Vidres India Ceramics Pvt. Ltd., Ahmedabad V. The Dy. CIt, Circle-4(1)(2), Ahmedabad

ITA 2521/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9982 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 15-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: A C SHAH
• Keywords: Bad and doubtful debts; Provision of bad debts; Set aside
• Section: 143(3); 142(1); 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO.2521/AHD/2017 (ASSESSMENT YEAR : 2013-14) VIDRES INDIA CERAMICS PVT. LTD., 3 RD FLOOR, SARTHIK SQUARE, B/S. PIZZA HUT, SHARKHEJ GANDHINAGAR HIGHWAY, AHMEDABAD 380 054. VS. THE DCIT, CIRCLE 4(1)(2), AHMEDABAD 380015. [PAN NO. AAACV 2963 Q] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI A. C. SHAH, A.R. RESPONDENT BY : SHRI S. K. DEV, SR. D.R. DATE OF HEARING 24.04.2019 DATE OF PRONOUNCEMENT 17 .0 5 . 2019 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER DATED 12.10.2017 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS)-8, AHMEDABAD UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) ARISING OUT OF THE ORDER DATED 01.03.2016 PASSED BY THE DCIT, CIRCLE 4(1)(2), AHMEDABAD FOR THE ASSESSMEN T YEAR 2013-14 WITH THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITIO N OF RS. 2,21,627/- UNDER SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) IN AS MUCH AS THE ASSESSEE HAS PAID SUCH CONTRIBUTION BEFORE THE END OF ACCOUNTING YEAR FOR ITA NO.2521/AHD/2017 VIDRES INDIA CERAMICS PVT. LTD. VS DCIT ASST.YEAR 2013-14 - 2 - ALL MONTHS EXCEPT FOR THE MONTH OF FEBRUARY AND MAR CH AND THE GUJARAT HIGH COURT DECISION IN THE CASE OF CIT V/S. GSRTC 3 66 ITR 170 IS NOT APPLICABLE ON THE FACTS OF THE CASE. 2. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITION OF PROVISION FOR BAD AND DOUBTFUL DEBTS OF RS. 5,23,625/- UNDER SECTION 36(1)(VII) IN AS MUCH AS THE ASSESSEE IS COVERED BY SC DECISION IN THE CASE OF CIT VS. VIJYA BANK 323 ITR 166 (SC). 2. GROUND NO.1 : AT THE TIME OF HEARING OF THE INSTANT APPEAL THE LE ARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT HE DOES NOT WANT TO PROCEED WITH THIS GROUND OF APPEAL. THEREFORE, T HE SAME IS DISMISSED AS NOT PRESSED. 3. GROUND NO.2 : THIS GROUND OF APPEAL RELATES TO CONFIRMING ADDITIO N OF PROVISION FOR BAD AND DOUBTFUL DEBTS OF RS.5,23,625 /- U/S 36(1)(III) OF THE ACT. 4. THE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACT URING AND TRADING OF CERAMIC TILES CHEMICALS AND TRADING OF CERAMIC MACH INE SPARES, FILED ITS RETURN OF INCOME ON 29.11.2013 DECLARING TOTAL INCOME AT R S.19,68,48,120/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, NOTICE U/S 143(2) UNDER SCRUTINY DATED 08.09.2014 FOLLOWED BY A NOTICE U/S 143(2) R.W.S.129 AND 142(1) DATED 04.06.2015 WAS SERVED UPON THE ASSESSEE. FURT HER THAT, ON 09.07.2015 A QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE ALONG WITH NOTE OF INFORMATION REGARDING THE DATE OF HEARING ON 13.08.2015, WAS SE RVED. DURING THE COURSE OF ASSESSMENT PROCEEDING, IT WAS FOUND FROM THE PROFIT AND LOSS ACCOUNT THAT THE ASSESSEE HAS CLAIM ED AN AMOUNT OF RS.5,23,625/- IN THE PROFIT AND LOSS ACCOUNT AS PRO VISION FOR BAD AND DOUBTFUL ITA NO.2521/AHD/2017 VIDRES INDIA CERAMICS PVT. LTD. VS DCIT ASST.YEAR 2013-14 - 3 - DEBTS AND HENCE THE ASSESSEE WAS ASKED AS TO WHY TH E SAME SHOULD NOT BE DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASS ESSEE. IN REPLY WHEREOF THE ASSESSEE BY AND UNDER A REPRESENTATION DATED 27.01. 2016 SUBMITTED THAT DURING THE COURSE OF BUSINESS IN CASE OF CERTAIN DEBTORS H AS CREATED PROVISION ON THE SAME. ON THE BASIS OF THE SUPREME COURT DECISION IN THE CASE OF CIT-VS-VIJAYA BANK REPORTED IN 323 ITR 166 SC WHEREIN THE PROVISI ON FOR BAD AND DOUBTFUL DEBTS IS ALLOWABLE ONLY WHEN THE SAID PROVISION IS DEBITED TO THE PROFIT AND LOSS ACCOUNT AND SUCH PROVISION IS DEDUCTED FROM TH E BALANCE OF THE TRADE RECEIVABLE, THE ASSESSEE COMPANY HAS DEBITED THE SA ID PROVISION TO THE PROFIT AND LOSS ACCOUNT AND ALSO REDUCED THE SAME FROM THE BALANCE FROM TRADE RECEIVABLE (DEBTORS). HENCE PRAYED FOR SUCH CLAIM. HOWEVER, THE EXPLANATION EXTENDED BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE A ND THUS THE SAME WAS REJECTED BY THE LEARNED AO UPON ADDITION WHICH WAS, IN TURN, CONFIRMED BY THE LEARNED CIT(A). HENCE, THE INSTANT APPEAL FILED BY THE ASSESSEE BEFORE US. 5. AT THE TIME OF HEARING OF THE INSTANT APPEAL, TH E LEARNED AR APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE CASE IS SQUARELY COVERED BY THE JUDGMENT PASSED BY THE HONBLE SUPREME COURT IN THE CASE OF VIJAYA BANK (SUPRA) AND ALSO BY THE GUJARAT HIGH COURT IN THE C ASE OF CIT-VS-VODAFONE ESSAR GUJARAT LTD. REPORTED IN [2017] 397 ITR 55 (G UJ). THE LEARNED AR FURTHER SUBMITTED IN THIS PARTICULAR CASE, THE ASSE SSEE HAS DEBITED THE PROVISION TO THE PROFIT AND LOSS ACCOUNT IN RESPECT OF DOUBTF UL DEBTS AND THE SAME AMOUNT IS REDUCED IN THE BALANCE SHEET FROM SUNDRY DEBTORS TRADE RECEIVABLE WHICH IS EVIDENT FROM THE BALANCE SHEET IN NOTE NO. 14 TO THE ACCOUNTS WHICH WAS ALSO PLACED BEFORE THE LEARNED CIT(A), HOWEVER, WITHOUT ANY RESULT. THE REDUCTION FROM THE SUNDRY DEBTORS AMOUNTS TO ACTUAL WRITE OFF AS HELD BY THE ITA NO.2521/AHD/2017 VIDRES INDIA CERAMICS PVT. LTD. VS DCIT ASST.YEAR 2013-14 - 4 - HONBLE APEX COURT IN THE CASE AS CITED ABOVE AS AL SO SUBMITTED BY THE LEARNED AR. THE SAID JUDGMENT IS APPLICABLE TO THE NON-BANKING COMPANY ALSO. IN THAT VIEW OF THE MATTER, HE PRAYED FOR DEL ETION OF ADDITION MADE BY THE AUTHORITIES BELOW. ON THE CONTRARY, THE LEARNED DR RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW. 6. HEARD THE RESPECTIVE PARTIES, PERUSED THE RELEVA NT MATERIALS AVAILABLE ON RECORD. IT APPEARS THAT THE ASSESSEE HAS ACTUALLY D EBITED THE PROVISION OF RS.5,23,625/- TO PROFIT AND LOSS ACCOUNT IN RESPECT OF SUCH DOUBTFUL DEBTS AND THE SAME WAS ALSO REDUCED IN THE BALANCE SHEET FROM SUNDRY DEBTORS/TRADE RECEIVABLE. IT ALSO APPEARS FROM THE RECORDS THAT THE JUDGMENT PASSED BY THE HONBLE SUPREME COURT IN THE CASE OF VIJAYA BANK HAS BEEN D ISTINGUISHED BY THE AUTHORITIES BELOW ON THE GROUND THAT SAID JUDGMENT RELATES TO ACTUAL WRITE OFF BAD DEBTS AND NOT PROVISION OF BAD DEBTS. HOWEVER, THE JUDGMENT RELIED UPON BY THE LEARNED AR HAS CLEARLY LAID DOWN THE RATIO T HAT MERE DEBIT TO PROFIT AND LOSS ACCOUNT IS NOT SUFFICIENT AND SIMULTANEOUSLY O BLITERATING OF PROVISION FROM ACCOUNTS BY REDUCTION FROM LOANS AND ADVANCES OR DE BTORS ON ASSETS SIDE OF BALANCE SHEET AMOUNTS TO WRITING OFF FOR GRANT OF D EDUCTION. MORESO, DISALLOWANCE FOR FAILURE TO CLOSE INDIVIDUAL ACCOUN T OF EACH DEBTORS IN ACCOUNT BOOKS IS NOT JUSTIFIED. FURTHER THAT, WE HAVE ALSO CAREFULLY CONSIDERED THE JUDGMENT PASSED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T-VS-VODAFONE ESSAR GUJARAT LTD. WHILE DECIDING THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE, THE ITA NO.2521/AHD/2017 VIDRES INDIA CERAMICS PVT. LTD. VS DCIT ASST.YEAR 2013-14 - 5 - HONBLE HIGH COURT TOOK INTO CONSIDERATION OF THE J UDGMENT PASSED IN THE MATTER OF VIJAYA BANK AND OBSERVED AS FOLLOWS: 16. WE MAY HOWEVER, APPRECIATE THE IMPLICATION OF THE RATIO LAID DOWN BY THE SUPREME COURT IN CASE OF VIJAYA BANK (SUPRA), ON TH E TRUE INTERPRETATION OF CLAUSE(I) TO THE EXPLANATION 1 AND THE DECISIONS OF KARNATAKA HIGH COURT IN CASES OF YOKOGAWA INDIA LTD. (SUPRA) AND KIRLOSKAR SYSTEMS LTD. (SUPRA). VIJAYA BANK (SUPRA) WAS A CASE ARISING UNDER SECTION 36(1) (VII) OF THE ACT. THE ASSESSEE BEFORE THE SUPREME COURT WAS A BANK. THE ISSUE CONS IDERED BY THE SUPREME COURT WAS WHETHER IT WAS IMPERATIVE FOR THE ASSESSE E BANK TO CLOSE THE INDIVIDUAL ACCOUNT OF EACH OF ITS DEBTORS IN ITS BO OKS OR A MERE REDUCTION IN THE LOANS AND ADVANCES OR DEBTORS ON THE ASSET SIDE OF ITS BALANCE SHEET TO THE EXTENT OF THE PROVISION FOR BAD DEBT, WOULD BE SUFFICIENT TO CONSTITUTE A WRITE-OFF. IN THIS CONTEXT, THE SUPREME COURT CONSIDERED THE ISSUE AS TO THE MANNER IN WHICH THE ACTUAL WRITE OFF TAKES PLACE UNDER THE ACCOUNTING P RINCIPLE. IT WAS NOTICED THAT PRIOR TO 1.4.1989 AMENDMENT IN SECTION 36(1)(VII), EVEN THE PROVISION FOR THE BAD DEBT COULD BE TREATED AS WRITE OFF. AFTER 1.4.1989 HOWEVER, A MERE PROVISION FOR BAD DEBT WOULD NOT BE ENTITLED TO DEDUCTION UNDER S ECTION 36(1)(VII) OF THE ACT. IN CONTEXT OF SUCH STATUTORY CHANGE, THE SUPREME CO URT REFERRED TO THE DECISION IN CASE OF SOUTHERN TECHNOLOGIES LTD. V. JT. CIT [2 010] 320 ITR 577/187 TAXMAN 346 , IN WHICH THE FOLLOWING OBSERVATIONS WERE MADE : 'PRIOR TO APRIL 1, 1989, THE LAW, AS IT THEN STOOD, TOOK THE VIEW THAT EVEN IN CASES IN WHICH THE ASSESSEE(S) MAKES ONLY A PROVISI ON IN ITS ACCOUNTS FOR BAD DEBTS AND INTEREST THEREON AND EVEN THOUGH THE AMOUNT IS NOT ACTUALLY WRITTEN OFF BY DEBITING THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE AND CREDITING THE AMOUNT TO THE ACCOUNT OF THE DEBTOR, THE ASSESSEE WAS STILL ENTITLED TO DEDUCTION UNDER SECTION 36(1)(VII). [SE E CIT V. JWALA PRASAD TIWARI (1953) 24 ITR 537 (BOM.) AND VITHALDAS H. DHANJIBHAI BARDANWALA V. CIT (1981) 130 ITR 95 (GUJ.) ] SUCH STATE OF LAW PREVAILED UP TO AND INCLUDING THE ASSESSMENT YEAR 1988-89. HO WEVER, BY INSERTION (WITH EFFECT FROM APRIL 1, 1989) OF A NEW EXPLANATI ON IN SECTION 36(1)(VII), IT HAS BEEN CLARIFIED THAT ANY BAD DEBT WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNT OF THE ASSESSEE WILL NOT INCLUDE ANY PROVIS ION FOR BAD AND DOUBTFUL DEBT MADE IN THE ACCOUNTS OF THE ASSESSEE. THE SAID AMENDMENT INDICATES THAT BEFORE APRIL 1, 1989, EVEN A PROVISION COULD B E TREATED AS A WRITE OFF. HOWEVER, AFTER APRIL 1, 1989, A DISTINCT DICHOTOMY IS BROUGHT IN BY WAY OF THE SAID EXPLANATION TO SECTION 36(1) (VII). CONSEQ UENTLY, AFTER APRIL 1, 1989, A MERE PROVISION FOR BAD DEBT WOULD NOT BE EN TITLED TO DEDUCTION UNDER SECTION 36(1)(VII). TO UNDERSTAND THE ABOVE D ICHOTOMY, ONE MUST UNDERSTAND `HOW TO WRITE OFF'. IF AN ASSESSEE DEBITS AN AMOUNT OF DOUBTFUL DEBT TO THE PROFIT AND LOSS ACCOUNT AND CREDITS THE ASSET ACCOUNT LIKE ITA NO.2521/AHD/2017 VIDRES INDIA CERAMICS PVT. LTD. VS DCIT ASST.YEAR 2013-14 - 6 - SUNDRY DEBTOR'S ACCOUNT, IT WOULD CONSTITUTE A WRIT E OFF OF AN ACTUAL DEBT. HOWEVER, IF AN ASSESSEE DEBITS `PROVISION FOR DOUBT FUL DEBT' TO THE PROFIT AND LOSS ACCOUNT AND MAKES A CORRESPONDING CREDIT T O 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 A PRIL 1, 1989. ' 17. THE SUPREME COURT (IN VIJAYA BANK) FURTHER OBSERVE D AS UNDER : '7. ONE POINT NEEDS TO BE CLARIFIED. ACCORDING TO S HRI BISHWAJIT BHATTACHARYA, LEARNED ADDITIONAL SOLICITOR GENERAL APPEARING FOR THE DEPARTMENT, THE VIEW EXPRESSED BY THE GUJARAT HIGH COURT IN THE CASE OF VITHALDAS H. DHANJIBHAI BARDANWALA [SUPRA] WAS P RIOR TO THE INSERTION OF THE EXPLANATION VIDE FINANCE ACT, 2001, WITH EFF ECT FROM 1ST APRIL, 1989, HENCE, THAT LAW IS NO MORE A GOOD LAW. ACCORDING TO THE LEARNED COUNSEL, IN VIEW OF THE INSERTION OF THE SAID EXPLANATION IN SE CTION 36(1)(VII) WITH EFFECT FROM 1ST APRIL, 1989, A MERE DEBIT OF THE IMPUGNED AMOUNT OF BAD DEBT TO THE PROFIT AND LOSS ACCOUNT WOULD NOT AMOUNT TO ACT UAL WRITE OFF. ACCORDING TO HIM, THE EXPLANATION MAKES IT VERY CLE AR THAT THERE IS A DICHOTOMY BETWEEN ACTUAL WRITE OFF ON THE ONE HAND AND A PROVISION FOR BAD AND DOUBTFUL DEBT ON THE OTHER. HE SUBMITTED THAT A MERE DEBIT TO THE PROFIT AND LOSS ACCOUNT WOULD CONSTITUTE A PROVISION FOR B AD AND DOUBTFUL DEBT, IT WOULD NOT CONSTITUTE ACTUAL WRITE OFF AND THAT WAS THE VERY REASON WHY THE EXPLANATION STOOD INSERTED. ACCORDING TO HIM, PRIOR TO FINANCE ACT, 2001, MANY ASSESSEES USED TO TAKE THE BENEFIT OF DEDUCTIO N UNDER SECTION 36(1)(VII) OF 1961 ACT BY MERELY DEBITING THE IMPUG NED BAD DEBT TO THE PROFIT AND LOSS ACCOUNT AND, THEREFORE, THE PARLIAM ENT STEPPED IN BY WAY OF EXPLANATION TO SAY THAT MERE REDUCTION OF PROFITS B Y DEBITING THE AMOUNT TO THE PROFIT AND LOSS ACCOUNT PER SE WOULD NOT CONSTI TUTE ACTUAL WRITE OFF. TO THIS EXTENT, WE AGREE WITH THE CONTENTIONS OF SHRI BHATTACHARYA. HOWEVER, AS STATED BY THE TRIBUNAL, IN THE PRESENT CASE, BESIDE S DEBITING THE PROFIT AND LOSS ACCOUNT AND CREATING A PROVISION FOR BAD AND D OUBTFUL DEBT, THE ASSESSEE-BANK HAD CORRESPONDINGLY/SIMULTANEOUSLY OB LITERATED THE SAID PROVISION FROM IT'S ACCOUNTS BY REDUCING THE CORRES PONDING AMOUNT FROM LOANS AND ADVANCES/DEBTORS ON THE ASSET SIDE OF THE BALANCE SHEET AND, CONSEQUENTLY, AT THE END OF THE YEAR, THE FIGURE IN THE LOANS AND ADVANCES OR THE DEBTORS ON THE ASSET SIDE OF THE BALANCE SHEET WAS SHOWN AS NET OF THE PROVISION 'FOR IMPUGNED BAD DEBT'. IN THE JUDGEMENT OF THE GUJARAT HIGH COURT IN THE CASE OF VITHALDAS H. DHANJIBHAI BARDAN WALA [SUPRA], A MERE DEBIT TO THE PROFIT AND LOSS ACCOUNT WAS SUFFICIENT TO CONSTITUTE ACTUAL WRITE OFF WHEREAS, AFTER THE EXPLANATION, THE ASSESSEE(S) IS NOW REQUIRED NOT ONLY TO DEBIT THE PROFIT AND LOSS ACCOUNT BUT SIMULTANEO USLY ALSO REDUCE LOANS AND ADVANCES OR THE DEBTORS FROM THE ASSET SIDE OF THE BALANCE SHEET TO THE ITA NO.2521/AHD/2017 VIDRES INDIA CERAMICS PVT. LTD. VS DCIT ASST.YEAR 2013-14 - 7 - EXTENT OF THE CORRESPONDING AMOUNT SO THAT, AT THE END OF THE YEAR, THE AMOUNT OF LOANS AND ADVANCES/DEBTORS IS SHOWN AS NE T OF PROVISIONS FOR IMPUGNED BAD DEBT. THIS ASPECT IS LOST SIGHT OF BY THE HIGH COURT IN IT'S IMPUGNED JUDGEMENT. IN THE CIRCUMSTANCES, WE HOLD, ON THE FIRST QUESTION, THAT THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF DE DUCTION UNDER SECTION 36(1)(VII) OF 1961 ACT AS THERE WAS AN ACTUAL WRITE OFF BY THE ASSESSEE IN IT'S BOOKS, AS INDICATED ABOVE.' 18. IT CAN THUS BE SEEN THAT IN CASE OF SOUTHERN TECHN OLOGIES LTD. (SUPRA), THE SUPREME COURT EXPLAINED THAT IF AN ASSESSEE DEBITS AN AMOUNT OF DOUBTFUL DEBT TO THE PROFIT AND LOSS ACCOUNT AND CREDITS THE ASSET A CCOUNT LIKE SUNDRY DEBTOR'S ACCOUNT, IT WOULD CONSTITUTE A WRITE-OFF OF AN ACTU AL DEBT. ON THE OTHER HAND, IF AN ASSESSEE DEBITS PROVISION FOR DOUBTFUL DEBT TO T HE PROFIT AND LOSS ACCOUNT AND MAKES A CORRESPONDING CREDIT TO THE CURRENT LIABILI TIES AND PROVISIONS ON THE LIABILITIES SIDE OF THE BALANCE SHEET, THEN IT WOUL D CONSTITUTE A PROVISION FOR DOUBTFUL DEBT AND IN SUCH A CASE AFTER 1.4.1989, TH E ASSESSEE COULD CLAIM NO DEDUCTION UNDER SECTION 36(1)(VII) OF THE ACT. 19. THIS PRINCIPLE WAS FURTHER CLARIFIED IN CASE OF VI JAYA BANK (SUPRA) BY OBSERVING THAT IN CASE ON HAND, THE ASSESSEE BESIDE S DEBITING THE PROFIT AND LOSS ACCOUNT AND CREATING A PROVISION FOR BAD AND DOUBTF UL DEBT, HAD SIMULTANEOUSLY OBLITERATED THE SAID PROVISION FROM ITS ACCOUNTS BY REDUCING THE CORRESPONDING AMOUNT FROM LOANS AND ADVANCES/DEBTORS ON THE ASSET SIDE OF THE BALANCE SHEET AND CONSEQUENTLY, AT THE END OF THE YEAR, THE FIGUR E OF LOANS AND ADVANCES OR THE DEBTORS ON THE ASSET SIDE OF THE BALANCE SHEET WAS SHOWN AS NET OF THE PROVISION FOR THE BAD DEBT. THEREAFTER, THE SUPREME COURT REJ ECTING THE REVENUE'S CONTENTION THAT FOR THE BANK TO TAKE BENEFIT OF SEC TION 36(1)(VII), MUST CLOSE THE ACCOUNT OF THE DEBTORS, DECIDED THE QUESTION IN FAV OUR OF THE ASSESSEE. 20. ABOVE DECISIONS OF SUPREME COURT IN CASES OF SOUTH ERN TECHNOLOGIES LTD. (SUPRA) AND VIJAYA BANK (SUPRA) THUS BRING OUT A CLEAR DISTINCTION BETWEEN A CASE WHERE THE ASSESSEE MAY MAKE A PROVISION FOR DO UBTFUL DEBT AND A CASE WHERE THE ASSESSEE AFTER CREATING SUCH A PROVISION FOR BAD AND DOUBTFUL DEBT BY DEBITING IN PROFIT AND LOSS ACCOUNT ALSO SIMULTANEO USLY REMOVES SUCH PROVISION FROM ITS ACCOUNT BY REDUCING THE CORRESPONDING AMOU NT FROM THE LOANS AND ADVANCES ON THE ASSET ASIDE OF THE BALANCE SHEET. T HE LATER WOULD BE AN INSTANCE OF WRITE- OFF AND NOT A MERE PROVISION. RESPECTFULLY, RELYING UPON THE JUDGMENT CITED ABOVE , WE DO NOT HESITATE TO CONCLUDE THAT THE ASSESSEE IS ENTITLED TO BE ALLOWE D THE PROVISION FOR BAD AND DOUBTFUL DEBTS ON THE IDENTICAL FACTS AND CIRCUMSTA NCES OF THE CASE SINCE IT HAS ITA NO.2521/AHD/2017 VIDRES INDIA CERAMICS PVT. LTD. VS DCIT ASST.YEAR 2013-14 - 8 - DEBITED THE PROVISION OF RS.5,23,625/- TO THE PROFI T AND LOSS ACCOUNT IN RESPECT OF DOUBTFUL DEBTS AND ALSO REDUCED THE SAME AMOUNT IN THE BALANCE SHEET FROM SUNDRY DEBTORS TRADE RECEIVABLE. SUCH REDUCTION F ROM SUNDRY DEBTORS AMOUNTS TO ACTUAL WRITE OFF AND HENCE WE ARE OF THE CONSIDE RED OPINION TO DELETE THE ADDITION MADE BY THE AUTHORITIES BELOW. WE ORDER AC CORDINGLY. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 17/05/2019 SD/- SD /- ( PRAMOD KUMAR ) ( M S. MADHUMITA ROY ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 17/05/2019 PRITI YADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-8, AHMEDABAD. 5. , ! ', #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 14/05/2019 (DICTATION PAGES 4) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 15/05/2019 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 17.05.2019 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER