DCIT-3(4), MUMBAI V. TATA MOTORS LTD, MUMBAI

ITA 1607/MUM/2023

AI Insights

The case involves Tata Motors Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals) regarding the computation of book profit under section 115JB for the assessment year 2004-05. The primary issue was whether the reversal of provision for doubtful debts should be excluded from the book profit. The Tribunal examined the provisions of section 115JB, the impact of the Finance Act, 2009, and relevant judicial precedents. The Tribunal concluded that the reversal of provision for doubtful debts should be included in the book profit computation, aligning with the legislative intent and previous judicial decisions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123429 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2023
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: E
• Next Hearing Date: 15-08-2023
• Assessment Year: 2004-2005
• Appeal Filed On: 08-05-2023
• Other Referred Cases: Goldman Sachs India Finance Pvt. Ltd. vs. DCIT, Pruthvi Brokers and Shareholders (P.) Ltd. vs. DCIT, HCL Commet Systems & Services Ltd. vs. CIT, Jute Corporation of India Ltd. vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Assessee Lawyers: RAJAN VORA AW NIKHIL TIWARI
• Keywords: Retrospective amendment; Bad and doubtful debts; Revised return; Set aside
• Section: 143(3); 115JB; 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 1607/MUM/2023 Assessment Year: 2004-05 DCIT-3(4), 29 th floor, Centre-1, World Trade Centre, Cuffe Parade, Mumbai-400 005. Vs. Tata Motors Ltd., Bombay House 24 Homi Mody Street, Hutatma Chowk, Mumbai G.P.O. Mumbai-400001. PAN No. AAACT 2727 Q Appellant Respondent CO No. 54/MUM/2023 (Arising out of ITA No. 1607/MUM/2023) Assessment Year: 2004-05 Tata Motors Ltd., Bombay House 24 Homi Mody Street, Hutatma Chowk, Mumbai G.P.O. Mumbai-400001. Vs. DCIT-3(4), 29 th floor, Centre-1, World Trade Centre, Cuffe Parade, Mumbai- 400005. PAN No. AAACT 2727 Q Appellant Respondent Assessee by : Mr. Rajan Vora a/w Mr. Nikhil Tiwari Revenue by : Mr. Mudit Nagpal, CIT-DR Date of Hearing : 16/08/2023 Date of pronouncement : 28/08/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue and cross-objection by the assessee are directed against order dated 13.03.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2004-05. 2. The grounds raised by the Revenue are reproduced as under: i. On the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in allowing the reduction of Reversal of Provision for doubtful debts while computing book profit under section 115JB of the Act without appreciating the facts that the assessee failed to furnish documentary evidence before the Assessing officer in support of its claim during the set aside proceedings. ii. On the facts and in circumstances of the case and in law the Ld. CIT(A) erred in allowing the reduction of Reversal of Provision for doubtful debts while computing book profit under section 115JB of the Act without appreciating the facts that in earlier years the book profit as increased by provisions for doub years i.e. AY 2001 normal provisions as well as Mat provisions. 2.1 The grounds raised by the assessee in cross reproduced as under: A. On the facts and in the circumstances of the case, the learned AO has erred in objecting order of Ld. CIT(A): General Objection to Department's Appeal 1. wherein CIT(A) granted relief by reducing the reversal of provisions for doubtful debts of Rs. longer required, while computing books profits under section 115JB of the Income Reduction of reversal of provision for doubtful debts while computing book profits under Se 28,48,46,678 ITA No. 1607 & CO No. 54/Mum/2023 Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year The grounds raised by the Revenue are reproduced as under: i. On the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in allowing the reduction of Reversal of Provision for doubtful debts while computing book profit ion 115JB of the Act without appreciating the facts that the assessee failed to furnish documentary evidence before the Assessing officer in support of its claim during the set aside proceedings. . On the facts and in circumstances of the case and in law the Ld. CIT(A) erred in allowing the reduction of Reversal of Provision for doubtful debts while computing book profit under section 115JB of the Act without appreciating the facts that in earlier years the book profit as increased by provisions for doubtful debt was not taxed since in those years i.e. AY 2001-02 and AY 2002-03 there was loss under normal provisions as well as Mat provisions. The grounds raised by the assessee in cross reproduced as under: A. On the facts and in the circumstances of the case, the learned AO has erred in objecting order of Ld. General Objection to Department's Appeal 1. wherein CIT(A) granted relief by reducing the reversal of provisions for doubtful debts of Rs. 28,48,46,678/ longer required, while computing books profits under section 115JB of the Income-tax Act, 1961 ('the Act"); Reduction of reversal of provision for doubtful debts while computing book profits under Section 115JB of the Act of Rs 678 ITA No. 1607 & CO No. 54/Mum/2023 2 Tata Motors Ltd. Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year The grounds raised by the Revenue are reproduced as under: i. On the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in allowing the reduction of Reversal of Provision for doubtful debts while computing book profit ion 115JB of the Act without appreciating the facts that the assessee failed to furnish documentary evidence before the Assessing officer in support of its claim during the . On the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in allowing the reduction of Reversal of Provision for doubtful debts while computing book profit under section 115JB of the Act without appreciating the facts that in earlier years the book profit as increased by tful debt was not taxed since in those 03 there was loss under The grounds raised by the assessee in cross-objection are A. On the facts and in the circumstances of the case, the learned AO has erred in objecting order of Ld. 1. wherein CIT(A) granted relief by reducing the reversal of 28,48,46,678/- as it is no longer required, while computing books profits under section Reduction of reversal of provision for doubtful debts while ction 115JB of the Act of Rs 2. without appreciating that provision for doubtful debts was not claimed as deduction while computing book profits under section 115JB of the Act, in the year in which provision was made, therefore the reversal of provision for doubtful debts the current year, was rightly reduced for the purpose of computing book profits; B. On the facts and in the circumstances of the case, the learned CIT(A): Both provision for doubtful debts and reversal should be treated equally 3. should have appreciate Finance Act 2009 with retrospective effect from 1 April 2001, the provision for doubtful debts of current year Rs.34,50,71,732/ computing book profits under section 115JB of the Act and on the same parity ‚reversal of the provision for doubtful debts of Rs.28,48,46,678 is not taxable while computing the book profits under section 115JB of the Act; 3. Briefly stated facts of the case are that the assessee a public limited company was chassis & vehicles for transport motor car and parts thereof The assessee filed its return of income for assessment year under consideration on 29.10 Rs.118,73,09,337/- under the normal provisions of the Income Act, 1961 (in short ‘the Act’) and book profit of Rs.786,33,27,262/ u/s 115JB of the Act. In the assessment completed u/s 143(3) of the Act dated 29.12.2006, additions and disallowances and assessed the total income at Rs.962,49,53,052/-. O Officer included provision for bad ITA No. 1607 & CO No. 54/Mum/2023 without appreciating that provision for doubtful debts was not claimed as deduction while computing book profits under section 115JB of the Act, in the year in which provision was made, therefore the reversal of provision for doubtful debts the current year, was rightly reduced for the purpose of computing book profits; B. On the facts and in the circumstances of the case, the learned CIT(A): Both provision for doubtful debts and reversal should be treated equally should have appreciated that due to the amendment vide Finance Act 2009 with retrospective effect from 1 April 2001, the provision for doubtful debts of current year Rs.34,50,71,732/- is not claimed as deduction while computing book profits under section 115JB of the Act and the same parity ‚reversal of the provision for doubtful debts of Rs.28,48,46,678 is not taxable while computing the book profits under section 115JB of the Act; Briefly stated facts of the case are that the assessee a public was engaged in the business of manufacturing of vehicles for transport of goods and passenger including motor car and parts thereof during the year under consideration The assessee filed its return of income for assessment year under consideration on 29.10.2004 declaring total income under the normal provisions of the Income Act, 1961 (in short ‘the Act’) and book profit of Rs.786,33,27,262/ u/s 115JB of the Act. In the assessment completed u/s 143(3) of the Act dated 29.12.2006, the Assessing Officer made various additions and disallowances and assessed the total income at . One of the addition made by the Assessing Officer included provision for bad & doubtful debt amounting to ITA No. 1607 & CO No. 54/Mum/2023 3 Tata Motors Ltd. without appreciating that provision for doubtful debts was not claimed as deduction while computing book profits under section 115JB of the Act, in the year in which provision was made, therefore the reversal of provision for doubtful debts in the current year, was rightly reduced for the purpose of B. On the facts and in the circumstances of the case, Both provision for doubtful debts and reversal should be d that due to the amendment vide Finance Act 2009 with retrospective effect from 1 April 2001, the provision for doubtful debts of current year is not claimed as deduction while computing book profits under section 115JB of the Act and the same parity ‚reversal of the provision for doubtful debts of Rs.28,48,46,678 is not taxable while computing the Briefly stated facts of the case are that the assessee a public in the business of manufacturing of goods and passenger including during the year under consideration. The assessee filed its return of income for assessment year under .2004 declaring total income at under the normal provisions of the Income-tax Act, 1961 (in short ‘the Act’) and book profit of Rs.786,33,27,262/- u/s 115JB of the Act. In the assessment completed u/s 143(3) of the Assessing Officer made various additions and disallowances and assessed the total income at ne of the addition made by the Assessing debt amounting to Rs.34,50,71,732/- while computing books profit u/s 115JB of the Act. The said addition was not pressed by the assessee in view of retrospective amendment w.e.f. 01.04.2001 Finance Act, 2009. However, the assessee made an additional plea before the Ld. CIT(A) that consequent to the amendment, reversal of provisions for bad & doubtful should be excluded from the book profit u/s 115J the same parity of reasoning basis which provision doubtful debt was disallowed. The Ld. CIT(A) however did not admit the plea of the assessee on the ground that same was not raised before the Assessing Officer during the course of the assessment proceedings and the amended provisions also do not such allowance. On further appeal, the plea of the assessee and restored the matter back to the Assessing Officer for verification and allow the Act. The relevant finding of the Trib by the Assessing Officer in para 2.2 of the impugned order giving effect dated 30.09.2021 "11. Ground No.4 relates to reversal of provisions of doubtful debts not excluded from the book profit under section 115JB of Rs. 28,48,46,678/ assessee submits that during the year the assessee claimed deduction for provision of doubtful debt while computing book profit under section 115JB.The Assessing Officer added back the same amount by treating it as un of appeal was raised before the ld. CIT(A), but this ground of appeal was not pressed. In view of retrospective amendment the w.e.f. 01.04.2011 ITA No. 1607 & CO No. 54/Mum/2023 while computing books profit u/s 115JB of the Act. The said addition was not pressed by the assessee in view of retrospective amendment w.e.f. 01.04.2001, brought out by the Finance Act, 2009. However, the assessee made an additional plea before the Ld. CIT(A) that consequent to the amendment, reversal of provisions for bad & doubtful debt amounting to Rs.28,48,46,678/ should be excluded from the book profit u/s 115JB of the Act on the same parity of reasoning basis which provision disallowed. The Ld. CIT(A) however did not admit the plea of the assessee on the ground that same was not raised before the Assessing Officer during the course of the assessment proceedings and the amended provisions also do not such allowance. On further appeal, the ITAT (Tribunal) plea of the assessee and restored the matter back to the Assessing verification and allow the claim as per the provisions of the Act. The relevant finding of the Tribunal has been reproduced Assessing Officer in para 2.2 of the impugned order giving effect dated 30.09.2021, which is extracted as under: "11. Ground No.4 relates to reversal of provisions of doubtful debts not excluded from the book profit under ction 115JB of Rs. 28,48,46,678/-. The ld. AR of the assessee submits that during the year the assessee claimed deduction for provision of doubtful debt while computing book profit under section 115JB.The Assessing Officer added back the same amount by ating it as un-ascertain liability, though, the ground of appeal was raised before the ld. CIT(A), but this ground of appeal was not pressed. In view of retrospective amendment the w.e.f. 01.04.2011 ITA No. 1607 & CO No. 54/Mum/2023 4 Tata Motors Ltd. while computing books profit u/s 115JB of the Act. The said addition was not pressed by the assessee in view of brought out by the Finance Act, 2009. However, the assessee made an additional plea before the Ld. CIT(A) that consequent to the amendment, reversal of debt amounting to Rs.28,48,46,678/- B of the Act on the same parity of reasoning basis which provision of bad & disallowed. The Ld. CIT(A) however did not admit the plea of the assessee on the ground that same was not raised before the Assessing Officer during the course of the assessment proceedings and the amended provisions also do not provide for any ITAT (Tribunal) admitted the plea of the assessee and restored the matter back to the Assessing claim as per the provisions of unal has been reproduced Assessing Officer in para 2.2 of the impugned order giving which is extracted as under: "11. Ground No.4 relates to reversal of provisions of doubtful debts not excluded from the book profit under . The ld. AR of the assessee submits that during the year the assessee claimed deduction for provision of doubtful debt while computing book profit under section 115JB.The Assessing Officer added back the same amount by ascertain liability, though, the ground of appeal was raised before the ld. CIT(A), but this ground of appeal was not pressed. In view of retrospective amendment the w.e.f. 01.04.2011 inserted by Finance Act 2009. However, subsequently it was submitted that consequent to the amendment, the reversal of provision for doubtful debts should also be excluded from calculating book profit under section 115JB. The ld. claim was not made before the Assessing O no such amendment is made in section 115JB to reduce the reversal of the provision and dismissed the same. The Id. AR of the assessee further submits that once it is held by the Finance Act, 2009 having retrospective effect from 01.04.2001, that doubtful debt is not allowable deduction while computing the book profit as per section 115JB, the reversal of provision for doubtful debt would also not be taxable. The treatment for the provision for doubtful debit and its reversal would g during the course of CIT(A) proceeding, claim for provision for doubtful debt is not pressed, thereby offered to tax under book profit, then the reversal for provision of doubtful debt should be excluded from book profit as a natura submits that in view of the High Court 349 ITR Corporation of India Ltd. 187 ITR 688 (SC) the assessee is enti appeal. 12. On the other hand, the id. DR for the Revenue strongly supported the order of authorities below. 13. We have considered the rival submission of the parties and have gone through the orders of authorities below of the assessee that no such claim was raised before Assessing Officer, thus cannot be entertained during the first appellate stage, secondly the amended provision do not provide for such allowance and dismissed the cl decision of jurisdictional High Court Pruthvi Broker (supra) we admit the grounds of appeal related with claim of reversal of provision for doubtful debt and restore back the issue to the file of Assessing Officer to ITA No. 1607 & CO No. 54/Mum/2023 inserted by Finance Act 2009. However, subsequently s submitted that consequent to the amendment, the reversal of provision for doubtful debts should also be excluded from calculating book profit under section 115JB. The ld. CIT(A) not entertain the ground that this claim was not made before the Assessing O no such amendment is made in section 115JB to reduce the reversal of the provision and dismissed the same. The Id. AR of the assessee further submits that once it is held by the Finance Act, 2009 having retrospective effect from 01.04.2001, that provision for doubtful debt is not allowable deduction while computing the book profit as per section 115JB, the reversal of provision for doubtful debt would also not be taxable. The treatment for the provision for doubtful debit and its reversal would go hand-in hand and once during the course of CIT(A) proceeding, claim for provision for doubtful debt is not pressed, thereby offered to tax under book profit, then the reversal for provision of doubtful debt should be excluded from book profit as a natural corollary. The ld. AR further submits that in view of the decision of jurisdictional High Court in Pruthvi Brokers and Shareholder (P.) Ltd. 349 ITR 336 (Bom.) and Hon'ble Apex Court in Jute Corporation of India Ltd. 187 ITR 688 (SC) the assessee is entitled to raise additional ground of appeal. 12. On the other hand, the id. DR for the Revenue strongly supported the order of authorities below. 13. We have considered the rival submission of the parties and have gone through the orders of authorities below. The id. CIT(A) repudiated the claim of the assessee that no such claim was raised before Assessing Officer, thus cannot be entertained during the first appellate stage, secondly the amended provision do not provide for such allowance and dismissed the claim of assessee. Considering the decision of jurisdictional High Court Pruthvi Broker (supra) we admit the grounds of appeal related with claim of reversal of provision for doubtful debt and restore back the issue to the file of Assessing Officer to ITA No. 1607 & CO No. 54/Mum/2023 5 Tata Motors Ltd. inserted by Finance Act 2009. However, subsequently s submitted that consequent to the amendment, the reversal of provision for doubtful debts should also be excluded from calculating book profit under section CIT(A) not entertain the ground that this claim was not made before the Assessing Officer and no such amendment is made in section 115JB to reduce the reversal of the provision and dismissed the same. The Id. AR of the assessee further submits that once it is held by the Finance Act, 2009 having provision for doubtful debt is not allowable deduction while computing the book profit as per section 115JB, the reversal of provision for doubtful debt would also not be taxable. The treatment for the provision for doubtful in hand and once during the course of CIT(A) proceeding, claim for provision for doubtful debt is not pressed, thereby offered to tax under book profit, then the reversal for provision of doubtful debt should be excluded from l corollary. The ld. AR further decision of jurisdictional in Pruthvi Brokers and Shareholder (P.) Ltd. 336 (Bom.) and Hon'ble Apex Court in Jute Corporation of India Ltd. 187 ITR 688 (SC) the tled to raise additional ground of 12. On the other hand, the id. DR for the Revenue strongly supported the order of authorities below. 13. We have considered the rival submission of the parties and have gone through the orders of . The id. CIT(A) repudiated the claim of the assessee that no such claim was raised before Assessing Officer, thus cannot be entertained during the first appellate stage, secondly the amended provision do not provide for such allowance and aim of assessee. Considering the decision of jurisdictional High Court Pruthvi Broker (supra) we admit the grounds of appeal related with claim of reversal of provision for doubtful debt and restore back the issue to the file of Assessing Officer to verify law. Needless to order that before passing the order, the Assessing Officer shall grant opportunity of hearing to the assessee. In the result, this ground of appeal is allowed for statistical purpose. 3.1 The Assessing proceedings before him, the assessee could not produce complete details regarding the provision for bad reversal thereof. The Assessing Officer accordingly rejected the claim for excluding the reversal of provision of bad and doubtful debt out of book profit. The Ld. Assessing Officer computed the book profit at Rs.12,53,31,51,813/ 30.09.2021. On further appeal before the Ld. CIT(A) claimed that exclusion of reversal of provision of bad and doubtful debt in the appeal year has been held to be allowable by the Tribunal in the case of (62 CCH 158) dated 27.05.2021. decision of the Tribunal and allow as under: “4.9 In support of its claim the AR of appellant placed reliance on the decision of Honible Mumbai Tribunal decision in case of Goldman Sachs India Finance Pvt 158) dated 27 May 2021 wherein the Hon'ble Tribunal has held thatt. assessee writes back provision for bad debt made in appeal years, the deduction of the same from the book profit is permissible, if the provision created in the earlier ear has been added back to the book profit. The relevant finding of the Tribunal is as under: "14. The Ld. CIT appeals has rejected the aforesaid argument on the premise that the provision of Act has ITA No. 1607 & CO No. 54/Mum/2023 the fact and pass the order in accordance with law. Needless to order that before passing the order, the Assessing Officer shall grant opportunity of hearing to the assessee. In the result, this ground of appeal is allowed for statistical purpose. Assessing Officer however noted that in the proceedings before him, the assessee could not produce complete details regarding the provision for bad & doubtful reversal thereof. The Assessing Officer accordingly rejected the xcluding the reversal of provision of bad and doubtful debt out of book profit. The Ld. Assessing Officer computed the book profit at Rs.12,53,31,51,813/- in the impugned order dated 30.09.2021. On further appeal before the Ld. CIT(A) that exclusion of reversal of provision of bad and doubtful debt in the appeal year has been held to be allowable by the Tribunal in the case of Goldman Sachs India Finance Pvt. Ltd. (62 CCH 158) dated 27.05.2021. The Ld. CIT(A) referred the above n of the Tribunal and allowed relief to the assessee observing 4.9 In support of its claim the AR of appellant placed reliance on the decision of Honible Mumbai Tribunal decision in case of Goldman Sachs India Finance Pvt Ltd (62 CCH 158) dated 27 May 2021 wherein the Hon'ble Tribunal has held thatt. assessee writes back provision for bad debt made in appeal years, the deduction of the same from the book profit is permissible, if the provision created in the earlier ear s been added back to the book profit. The relevant finding of the Tribunal is as under: "14. The Ld. CIT appeals has rejected the aforesaid argument on the premise that the provision of Act has ITA No. 1607 & CO No. 54/Mum/2023 6 Tata Motors Ltd. the fact and pass the order in accordance with law. Needless to order that before passing the order, the Assessing Officer shall grant opportunity of hearing to the assessee. In the result, this ground of however noted that in the impugned proceedings before him, the assessee could not produce complete & doubtful debts and reversal thereof. The Assessing Officer accordingly rejected the xcluding the reversal of provision of bad and doubtful debt out of book profit. The Ld. Assessing Officer computed the in the impugned order dated 30.09.2021. On further appeal before the Ld. CIT(A), the assessee that exclusion of reversal of provision of bad and doubtful debt in the appeal year has been held to be allowable by the Goldman Sachs India Finance Pvt. Ltd. The Ld. CIT(A) referred the above relief to the assessee observing 4.9 In support of its claim the AR of appellant placed reliance on the decision of Honible Mumbai Tribunal decision Ltd (62 CCH 158) dated 27 May 2021 wherein the Hon'ble Tribunal has held thatt. assessee writes back provision for bad debt made in appeal years, the deduction of the same from the book profit is permissible, if the provision created in the earlier ear s been added back to the book profit. The relevant finding "14. The Ld. CIT appeals has rejected the aforesaid argument on the premise that the provision of Act has to be strictly construed and hence, he has rejected the afores aforesaid view of the leamed CIT appeals is not sustainable, if we apply the purposive test of the enactment being considered here. To recapitulate the provision of the act mandates that if assessee writes back pr deduction of the same from the book profit is permissible if the provision created in the earlier year has been added back to the book profit. In this regard, the CBDT circular No. 550 (supra) explains that su an action in earlier year should have gone to increase the book profit of the said year." 4.10 In view of the direction of Hon'ble ITAT, Mumbai in ITA No. 3335 & 4825/Mum/2011 for A. Y. 2004 07/01/2019, this ground of appeal is admitted. the above discussion and in view of the finding of jurisdictional High Court in the case of Pruthvi Broker (supra), and the amendments to section 115JB by Finance Act. 2009. the reduction of Reversal of Provision for doubtful debts while computing book Act of Rs. 28,48,46,678/ Accordingly, grounds of appeal 2 & 3 are allowed. 4. Aggrieved, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above. 5. Before us, the provision for bad & doubtful debt reversed in the year under consideration. A detail of the provision reversed in the year under consideration submitted by the assessee is extracted as under: “21. Details of provision reversed in AY 2004 under: AY Provision Created ITA No. 1607 & CO No. 54/Mum/2023 to be strictly construed and hence, he has rejected the aforesaid plea of the assessee. We find that the aforesaid view of the leamed CIT appeals is not sustainable, if we apply the purposive test of the enactment being considered here. To recapitulate the provision of the act mandates that if assessee writes back provision for bad debt made in appeal years, the deduction of the same from the book profit is permissible if the provision created in the earlier year has been added back to the book profit. In this regard, the CBDT circular No. 550 (supra) explains that su an action in earlier year should have gone to increase the book profit of the said year." 4.10 In view of the direction of Hon'ble ITAT, Mumbai in ITA No. 3335 & 4825/Mum/2011 for A. Y. 2004 07/01/2019, this ground of appeal is admitted. Consideri the above discussion and in view of the finding of jurisdictional High Court in the case of Pruthvi Broker (supra), and the amendments to section 115JB by Finance Act. 2009. the reduction of Reversal of Provision for doubtful debts while computing book profit under section 115JB of the Act of Rs. 28,48,46,678/- is held to be not taxable. Accordingly, grounds of appeal 2 & 3 are allowed. Aggrieved, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above. Ld. Counsel of the assessee submitted that for bad & doubtful debt created in earlier years has been reversed in the year under consideration. A detail of the provision reversed in the year under consideration submitted by the assessee ted as under: 21. Details of provision reversed in AY 2004 Provision Created Provision created in earlier years and reversed in AY 2004 ITA No. 1607 & CO No. 54/Mum/2023 7 Tata Motors Ltd. to be strictly construed and hence, he has rejected the aid plea of the assessee. We find that the aforesaid view of the leamed CIT appeals is not sustainable, if we apply the purposive test of the enactment being considered here. To recapitulate the provision of the act mandates that if assessee writes ovision for bad debt made in appeal years, the deduction of the same from the book profit is permissible if the provision created in the earlier year has been added back to the book profit. In this regard, the CBDT circular No. 550 (supra) explains that such an action in earlier year should have gone to increase 4.10 In view of the direction of Hon'ble ITAT, Mumbai in ITA No. 3335 & 4825/Mum/2011 for A. Y. 2004-05 on Considering the above discussion and in view of the finding of jurisdictional High Court in the case of Pruthvi Broker (supra), and the amendments to section 115JB by Finance Act. 2009. the reduction of Reversal of Provision for doubtful profit under section 115JB of the is held to be not taxable. Accordingly, grounds of appeal 2 & 3 are allowed.” Aggrieved, the Revenue is in appeal before the Tribunal raising Ld. Counsel of the assessee submitted that created in earlier years has been reversed in the year under consideration. A detail of the provision reversed in the year under consideration submitted by the assessee 21. Details of provision reversed in AY 2004-05 are as Provision created in earlier years and reversed in AY 2004-05 (on FIFO 2001-02 2002-03 2003-04 Total 1,83,21,71,864 5.1 The contention of the assessee bad and doubtful debt book profit for the purpose of section 115JB of the Act years, then reversal of the same i also need to be excluded taxation. The ld Counsel referred to the Explanation section 115JB(2) of the Act and submitted that for the purpose of computation of book profit, certain items have prescribed for reducing from net profit as per books of account. He submitted that item at (i) is listed as the amount withdrawn from any reserve or provision, if any such amount is credited to the statement o and loss. Thus, he submitted that law also authorise the Assessing officer to exclude such reversal of provision from the net profit for the purpose of computation of book profit for the purpose of section 155JB of the Act. 5.2 The Ld. Counsel of the Tribunal in the case of Ltd. (supra). The relevant para of the decision has already been reproduced by the Ld. CIT(A) us in above paras. The Ld. Counsel of the assessee has also relied on the decision of the Mumbai Tribunal in the case of ITA No. 1607 & CO No. 54/Mum/2023 basis) 14,43,52,000 14,43,52,000 73,84,00,763 14,04,94,679 94,94,19,101 - 1,83,21,71,864 28,48,46,679 The contention of the assessee is that when said provision for bad and doubtful debt was added to net profit while calculating book profit for the purpose of section 115JB of the Act then reversal of the same in the year under consideration need to be excluded, otherwise it would be a case of The ld Counsel referred to the Explanation section 115JB(2) of the Act and submitted that for the purpose of computation of book profit, certain items have prescribed for reducing from net profit as per books of account. He submitted that as the amount withdrawn from any reserve or provision, if any such amount is credited to the statement o Thus, he submitted that law also authorise the Assessing officer to exclude such reversal of provision from the net profit for the purpose of computation of book profit for the purpose of section The Ld. Counsel of the assessee has relied on the decision of the Tribunal in the case of Goldman Sachs India Finance Pvt. (supra). The relevant para of the decision has already been reproduced by the Ld. CIT(A) , which has already been extracted by The Ld. Counsel of the assessee has also relied on the decision of the Mumbai Tribunal in the case of ITA No. 1607 & CO No. 54/Mum/2023 8 Tata Motors Ltd. 14,43,52,000 14,04,94,679 - 28,48,46,679 when said provision for to net profit while calculating book profit for the purpose of section 115JB of the Act in earlier n the year under consideration would be a case of double The ld Counsel referred to the Explanation -1 below the section 115JB(2) of the Act and submitted that for the purpose of computation of book profit, certain items have prescribed for reducing from net profit as per books of account. He submitted that as the amount withdrawn from any reserve or provision, if any such amount is credited to the statement of profit Thus, he submitted that law also authorise the Assessing officer to exclude such reversal of provision from the net profit for the purpose of computation of book profit for the purpose of section the assessee has relied on the decision of Goldman Sachs India Finance Pvt. (supra). The relevant para of the decision has already been which has already been extracted by The Ld. Counsel of the assessee has also relied on the decision of the Mumbai Tribunal in the case of Bob Cards Ltd. (ITA No. 4485 and 4297/Mum/2017 dated 07.05.2019) (Mumbai ITAT). The relevant part of the decision is reproduced as under: “5.1 We have car perused relevant material on record and deliberated on judicial pronouncements as cited before us. The basic facts are not under dispute. So far as the nature of provisions of card receivables is concerned, we fi Court has succinctly carved out the fine distinction between debts payable by the assessee vis the assessee in the cited case of CIT Vs. HCL Commet Systems & Services Ltd. [305 ITR 409] in the following manner: - As stated above, the said Explanation has provided six items, i.e., Item Nos.(a) to (f) which if debited to the profit and loss account can be added back to the net profit for computing the book profit. In this case, we are concerned with Item No. (c) provision for bad and doubtful debt. The provision for bad and doubtful debt can be added back to the net profit only if Item (c) stands attracted. Item (c) deals with amount(s) set aside as provision made for meeting liabilities, othe The assessee's case would, therefore, fall within the ambit of Item (c) only if the amount is set aside as provision; the provision is made for meeting a liability; and the provision should be for other than ascertained liability, i.e., it should be for an unascertained liability. In other words, all the ingredients should be satisfied to attract Item (c) of the Explanation to Section 115JA. In our view, Item (c) is not attracted. There are two types of "debt". A debt payable different from a debt receivable by the assessee. A debt is payable by the assessee where the assessee has to pay the amount to others whereas the debt receivable by the assessee is an amount which the assessee has to receive from other case "debt" under consideration is "debt receivable" by the assessee. The provision for bad and doubtful debt, ITA No. 1607 & CO No. 54/Mum/2023 Ltd. (ITA No. 4485 and 4297/Mum/2017 dated 07.05.2019) The relevant part of the decision is reproduced as 5.1 We have carefully considered the rival submissions and perused relevant material on record and deliberated on judicial pronouncements as cited before us. The basic facts are not under dispute. So far as the nature of provisions of card receivables is concerned, we find that Hon’ble Apex Court has succinctly carved out the fine distinction between debts payable by the assessee vis-à-vis debts receivable by the assessee in the cited case of CIT Vs. HCL Commet Systems & Services Ltd. [305 ITR 409] in the following As stated above, the said Explanation has provided six items, i.e., Item Nos.(a) to (f) which if debited to the profit and loss account can be added back to the net profit for computing the book profit. In this case, we are concerned with Item No. (c) which refers to the provision for bad and doubtful debt. The provision for bad and doubtful debt can be added back to the net profit only if Item (c) stands attracted. Item (c) deals with amount(s) set aside as provision made for meeting liabilities, other than ascertained liabilities. The assessee's case would, therefore, fall within the ambit of Item (c) only if the amount is set aside as provision; the provision is made for meeting a liability; and the provision should be for other than ascertained ility, i.e., it should be for an unascertained liability. In other words, all the ingredients should be satisfied to attract Item (c) of the Explanation to Section 115JA. In our view, Item (c) is not attracted. 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 the assessee has to pay the amount to others whereas the debt receivable by the assessee is an amount which the assessee has to receive from others. In the present case "debt" under consideration is "debt receivable" by the assessee. The provision for bad and doubtful debt, ITA No. 1607 & CO No. 54/Mum/2023 9 Tata Motors Ltd. Ltd. (ITA No. 4485 and 4297/Mum/2017 dated 07.05.2019) The relevant part of the decision is reproduced as efully considered the rival submissions and perused relevant material on record and deliberated on judicial pronouncements as cited before us. The basic facts are not under dispute. So far as the nature of provisions of nd that Hon’ble Apex Court has succinctly carved out the fine distinction between vis debts receivable by the assessee in the cited case of CIT Vs. HCL Commet Systems & Services Ltd. [305 ITR 409] in the following As stated above, the said Explanation has provided six items, i.e., Item Nos.(a) to (f) which if debited to the profit and loss account can be added back to the net profit for computing the book profit. In this case, we which refers to the provision for bad and doubtful debt. The provision for bad and doubtful debt can be added back to the net profit only if Item (c) stands attracted. Item (c) deals with amount(s) set aside as provision made for r than ascertained liabilities. The assessee's case would, therefore, fall within the ambit of Item (c) only if the amount is set aside as provision; the provision is made for meeting a liability; and the provision should be for other than ascertained ility, i.e., it should be for an unascertained liability. In other words, all the ingredients should be satisfied to attract Item (c) of the Explanation to Section 115JA. In our view, Item (c) is not attracted. There are two by the assessee is different from a debt receivable by the assessee. A debt is payable by the assessee where the assessee has to pay the amount to others whereas the debt receivable by the assessee is an amount which the s. In the present case "debt" under consideration is "debt receivable" by the assessee. The provision for bad and doubtful debt, therefore, is made to cover up the probable diminution in the value of asset, i.e., debt which is an amount receivable by the a cannot be said to be a provision for liability, because even if a debt is not recoverable no liability could be fastened upon the assessee. In the present case, the debt is the amount receivable by the assessee and not any liability payable by the assessee and, therefore, any provision made towards irrecoverability of the debt cannot be said to be a provision for liability. Therefore, in our view Item (c) of the Explanation is not attracted to the facts of the present ca circumstances, the AO was back the provision for doubtful debts of Rs.92,15,187/ Section 115JA of the 1961 Act. With a view to overcome the same, clause (i) was added to Explanation1 to Section 115JB with retrospective effect from AY 2001-02 vide Finance (No.2) Act, 2009 which provided that the Book Profits should be increase by the amount set aside as provision for diminution in the value of any asset. It is undisputed fact that th income for AY 2007 amendment and therefore, the said amendment could not be given effect to by filing revised return of income u/s 139(5) which already expired on 31/03/2009. 5.2 Proceedin write-back of Rs.363.37 Lacs has been made out of provisions of Rs.3449.82 Lacs made in AY 2007 on record controvert the aforesaid fact. We find that in AY 2007-08, the assessee had book losses and even after adding back the said provisions as envisaged by the amendment, the resultant figure would have still been a negative figure and the assessee would not have any liability to pay tax u/s 115JB. Therefore, we find substantia force in these arguments raised by Ld. AR before us. 5.3 Lastly, it is also evident from assessment order dated 27/01/2014 of immediately preceding AY 2011 similar treatment given by the assessee to write Rs.1899.12 Lacs in that year has revenue since no computation of Book Profit has been made ITA No. 1607 & CO No. 54/Mum/2023 therefore, is made to cover up the probable diminution in the value of asset, i.e., debt which is an amount receivable by the assessee. Therefore, such a provision cannot be said to be a provision for liability, because even if a debt is not recoverable no liability could be fastened upon the assessee. In the present case, the debt is the amount receivable by the assessee and not any liability payable by the assessee and, therefore, any provision made towards irrecoverability of the debt cannot be said to be a provision for liability. Therefore, in our view Item (c) of the Explanation is not attracted to the facts of the present ca circumstances, the AO was not justified in adding back the provision for doubtful debts of Rs.92,15,187/- under clause (c) of the Explanation to Section 115JA of the 1961 Act. With a view to overcome the same, clause (i) was added to n1 to Section 115JB with retrospective effect from 02 vide Finance (No.2) Act, 2009 which provided that the Book Profits should be increase by the amount set aside as provision for diminution in the value of any asset. It is undisputed fact that the assessee had filed return of income for AY 2007-08 much before the date of the said amendment and therefore, the said amendment could not be given effect to by filing revised return of income u/s 139(5) which already expired on 31/03/2009. 5.2 Proceedings further, it is also an undisputed fact that the back of Rs.363.37 Lacs has been made out of provisions of Rs.3449.82 Lacs made in AY 2007-08. Nothing on record controvert the aforesaid fact. We find that in AY 08, the assessee had book losses of Rs.4601.10 Lacs and even after adding back the said provisions as envisaged by the amendment, the resultant figure would have still been a negative figure and the assessee would not have any liability to pay tax u/s 115JB. Therefore, we find substantia force in these arguments raised by Ld. AR before us. 5.3 Lastly, it is also evident from assessment order dated 27/01/2014 of immediately preceding AY 2011 similar treatment given by the assessee to write Rs.1899.12 Lacs in that year has been accepted by the revenue since no computation of Book Profit has been made ITA No. 1607 & CO No. 54/Mum/2023 10 Tata Motors Ltd. therefore, is made to cover up the probable diminution in the value of asset, i.e., debt which is an amount ssessee. Therefore, such a provision cannot be said to be a provision for liability, because even if a debt is not recoverable no liability could be fastened upon the assessee. In the present case, the debt is the amount receivable by the assessee and not any liability payable by the assessee and, therefore, any provision made towards irrecoverability of the debt cannot be said to be a provision for liability. Therefore, in our view Item (c) of the Explanation is not attracted to the facts of the present case. In the not justified in adding back the provision for doubtful debts of under clause (c) of the Explanation to With a view to overcome the same, clause (i) was added to n1 to Section 115JB with retrospective effect from 02 vide Finance (No.2) Act, 2009 which provided that the Book Profits should be increase by the amount set aside as provision for diminution in the value of any asset. It e assessee had filed return of 08 much before the date of the said amendment and therefore, the said amendment could not be given effect to by filing revised return of income u/s 139(5) gs further, it is also an undisputed fact that the back of Rs.363.37 Lacs has been made out of -08. Nothing on record controvert the aforesaid fact. We find that in AY of Rs.4601.10 Lacs and even after adding back the said provisions as envisaged by the amendment, the resultant figure would have still been a negative figure and the assessee would not have any liability to pay tax u/s 115JB. Therefore, we find substantial force in these arguments raised by Ld. AR before us. 5.3 Lastly, it is also evident from assessment order dated 27/01/2014 of immediately preceding AY 2011-12 that similar treatment given by the assessee to write-back of been accepted by the revenue since no computation of Book Profit has been made in the assessment order. Therefore, following the principle of consistency, the assessee’s claim was to be accepted, there being no change in factual matrix. 5.4 Bearing in mind the aforesaid factual matrix, we are of the considered opinion that the assessee was entitled for deduction of writeback while computing Book Profits u/s 115JB for the impugned AY. We order so. Ground No. 1 stand allowed. 5.3 Respectfully, following the finding of the Tribunal in the case of Goldman Sachs India Finance Pvt. Ltd. (supra) computation of book profit u/s 115JB of the Act, exclusion of reversal of provision of bad and doubtful debt allowed to the assessee subject to verification whether same was credited in the profit a assessee it was claimed that reversal of provision of bad and doubtful debt included in item no. 8 of the profit i.e. net amount of provision for diminution in value of asset amounting to Rs. (-) 48.30 crores ledger account of said item has not been filed before us. shall verify from the and loss account i.e. net amount of provision for diminution in value of asset amounting to Rs. ( following the finding of the Tribunal in the case of Goldman Sachs India Finance Pvt. Ltd. (supra) grounds of appeal of the Revenue are accordingly statistical purpose. ITA No. 1607 & CO No. 54/Mum/2023 in the assessment order. Therefore, following the principle of consistency, the assessee’s claim was to be accepted, there being no change in factual matrix. 5.4 Bearing in mind the aforesaid factual matrix, we are of the considered opinion that the assessee was entitled for deduction of writeback while computing Book Profits u/s 115JB for the impugned AY. We order so. Ground No. 1 stand allowed.” following the finding of the Tribunal in the case of Goldman Sachs India Finance Pvt. Ltd. (supra), for the purpose of computation of book profit u/s 115JB of the Act, exclusion of reversal of provision of bad and doubtful debt from net p allowed to the assessee subject to verification whether same was credited in the profit and loss account by the assessee, because, the assessee it was claimed that reversal of provision of bad and doubtful debt included in item no. 8 of the profit and loss account i.e. net amount of provision for diminution in value of asset ) 48.30 crores (Paper book page- ledger account of said item has not been filed before us. shall verify from the detailed ledger account item no. 8 of the profit and loss account i.e. net amount of provision for diminution in value of asset amounting to Rs. (-) 48.30 crores and accordingly following the finding of the Tribunal in the case of Goldman Sachs India Finance Pvt. Ltd. (supra) decide the claim of the assessee. The grounds of appeal of the Revenue are accordingly ITA No. 1607 & CO No. 54/Mum/2023 11 Tata Motors Ltd. in the assessment order. Therefore, following the principle of consistency, the assessee’s claim was to be accepted, there 5.4 Bearing in mind the aforesaid factual matrix, we are of the considered opinion that the assessee was entitled for deduction of writeback while computing Book Profits u/s 115JB for the impugned AY. We order so. Ground No. 1 following the finding of the Tribunal in the case for the purpose of computation of book profit u/s 115JB of the Act, exclusion of the from net profit is allowed to the assessee subject to verification whether same was nd loss account by the assessee, because, the assessee it was claimed that reversal of provision of bad and and loss account i.e. net amount of provision for diminution in value of asset -5) but detailed ledger account of said item has not been filed before us. The AO unt item no. 8 of the profit and loss account i.e. net amount of provision for diminution in and accordingly following the finding of the Tribunal in the case of Goldman Sachs the claim of the assessee. The grounds of appeal of the Revenue are accordingly allowed for 6. As far as the cross finding of the Ld. CIT(A) on the issue in dispute already upheld the finding of the Ld. CIT(A) on the issue in dispute subject to verification required to adjudicate dismissed as infructuous. 7. In the result, the appe statistical purpose whereas the dismissed. Order pronounced in the open Court on Sd/ (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 28/08/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// ITA No. 1607 & CO No. 54/Mum/2023 As far as the cross-objection of the assessee are in support of finding of the Ld. CIT(A) on the issue in dispute ady upheld the finding of the Ld. CIT(A) on the issue in dispute subject to verification of accounts of assessee, therefore we are not required to adjudicate the cross objections separately dismissed as infructuous. In the result, the appeal of the Revenue statistical purpose whereas the cross-objection of the assessee nounced in the open Court on 28/08/2023. Sd/- Sd/ KAVITHA RAJAGOPAL) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai ITA No. 1607 & CO No. 54/Mum/2023 12 Tata Motors Ltd. objection of the assessee are in support of finding of the Ld. CIT(A) on the issue in dispute.Since we have ady upheld the finding of the Ld. CIT(A) on the issue in dispute therefore we are not separately and same are al of the Revenue is allowed for objection of the assessee is /08/2023. Sd/- (OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai