTHER EXPENSES AND IN THE BALANCE SHEET THE SUNDRY DEBTOR WAS SHOWN NET OFF PROVISIONS FOR BAD AND DOUBTFUL DEBTS AND THEREFORE NO ADDITION CAN BE MADE IN VIEW OF THE DE CISION OF ITA NO.1192/M/2017 M/S. GLOBAL MANSIONS P. LTD. 5 HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. YOKOGAWA INDIA LTD. (SUPRA) AND VIJAY BANK VS. CIT (SUPRA). THE LD. A.R., THEREFORE, PRAYED THAT UNLESS IT WAS AN ACTUAL WRIT E OFF OF DEBTS ,THE QUESTION OF TREATING IT AS PROVISIONS OF DIMIN ISHING IN THE VALUE OF SUCH DOES NOT ARISE. THE LD. A.R. ALSO SU BMITTED THAT BY NOT CLAIMING THE DEDUCTION UNDER SECTION 36(1)(V II) OF THE ACT CAN NOT BE CONSIDERED AS BASIS FOR MAKING ADJUSTMEN T UNDER SECTION 115JB OF THE ACT. THE LD. A.R. SUBMITTED T HAT THE ASSESSEE HAS CONSISTENTLY BEEN FOLLOWING THE POLICY OF CLAIMING OF DEBTS UNDER NORMAL COMPUTATION OF INCOME UPON SQUAR ING OFF THE ACCOUNTS TO AVOID ANY POSSIBILITY OF DOUBLE CL AIM ONCE AT THE TIME OF CREATING PROVISIONS FOR BAD AND DOUBTFUL DE BTS AND AGAIN AT THE TIME OF SQUARING OF THE ACCOUNTS. THE LD. A .R. ALSO POINTED OUT THAT THE ASSESSEE HAS ALSO MADE A CLAIM FOR PROVISIONS FOR BAD AND DOUBTFUL DEBTS EVEN UNDER TH E NORMAL PROVISION OF ACT BY RAISING THE ADDITIONAL GROUND B EFORE LD. CIT(A). HOWEVER, THE CLAIM WAS REJECTED. THE LD. A .R. SUBMITTED THAT THE ASSESSEE HAS BEEN ASSESSED UNDER THE MAT, IT HAS NOT RAISED A GROUND FOR DISALLOWANCE OF DEDUCTION UNDER SECTION 36(1)(VII) OF THE ACT WHICH WAS CLAIMED BEFORE LD. CIT(A). IN DEFENCE OF HIS ARGUMENTS, THE LD. A.R. RELIED ON TH E DECISION OF THE TRIBUNAL IN THE CASE OF FLEX FOODS LTD. VS. DCI T IN ITA NO.4800/DEL/2011. 5. THE LD. D.R., ON THE OTHER HAND, RELIED HEAVILY ON THE ORDER OF AUTHORITIES BELOW BY SUBMITTING THAT THE ARGUMEN TS OF THE LD. A.R. ARE CONTRADICTORY AND MAY BE DISMISSED. ON TH E ONE HAND, THE LD. D.R. HAS SUBMITTED THAT THE ASSESSEE HAS SU O-MOTO ADDED THE SAME UNDER THE NORMAL PROVISION OF THE AC T WHILE THE SAME PROVISIONS FOR BAD AND DOUBTFUL DEBTS HAVE BEE N CLAIMED ITA NO.1192/M/2017 M/S. GLOBAL MANSIONS P. LTD. 6 IN THE COMPUTATION OF BOOK PROFIT UNDER SECTION 115 JB OF THE ACT. THE LD. D.R. DREW THE ATTENTION OF THE BENCH TO THE PROVISIONS OF SECTION 115JB OF THE ACT WHICH SPECIF ICALLY PROVIDED THAT ANY PROVISIONS CREATED TOWARDS UNASCE RTAINED LIABILITY HAS TO BE DEDUCTED UNDER CLAUSE (C) TO EX PLANATION 1 OF SECTION 115JB AND THEREFORE HAS RIGHTLY BEEN ADDED BY THE AO AND SUBSEQUENTLY AFFIRMED BY THE LD. CIT(A). CONTR OVERTING THE ARGUMENTS OF THE LD. A.R. QUA THE ADDITION MADE UN DER CLAUSE (C) TO EXPLANATION 1 OF SECTION 115JB , THE LD. D.R . SUBMITTED THAT EVEN IF THE CONTENTIONS OF THE LD A.R. IS ACCE PTED, THE ADDITION HAS BEEN MADE WHICH MAY KINDLY BE TREATED AS BEING COVERED BY THE CLAUSE (I) TO EXPLANATION 1 OF SECTI ON 115JB. FINALLY, THE LD. D.R. SUBMITTED THAT THE ORDER OF T HE LD. CIT(A) MAY BE AFFIRMED BY DISMISSING THE APPEAL OF THE ASS ESSEE AS THE ASSESSEE ITSELF HAS MADE CONTRADICTORY CLAIMS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE DE CISIONS CITED BEFORE US BY THE LD. A.R. UNDISPUTEDLY, THE ASSESS EE HAS ADDED BACK THE PROVISIONS FOR BAD AND DOUBTFUL DEBTS OF RS.3,65,57,600/- WHILE COMPUTING THE BOOK PROFIT UN DER SECTION 115JB OF THE ACT ,THE SAID PROVISIONS FOR BAD AND D OUBTFUL DEBTS WERE NOT ADDED. THIS IS ALSO UNDISPUTED THAT ASSES SEE HAS BEEN ASSESSED UNDER SECTION 115JB OF THE ACT ON MAT AS T AX UNDER THE NORMAL PROVISIONS OF THE ACT WAS LOWER AS COMPA RED TO MAT TAX LIABILITY. THE ASSESSEE HAS TRIED TO RAISE THI S ISSUE BEFORE LD. CIT(A) BY WAY OF ADDITIONAL GROUND QUA ALLOWING THE CLAIM UNDER SECTION 36(1)(VII) OF THE ACT , HOWEVER, THE SAME W AS NOT TAKEN BEFORE THE TRIBUNAL FOR THE REASON STATED ABOVE THA T TAX AS PER MAT PROVISION WAS MORE THAN THE TAX AS PER NORMAL P ROVISIONS ITA NO.1192/M/2017 M/S. GLOBAL MANSIONS P. LTD. 7 OF THE ACT. THIS IS ALSO UNDISPUTED THAT THE PROVI SIONS FOR BAD AND DOUBTFUL DEBTS HAS BEEN CLAIMED IN THE P&L ACCO UNT UNDER THE HEAD OPERATION AND ANOTHER EXPENSES AND THE SUN DRY DEBTORS IN THE BALANCE SHEET HAS BEEN SHOWN AT NET OF PROVISIONS FOR BAD AND DOUBTFUL DEBTS. IN THE LIGHT OF THESE FACTS WE WILL BE DECIDING THIS ISSUE . WE HAVE PERUSED PROVISIONS O F SECTION 115JB OF THE ACT AND OBSERVE THAT UNDER CLAUSE (C) TO EXPLANATION 1 OF SECTION 115JB(2) OF THE ACT , THE PROVISIONS QUA FOR MEETING THE UNASCERTAINED LIABILITIES CAN BE A DDED TO THE BOOK PROFIT WHICH IS NOT THE CASE BEFORE US. IN TH E PRESENT CASE THE PROVISIONS FOR BAD AND DOUBTFUL DEBTS CREATED A ND CLAIMED BY THE ASSESSEE IN RESPECT OF TRADE RECEIVABLES AN D NOT FOR UNASCERTAINED LIABILITY AS HAS BEEN OBSERVED BY THE LOWER AUTHORITIES. THEREFORE, WE FIND MERITS IN THE CONT ENTIONS OF THE LD. A.R. THAT SAID PROVISIONS WERE ADDED BY THE AO AND AFFIRMED BY LD. CIT(A) ON WRONG UNDERSTANDING OF FACTS AND L AW AS THE PROVISIONS FOR BAD AND DOUBTFUL DEBTS ARE NOT RELAT ING TO ANY UNASCERTAINED LIABILITY BUT REPRESENTS THE PROVIS IONS CREATED FOR WRITING OFF THE TRADE DEBTS WHICH HAVE BECOME BAD. THEREFORE, THE ADDITION MADE BY THE AO UNDER CLAUSE (C) TO EXP LANATION 1 OF SECTION 115JB OF THE ACT IS WRONG AND CAN NOT BE SU STAINED. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS. HCL COMNET SY STEMS & SERVICES LTD. (SUPRA) WHEREIN THE HONBLE APEX COUR T HAS HELD AS UNDER: THERE ARE TWO TYPES OF 'DEBT': A DEBT PAYABLE BY T HE ASSESSEE IS DIFFERENT FROM A DEBT RECEIVABLE BY THE ASSESSEE. A DEBT IS PAYABLE BY THE ASSESSEE WHERE IT HAS TO PAY (BE AMOUNT LO OTHERS, WHEREAS THE DEBT RECEIVAB LE BY THE ASSESSEE IS AN AMOUNT WHICH IT HAS 10 RECEIVE FROM OTHERS. IN THE INSTANT CASE, 'DEBT' UNDER CONSIDERATION WAS 'DEBT RECEIVABLE' BY (HE 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 RECE IVABLE BY THE ASSESSEE. ITA NO.1192/M/2017 M/S. GLOBAL MANSIONS P. LTD. 8 THEREFORE, SUCH A PROVISION COULD NOT BE SAID TO BE A PROVISION FOR LIABILITY, BECAUSE EVEN IF A DEBT WAS NOT RECOVERABLE, NO LIABILITY CO ULD BE FASTENED UPON THE ASSESSEE. IN THE INSTANT CASE, SINCE THE DEBT WAS T HE AMOUNT RECEIVABLE BY THE ASSESSEE AND NOT ANY LIABILITY PAYABLE BY IT, ANY P ROVISION MADE TOWARDS IRRECOVERABILITY OF THE DEBT COULD NOT BE SAID TO B E A PROVISION FOR LIABILITY. THEREFORE, CLAUSE (C ) OF THE EXPLANATION TO SECTIO N 115JA WAS NOT ATTRACTED TO THE FACTS OF THE INSTANT CASE. THE ASSESSING OFFICER WA S NOT JUSTIFIED IN ADDING BACK THE PROVISION FOR BAD AND DOUBTFUL DEBTS UNDER CLAUSE ( C) OF THE EXPLANATION TO SECTION 115JA FOR THE PURPOSE OF COMPUTING BOOK PRO/IT UNDE R SECTION 115JA. ' SIMILARLY, THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. YOKOGAWA INDIA LTD. (SUPRA) HAS HELD THAT W HILE COMPUTING BOOK PROFIT IN ACCORDANCE WITH SECTION 11 5JB OF THE ACT PROVISIONS FOR BAD AND DOUBTFUL DEBTS CAN NOT B E ADDED IN THE BOOK PROFITS AS THE SAME IS NOT FOR AN UNASCERT AINED LIABILITY. THE HONBLE HIGH COURT HAS FOLLOWED THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS. HCL COMNET SYSTEMS & S ERVICES LTD. (SUPRA)WHILE PASSING THIS JUDGMENT. THE HONB LE AHMEDABAD TRIBUNAL IN THE CASE OF ACIT VS. VODAFORE ESSAR GUJARAT LTD. (SUPRA) HAS HELD THAT THERE IS NO REQU IREMENT TO ADD BACK THE PROVISIONS FOR BAD AND DOUBTFUL DEBTS WHIL E COMPUTING THE BOOK DEBTS UNDER CLAUSE (C) TO EXPLANATION 1 OF SECTION 115JB. THE SAID DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS BEEN AFFIRMED BY THE HONBLE GUJARAT H IGH COURT AS REPORTED IN 397 ITR 55. THEREFORE, CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DECISIONS OF THE HONBLE APEX COURT, HIGH COURTS AND TRIBUNAL, WE ARE NOT IN AGRE EMENT WITH THE CONCLUSION DRAWN BY THE LD. CIT(A) ON THIS ISSU E. WE ALSO FIND MERITS IN THE CONTENTIONS OF THE ASSESSEE THAT THE AFORESAID ADDITION OUGHT TO BE MADE UNDER CLAUSE (I) OF EXPL ANATION 1 TO SECTION 115JB AND THERE CAN NOT BE IMPROVEMENT IN T HE CASE OF THE AO AT THIS STAGE. WITHOUT PREJUDICE SUBMISSION MADE BY THE LD. A.R. ALSO CONTAINS MERIT THAT PROVISIONS FOR BA D AND DOUBTFUL ITA NO.1192/M/2017 M/S. GLOBAL MANSIONS P. LTD. 9 DEBTS IS DEBITED TO THE P&L ACCOUNT UNDER THE HEAD OPERATION AND OTHER EXPENSES AND THESE BOOK DEBTS WERE SHOWN UNDER THE HEAD SUNDRY DEBTOR NET OF THESE PROVISIONS FOR BAD AND DOUBTFUL DEBTS. THE CASE OF THE ASSESSEE ALSO FINDS SUPPORT FROM HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. KIRLOSK AR SYSTEMS LTD. 220 TAXMAN 1. THE OPERATIVE PART IS REPRODUCE D AS UNDER: THE APEX COURT IN THE CASE OF VIJAYA BANK VS. CIT [2010] 323 ITR 166/190 TAXMAN 257 (SC) HAS HELD THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF REJECTION UNDER SECTION 36(1)(VII) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT) WHEN THERE IS AN ACTUAL WRITE OFF BY THE ASSESSEE IN ITS BOOK. THIS COURT IN THE CASE OF CIT VS. YOKOGAWA INDIA LTD. [2012] 204 TAXMAN 305/17 TAXMAN N.COM 15 (KAR.) HAS HELD ADJUSTMENT OF PROVISION FOR BAD AND DOUBTFUL DEBTS IS REDUCED FROM THE LOANS AND ADVANCES OR THE DEBTORS FROM THE ASSETS SIDE OF THE BALANCE SHEET, THE EXPLANATION TO SECTION 115JA AND JB IS NOT AT ALL ATTRACTED. TH EREFORE, AFTER THE EXPLANATION THE ASSESSEE IS NOW REQUIRED NOT ONLY TO DEBIT THE P AN D E ACCOUNT BUT SIMULTANEOUSLY ALSO REDUCE THE LOANS AND ADVANCES OR THE DEBTORS F ROM THE ASSETS SIDE OF THE BALANCE SHEET TO THE EXTENT OF THE CORRESPONDING AM OUNT SO THAT, AT THE END OF THE YEAR, THE AMOUNT OF LOANS AND ADVANCES-DEBTORS IS S HOWN AS NET OF THE PROVISIONS FOR THE IMPUGNED BAD DEBT. ' 8. IN VIEW OF THESE FACTS AND THE RATIO LAID DOWN I N THE VARIOUS DECISIONS AS DISCUSSED ABOVE, WE ARE INCLINED TO SE T ASIDE THE ORDER OF LD. CIT(A) AND DIRECTED THE AO TO DELETE T HE ADDITION MADE TO BOOK PROFITS OF RS.3,65,57,600/-. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.09.2019. SD/- SD/- ( AMARJEET SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 13.09.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI ITA NO.1192/M/2017 M/S. GLOBAL MANSIONS P. LTD. 10 THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.