D.C.I.T. RG.3(3), MUMBAI V. RELIANCE WELFARE ASSOCIATION, MUMBAI

ITA 5976/MUM/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0862 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 01-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CIRCUMSTANCES OF CASE; B PRUSETH SHRI JAHANGIR MISTRI
• Keywords: Capital asset; Depreciation; Earning of tax free income; Retrospective amendment; Bad and doubtful debts
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE D.T. GARASIA, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5976/M/2012 ASSESSMENT YEAR: 2008-09 ASST. COMMISSIONER OF INCOME TAX CIRCLE 3(3) ROOM NO.609, 6 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 VS. M/S. RELIANCE WELFARE ASSOCIATION CIRCLE MAKER CHAMBERS IV, 3 RD FLOOR, NARIMAN POINT, MUMBAI - 400021 PAN:AAACR6115N (APPELLANT) (RESPONDENT) PRESENT FOR: REVENUE BY : SHRI B. PRUSETH ASSESSEE BY : SHRI JAHANGIR MISTRI, SR. ADVOCATE AND SHRI MADHUR AGARWAL DATE OF HEARING : 10.01.2018 DATE OF PRONOUNCEMENT : 15.01.2018 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE ABOVE TITLED APPEAL HAS BEEN PREFERRED BY THE A SSESSEE AGAINST THE ORDER DATED 30.05.2012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) 7, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2008-09. 2. THE ONLY GROUND IN THIS APPEAL IS AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F RS.46,94,62,365/- MADE BY AO U/S.115JB OF THE I.T. ACT UNDER THE HEAD PROVISION SET ASIDE FOR DIMINUTION IN THE VALUE OF INVESTMENT HOL DING THAT THE SAME ARE NOT IN THE NATURE OF PROVISION ONLY. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER:- THE ASSESSEE IS A COMPANY REGISTERED U/S.25 OF THE COMPANIES ACT, 1956 AND HOLDING ITS INVESTMENT BOTH AS CURRENT INV ESTMENT AND LONG TERM INVESTMENT. THE ASSESSEE HAD SUBMITTED ITS RET URN OF INCOME DECLARED INCOME OF RS.21,43,597/- UNDER THE NORMAL PROVISIONS AND ITA NO5976/M/12 A.Y.2008-09 2 RS.17,49,45,153/- U/S.115JB OF THE ACT. THE ASSESS ING OFFICER HAS COMPLETED THE ASSESSMENT AT TOTAL INCOME (BOOK PROF IT) U/S.115JB AT RS.64,44,07,518/- AS AGAINST TOTAL BOOK PROFIT AT R S.17,49,45,153/- RETURNED BY THE APPELLANT. THUS ASSESSING OFFICER AMENDED THE TOTAL INCOME OF RS.21,43,597/- RETURNED BY THE ASSESSEE C OMPANY THROUGH MAKING THE ADDITION OF RS.46,94,62,365/- WHICH WAS DEBITED BY THE ASSESSEE COMPANY TO PROFIT AND LOSS ACCOUNT AS DIMI NUTION IN VALUE OF CURRENT INVESTMENT AS EXPENDITURE BY DETERMINING BO OK PROFIT AT RS.64,44,07,518/- U/S.115JB OF THE ACT AS PER ORDER U/S.143(3) OF THE ACT. THE AO HAS TREATED THE SAID LOSS CLAIMED BY T HE ASSESSEE COMPANY AS PROVISION IN DIMINUTION IN THE VALUE OF INVESTMENT INSTEAD OF ACTUAL LOSS / EXPENDITURE AS CLAIMED BY THE ASSE SSEE COMPANY. 4. THE MATTER CARRIED TO CIT(A) AND CIT(A) ALLOWED THE CLAIM BY OBSERVING AS UNDER:- 4.32 THUS, I AM OF THE CONSIDERED VIEW THAT ALL THE PROVISION, WHICH ARE MADE IN THE FINANCIAL STATEMENT PREPARED AS PER PART II AND III OF SCHEDULE VI FOR DIMINUTION IN THE VALUE OF ANY ASSET ARE NOT TO BE INCREASED T O THE AMOUNT OF BOOK PROFIT AND ONLY THOSE AMOUNTS WHICH ARE SET ASIDE AS PROVISION CAN ALONG BE INCREASED AS PER CLAUSE (I) OF EXPLANATION 1 TO SECTION 115JB OF THE ACT. THERE IS A DIFFERENCE IN BETWEEN RETAINING AN AMOUNT AND WRITING OFF AN AM OUNT. ONLY THOSE PROVISIONS, WHICH ARE RETAINED CAN BE COVERED BY CLAUSE (I) OF EXPLANATION 1 TO S. 115JB OF THE ACT, AS THE AMOUNT RETAINED IS AN AMOUNT SET ASIDE AS PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET, THEN IT IS NOT A CASE OF SET AS IDE OF AN AMOUNT AS PROVISION AS THE PROVISION GETS OBLITERATED. WHERE THERE IS AN ACTU AL LOSS (ASCERTAINED IN SCIENTIFIC MANNER) AND SUCH LOSS IS WRITTEN OFF AGAINST THE VA LUE OF ASSETS, THEN THIS CLAUSE WILL NOT APPLY BECAUSE CLAUSE (I) OF EXPLANATION 1 OF SE CTION 115JB OF THE ACT PROVIDES FOR INCREASE OF BOOK PROFIT BY THE AMOUNT SET ASIDE AS PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET EVEN IF SUCH LOSS IS NOT ALLOWED IN COMPUTATION OF NORMAL INCOME. FOR EXAMPLE IF A COMPANY ADOPTS A METHOD OF VALUING ITS CURRENT INVESTMENTS ARE VALUED AT MARKET VALUE OF INVESTMENTS, THEN SUCH DE BIT WILL BE ALLOWABLE IN COMPUTATION OF BOOK PROFIT AND IT CANNOT BE ADDED B ACK UNDER THE PROPOSED VALUE (G) / (I) OF EXPLANATION IN S.115JA / 115JB RESPECTIVEL Y. THIS IS IN SPITE OF FACT THAT SUCH DEBIT WILL HAVE TO BE ADDED WHILE COMPUTING TOTAL I NCOME BECAUSE IN CASE OF CAPITAL ITA NO5976/M/12 A.Y.2008-09 3 ASSETS, COMPUTATION WILL BE MADE WHEN CAPITAL ASSET IS TRANSFERRED. CLAUSE (I) OF EXPLANATION 1 OF SECTION 115JB OF THE ACT PROVIDES FOR INCREASE OF BOOK PROFIT BY THE AMOUNT SET ASIDE AS PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET. ANY CORPORATE ENTITY WOULD HAVE VARIOUS ASSETS WHICH AR E REFLECTED IN THE BALANCE SHEET AS FIXED ASSETS, INVESTMENTS OR CURRENT ASSETS. TH E ISSUE IS WHETHER THE DIMINUTION IN THE VALUE OF ANY ASSET IS COVERED BY THIS CLAUSE OR NOT. LET US CONSIDER WHAT HAPPENS WHEN THERE IS A FALL IN VALUE OF STOCK-IN-T RADE. WHERE THE ASSESSEE COMPANY ADOPT METHOD OF VALUE OF STOCK-IN-TRADE AS AT COST OR MARKET VALUE WHICHEVER IS LESS, AND CONSEQUENTLY STOCK IS VALUED AT LESS THAN COST, THE DIFFERENCE BETWEEN COST AND MARKET VALUE WILL NOT BE A PROVISION FOR DIMINUTION IN VALUE OF ANY ASSET AS THE AMOUNT IS WRITTEN OFF IN THE PROFIT AND LOSS ACCOUN T AND THE VALUE OF STOCK IN TRADE IS ONLY REFLECTED AT THE MARKET VALUE. HOWEVER, IF A HYPOTHETICAL DIMINUTION TO THE VALUE OF STOCK IN TRADE IS PROVIDED BY NOT REDUCING THE VALUE OF STOCK IN TRADE BUT SHOWING THE AMOUNT AS SET ASIDE AS PROVISION IN THE BALANCE SHEET, THEN THE SAME CAN BE ADDED BACK UNDER CLAUSE (I) OF EXPLANATION 1 TO SECTION 115JB OF THE ACT. THE SAME TREATMENT IS ALSO TO BE GIVEN TO OTHER CURRENT ASSETS VIZ. BAD AND DOUBTFUL LOANS, ADVANCES AND SUNDRY DEBTORS WRITTEN OFF. AS FAR AS THE FIXED ASSETS (TANGIBLE/INTANGIBLE DEPRECIABLE ASSETS) ARE CONCER NED, DEPRECIATION HAS TO BE PROVIDED AS PER THE RATES PROVIDED UNDER THE COMPAN IES ACT OR INCOME TAX ACT. NOW WHAT HAPPENS IN CASE THERE IS A DESTRUCTION OF AN ASSET WHICH IS COMPRISED IN THE BLOCK OF ASSETS (FOR THE PURPOSE OF INCOME TAX ACT) BUT IS INCLUDED AS AN INDIVIDUAL ASSET IN THE SCHEDULE TO FIXED ASSETS. IN SUCH A CASE, THERE WOULD BE A DIMINUTION IN THE VALUE OF FIXED ASSETS WHICH HAS T O BE WRITTEN OFF AS PER THE PROVISIONS OF COMPANIES ACT AND ACCOUNTING STANDARD S. CAN SUCH A WRITE OFF FOR A DESTROYED ASSET BE INCREASED TO THE BOOK PROFIT AS PER THE CLAUSE (I) OF EXPLANATION 1 TO S.S.115JB OF THE ACT. THE ANSWER IS PLAIN AND S IMPLE NO AS THE AMOUNT IS ACTUALLY WRITTEN OFF AND IS NOT SET ASIDE AS PROVIS ION. 4.33 THUS THE EXPRESSION SET ASIDE AS PROVISION FO R DIMINUTION IN THE VALUE OF ANY ASSET WOULD NOT INCLUDE PROVISIONS WHICH HAVE BEEN WRITING OFF OF AS ACTUAL LOSS. ACTUAL LOSS MEANS WHAT IS ACTUALLY SUFFERED, THE AM OUNT DEBITED TO THE P &L ACCOUNT AND ALSO REDUCED FROM THE VALUE OF THE ASSET. IF O NE CAN ESTABLISH THAT THERE IS NO PROVISION SET ASIDE BUT WRITE OFF, THEN CLAUSE (I) OF EXPLANATION 1 TO S.115JB OF THE ACT WILL NOT APPLY. ITA NO5976/M/12 A.Y.2008-09 4 4.34 THE NEW EXPLANATION IN SECTION 36(1)(VII), HAS CLARIFIED THAT ANY BAD DEBT WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNT OF THE ASSESSEE WILL NOT INCLUDE ANY PROVISION FOR BAD AND DOUBTFUL DEBT MADE IN THE ACC OUNTS OF THE ASSESSEE. IN SUPPORT, RELIANCE IS PLACED ON PARA 25 OF THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. VS. JOINT CIT RE PORTED IN 320 ITR 577 WHICH READS AS UNDER: 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 AMOU NT 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 W AS STILL ENTITLED TO DEDUCTION UNDER SECTION 36(1)(VII). (SEE CIT V. JW ALA PRASAD TIWARI [1953] 24 ITR 537 (BOM) AND VITHALDAS H. DHANJIBHAI BARDAN WALA VS. CIT [1981] 130 ITR 95 (GUJ.). SUCH STATE OF LAW PREVAILED UP TO AND INCLUDING THE ASSESSMENT YEAR 1988-89. HOWEVER, BY INSERTION (WI TH EFFECT APRIL 1, 1989) OF A NEW EXPLANATION IN SECTION 36(1)(VII), IT HAS BEEN CLARIFIED THAT BAD DEBT WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNT OF THE ASSESSEE WILL NOT INCLUDE ANY PROVISION FOR BAD AND DOUBTFUL DEBT MADE IN THE ACC OUNTS OF THE ASSESSEE. THE SAID AMENDMENT INDICATES THAT BEFORE APRIL 1, 1 989, EVEN A PROVISION COULD BE TREATED AS A WRITE OFF. HOWEVER, AFTER AP RIL 1, 1989, A DISTINCT DICHOTOMY IS BROUGHT IN BY WAY OF THE SAID EXPLANA TION TO SECTION 36(1)(VII). CONSEQUENTLY, AFTER APRIL 1, 1989, A MERE PROVISION FOR BAD DEBT WOULD NOT BE ENTITLED TO DEDUCTION UNDER SECTION 36(1)(VII). TO UNDERSTAND THE ABOVE DICHOTOMY, ONE MUST UNDERSTAND HOW TO WRITE OFF. I F AN ASSESSEE DEBITS AN AMOUNT OF DOUBTFUL DEBT TO THE PROFIT AND LOSS ACCO UNT AND CREDITS THE ASSET ACCOUNT LIKE SUNDRY DEBTORS ACCOUNT, IT WOULD CONS TITUTE WRITE OFF AN ACTUAL DEBT. HOWEVER, IF AN ASSESSEE DEBITS DOUBTFUL DEBT TO THE PROFIT AND LOSS ACCOUNT AND MAKES A CORRESPONDING CREDIT TO THE PRO VISIONS FOR DOUBTFUL DEBT ON THE LIABILITIES SIDE OF THE BALANCE SHEET, THEN IT WOULD CONSTITUTE A SETTING ASIDE A PROVISION FOR DOUBTFUL DEBT. IN THE LATER CASE, THE ASSESSEE WOULD NOT BE ENTITLED TO DEDUCTION AFTER APRIL 1, 1989. 4.35 RELIANCE IS ALSO PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF VIJAYA BANK V. CIT 323 ITR 166, WHEREIN THE HONBLE SUPREME COURT HAS DECIDED ON THE FOLLOWING QUESTION: ITA NO5976/M/12 A.Y.2008-09 5 WHETHER IT IS IMPERATIVE FOR THE ASSESSEE-BANK TO C LOSE THE INDIVIDUAL ACCOUNT OF EACH OF ITS DEBTORS IN ITS BOOKS OR A ME RE REDUCTION IN THE LOANS AND ADVANCES OR DEBTORS ON THE ASSETS SIDE OF ITS BALANCE SHEET TO THE EXTENT OF THE PROVISION FOR BAD DEBT WOULD BE S UFFICIENT TO CONSTITUTE A WRITE OFF IS THE QUESTION WHICH ARE RE QUIRED TO ANSWER IN THESE CIVIL APPEALS? 4.36 BEFORE THE HONBLE SUPREME COURT THE ASSESSEE HAD CONTENDED THAT ONCE A PROVISION STOOD CREATED AND, ULTIMATELY, CARRIED TO THE BALANCE SHEET WHEREIN LOANS AND ADVANCES OR DEBTORS DEPICTED STOOD REDUCE D BY THE AMOUNT OF SUCH PROVISION, THEN, THERE WAS ACTUAL WRITE OFF BECAUSE , IN THE FINAL ANALYSIS, AT THE YEAR END THE SO CALLED PROVISION DOES NOT REMAIN AN D THE BALANCE SHEET AT THE YEAR END. ONLY CARRIED THE AMOUNT OF LOANS AND ADV ANCES OR DEBTORS, NET OF SUCH PROVISION MADE BY THE ASSESSEE FOR THE IMPUGNE D BAD DEBT. IN THE SAID CASE BEFORE THE HONBLE SUPREME COURT THE TRIBUNAL, HAD UPHELD THE ABOVE CONTENTION OF THE ASSESSEE ON THREE GROUNDS. FIRST LY, ACCORDING TO THE TRIBUNAL, THE ASSES SEE HAD RIGHTLY MADE A PROVISIO N FOR BAD AND DOUBTFUL DEBT BY DEBITING THE AMOUNT OF BAD DEBT TO THE PROF IT AND LOSS ACCOUNT SO AS TO REDUCE THE PROFITS OF THE YEAR. SECONDLY, THE PROV ISION ACCOUNT SO CREATED WAS DEBITED AND SIMULTANEOUSLY THE AMOUNT OF LOANS AND ADVANCES OR DEBTORS STOOD REDUCED AND, CONSEQUENTLY, THE PROVISION ACCO UNT STOOD OBLITERATED. LASTLY, ACCORDING TO THE TRIBUNAL, LOANS AND ADVANC ES OR THE SUNDRY DEBTORS OF THE ASSESSEE AS AT THE END OF THE YEAR LYING IN THE BALANCE SHEET WAS SHOWN AS NET OF PROVISIONS FOR DOUBTFUL DEBT CREATED BY W AY OF DEBIT TO THE PROFIT AND LOSS ACCOUNT OF THE YEAR. 4.37 IN THE AFORESAID FACTS, THE HONBLE SUPREME CO URT HELD THAT IN THE APPEAL, BROADLY, TWO QUESTIONS ARISE FOR DETERMINATION. TH E FIRST QUESTION WHICH ARISES FOR DETERMINATION CONCERNS THE MANNER IN WHI CH ACTUAL WRITE OFF TAKES PLACE UNDER THE ACCOUNTING PRINCIPLES. THE SECOND QUESTION WHICH ARISES FOR DETERMINATION, IS WHETHER IT IS IMPERATIVE FOR THE ASSESSEE BANK TO CLOSE THE INDIVIDUAL ACCOUNT OF EACH DEBTOR IN ITS BOOKS OR A MERE REDUCTION IN THE LOANS AND ADVANCES ACCOUNT OR DEBTORS TO THE EXTENT OF THE PROVISION FOR BAD AND DOUBTFUL DEBT IS SUFFICIENT? THE HONBLE SUPREME COURT WITH REFERENCE TO THE FI RST QUESTION HAS HELD AS UNDER:- ITA NO5976/M/12 A.Y.2008-09 6 ONE POINT NEEDS TO BE CLARIFIED. ACCORDING TO SHR I BISHWAJIT BHATTACHARYA, THE LEARNED ADDITIONAL SOLICITOR GENE RAL APPEARING FOR THE DEPARTMENT, THE VIEW EXPRESSED BY THE GUJARAT H IGH COURT IN THE CASE OF VITHALDAS H. DHANJIBHAI BARDANWALA [1981] 1 30 ITR 95 WAS PRIOR TO THE INSERTION OF THE EXPLANATION VIDE THE FINANCE ACT, 2001, WITH EFFECT FROM APRIL 1, 1989, HENCE, THAT LAW IS NO MORE A GOOD LAW. ACCORDING TO THE LEARNED COUNSEL, IN VIEW OF THE IN SERTION OF THE SAID EXPLANATION IN SECTION 36(1)(VII) WITH EFFECT FROM APRIL 1, 1989, A MERE DEBIT OF THE IMPUGNED AMOUNT OF BAD DEBT TO TH E PROFIT AND LOSS ACCOUNT WOULD NOT AMOUNT TO ACTUAL WRITE OFF. ACCO RDING TO HIM, THE EXPLANATION MAKES IT VERY CLEAR THAT THERE IS A DIC HOTOMY BETWEEN ACTUAL WRITE OFF ON THE ONE HAND A PROVISION FOR BA D AND DOUBTFUL DEBT ON THE OTHER. HE SUBMITTED THAT A MERE DEBIT TO TH E PROFIT AND LOSS ACCOUNT WOULD CONSTITUTE A PROVISION FOR BAD AND DO UBTFUL DEBT, IT WOULD NOT CONSTITUTE ACTUAL WRITE OFF AND THAT WAS THE VERY REASON WHY THE EXPLANATION STOOD INSERTED. ACCORDING TO HIM, PRIOR TO THE FINANCE ACT, 2001, MANY ASSESSEES USED TO TAKE THE BENEFIT OF DEDUCTION UNDER SECTION 36(1)(VII) OF THE 1961 ACT BY MERELY DEBITING THE IMPUGNED BAD DEBT TO THE PROFIT AND LOSS ACCOUN T AND THEREFORE, PARLIAMENT STEPPED IN BY WAY OF EXPLANATION TO SAY THAT MERE REDUCTION OF PROFITS BY DEBITING THE AMOUNT TO THE PROFIT AND LOSS ACCOUNT PER SE WOULD NOT CONSTITUTE ACTUAL WRITE OF F. 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 A ND DOUBTFUL DEBT, THE ASSESSEE-BANK HAD CORRESPONDINGLY / SIMULTANEOU SLY OBLITERATED THE SAID PROVISION FROM ITS ACCOUNT BY REDUCING THE CORRESPONDING AMOUNT FROM LOANS AND ADVANCE / DEBTORS ON THE ASSE TS 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 THE IMP UGNED BAD DEBT. IN THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CA SE OF VITHALDAS H. DHANJIBHAI BARDANWALA [1981] 130 ITR 95, A MERE DEB IT TO THE PROFIT AND LOSS ACCOUNT WAS SUFFICIENT TO CONSTITUTE ACTUA L WRITE OFF WHEREAS, ITA NO5976/M/12 A.Y.2008-09 7 AFTER THE EXPLANATION, THE ASSESSEE(S) IS NOW REQU IRED NOT ONLY TO DEBIT THE PROFIT AND LOSS ACCOUNT BUT SIMULTANEOUSL Y ALSO REDUCE LOANS AND ADVANCES OR THE DEBTORS FROM THE ASSETS SIDE OF THE BALANCE SHEET TO THE EXTENT OF THE CORRESPONDING AMOUNT SO THAT, AT THE END OF THE YEAR, THE AMOUNT OF LOANS AND ADVANCES / DEBTORS IS SHOWN AS NET OF THE PROVISIONS FOR THE IMPUGNED BAD DEBT. THIS ASP ECT IS LOST SIGHT OF BY THE HIGH COURT IN ITS IMPUGNED JUDGMENT. IN THE CIRCUMSTANCES, WE HOLD, ON THE FIRST QUESTION, THAT THE ASSESSEE W AS ENTITLED TO THE BENEFIT OF DEDUCTION UNDER SECTION 36(1)(VII) OF 19 61 ACT AS THERE WAS AN ACTUAL WRITE OFF BY THE ASSESSEE IN ITS BOOKS, A S INDICATE ABOVE. 4.38 HAVING REGARD TO THE AFORESAID DISCUSSION, IT IS HELD THAT THE AMOUNT OF PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT S IS NOT SET ASIDE BY THE APPELLANT AS THE AMOUNT IS WRITTEN OFF AGAINST THE CURRENT INVESTMENTS HELD BY THE APPELLANT. THE WRITE OFF OF THE AMOUNT AGAINST THE ASSET HAS OBLITERATED THE PROVISION AND THE CURRENT ASSETS ARE REFLECTED IN THE BOOKS OF ACCOUNT NET OF PROVISION. ONCE THE AMOUNT OF DIMINUTION IN THE VALUE OF INVESTMENTS IS WRITTEN OFF AGAINST THE ASSET, THERE CAN BE NO USE OF ANY AMOUNT HAVING BEEN SET ASIDE FOR DIMINUTION IN THE VALUE OF ASSETS. 4.39 HAVING CIRCUMSPECTED THE ENTIRE SPECTRUM OF FA CT AND CIRCUMSTANCES OF THE CASE VIS--VIS FINDING OF THE ASSESSING OFFICER AND SUBMISSIONS OF THE APPELLANT, CAREFULLY. I HAVE ALSO PERUSED THE PROV ISIONS OF SECTION 115JB OF THE INCOME-TAX ACT, 1961, SECTION 211 OF THE COMPAN IES ACT, 1956 AND ACCOUNTING STANDARD 13 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. 4.40 ON PERUSAL OF PROVISIONS OF SECTION 115JB IT I S VERY CLEAR THAT WHAT IS APPELLANT COMPANY EXPLICIT, REQUIRED TO BE ADDED TO BOOK PROFIT IS AMOUNT SET ASIDE AS PROVISIONS FOR DIMINUTION IN VALUE OF INVE STMENT. UNDER THE CIRCUMSTANCES, WHAT IS REQUIRED TO BE DECIDED IS WH ETHER THE AMOUNT OF RS.46,94,62,365/- DEBITED TO PROFIT & LOSS ACCOUNT IS SET ASIDE AS A PROVISIONS OR HAS IT BEEN WRITE OFF AS A LOSS AGAIN ST THE VALUE OF THE ASSET. BEFORE COMING TO THE CONCLUSION AND ALSO TO MAKE TH E ISSUE INVOLVED IN THIS APPELLANTS CASE, I WISE TO NARRATE THE FACTS OF TH E CASE AS UNDER: 1. THE APPELLANT MADE INVESTMENT IN UNITS OF MUTUA L FUND IN MARCH,2008. ITA NO5976/M/12 A.Y.2008-09 8 2. INTENTION OF THE APPELLANT WAS TO HOLD IT FOR S HORT PERIOD AND ACCORDINGLY CLASSIFIED THE SAID INVESTMENT AS CURRE NT INVESTMENT IN THE BALANCE SHEET OF THE APPELLANT COMPANY AS ON 30/03/ 08. THE CONDUCT OF THE APPELLANT APPROVES THE INTENTION OF THE APPELLANT A S THE UNITS IN QUESTION WERE SOLD IN APRIL,2008 WITH IN A PERIOD OF AROUND 1 MON TH. 3. THE APPELLANT BEING A COMPANY IS REQUIRED TO DR AW ITS ACCOUNT IN ACCORDANCE WITH PART II OF SCHEDULE VI OF THE COMPA NIES ACT AS PROVIDED IN SECTION 211 OF THE COMPANIES ACT, 1956. 4. AS-13 WHICH IS A STANDARD FOR ACCOUNTING OF INV ESTMENT IS MANDATORY IN NATURE CLASSIFIED DIFFERENT TREATMENT FOR ACCOUN TING OF CURRENT INVESTMENT AND LONG TERM INVESTMENT. CURRENT INVESTMENT IS RE QUIRED TO BE STATED IN ACCOUNTS AT LOWER OF COST OR FAIR VALUE AS ON BALAN CE SHEET DATE. WHEREAS WHEN THERE IS FALL IN THE VALUE OF INVESTMENT, PROV ISION IS REQUIRED TO BE MADE IN ACCOUNTS. 5. AMENDED PROVISIONS OF SECTION 115JB REQUIRES PR OVISION FOR DIMINUTION IN VALUE OF INVESTMENT TO BE ADDED BACK TO BOOK PROFIT TO DETERMINE MINIMUM ALTERNATE TAX. 6. FAIR VALUE OF UNIT OF MUTUAL FUND WAS LOWER THA N ITS COST BY RS.46,94,62,365/- AND THE SAME BEING CURRENT INVEST MENT, THE APPELLANT FOLLOWING MANDATORY AS-13, CHARGED RS.46,94,62,365/ - TO PROFIT & LOSS ACCOUNT AND PREPARED ITS ACCOUNTS IN ACCORDANCE WIT H SCHEDULE VI AS PROVIDED IN SECTION 211 OF THE COMPANIES ACT, 1956. 7. FURTHER IN SUBSEQUENT YEAR, THE APPELLANT HAS C REDITED DIFFERENCE BETWEEN SALE PRICE AND FAIR VALUE AS ON 31/03/2008 TO PROFIT & LOSS ACCOUNT AND NOT THE DIFFERENCE BETWEEN SALE PRICE AND ITS C OST. SUCH ACCOUNTING TREATMENT IS IMPOSSIBLE WHERE THE PROVISION IS MADE INSTEAD OF WRITE OFF. 4.41. ON PERUSAL OF THE ABOVE FACTS, I AM OF THE CO NSIDERED VIEW THAT DEBIT OF RS.46,94,62,365/- APPEARING IN PROFIT & LOSS ACCOUN T IS NOT A PROVISIONS SET ASIDE FOR DIMINUTION IN VALUE OF INVESTMENT BUT A A CTUAL CHARGE TO THE PROFIT & LOSS ACCOUNT WHICH HAS BEEN WRITTEN OFF AGAINST THE VALUE OF THE CURRENT ASSET. THUS CONSIDERING ALL FACTS AND PROVISIONS O F INCOME-TAX ACT, 1961 AND COMPANIES ACT, 1956, I AM OF THE CONSIDERED VIEW TH AT DEBIT OF RS.46,94,62,365/- APPEARING IN PROFIT & LOSS ACCOUN T IS NOT A PROVISIONS SET ASIDE FOR DIMINUTION IN VALUE OF INVESTMENT BUT IT IS ACTUAL CHARGED FOR THE ITA NO5976/M/12 A.Y.2008-09 9 LOSS IN THE DIMINUTION IN VALUE OF INVESTMENT. HAV ING HELD THAT THIS IS NOT PROVISION SET ASIDE, I HELD THAT BOOK PROFIT FOR TH E PURPOSE OF SECTION 115JB IS NOT REQUIRED TO BE INCREASED BY RS.46,94,62,365/- A S THE SAME IS NOT IN THE NATURE OF PROVISION. ACCORDINGLY, THESE GROUNDS OF APPEAL ARE ALLOWED. IN THE RESULT, THE ADDITION SO MADE BY A.O. TO THE BOO K PROFIT IS DELETED. 4.42 EVEN I FIND THAT THE A.O.S ALTERNATE ARGUMENT THAT THE LOSS OCCURRED TO THE APPELLANT COMPANY SUBSEQUENT TO DIVIDEND EARNING FR OM INVESTMENT IN MUTUAL FUNDS WILL AMOUNTS TO EXPENDITURE TO BE DISA LLOWED U/S.115JB OF THE ACT IN ACCORDANCE TO THE PROVISIONS OF SECTION 14A OF THE ACT IS NOT CORRECT TAKING NOTE OF THE DECISION OF ITAT, INDORE BENCH I N THE CASE OF ACIT, INDORE VS. KAILASH CHANDRA DHANUKA REPORTED IN 13 T TJ 213, WHEREIN THE HONBLE ITAT UPHELD THE ORDER OF CIT(A) CORRECT AFT ER TAKING NOTE OF HONBLE ITAT, MUMBAIS DECISION IN THE CASE OF CIT VS. WALFORT SHARES AND STOCK BROKERS PVT. LTD. AND THE HONBLE BOMBAY HIGH COURT IN THE SAME CASE. THE RELEVANT PORTION OF THE SAID ORDER IS EX TRACTED AS UNDER:- WE HAVE CONSIDERED RIVAL SUBMISSION AND MATERIAL AVAILABLE ON RECORD. THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF WALFORT SHARES AND STOCK BROKERS PVT. LTD. IN PARA 57&58, IT IS HELD: 23. THE ALTERNATIVE ARGUMENT OF THE REVENUE THAT T HE LOSS ARISING FROM THE TRANSACTION IN QUESTION IS LIABLE TO BE TREATED AS AN EXPENDITURE INCURRED FOR EARNING THE TAX FREE INCOME AND HENCE DISALLOWABLE UNDER SECTION 14A IS NO SUSTAINABLE. SECTION 14A DEALS WITH THE EXPENDITUR E INCURRED FOR EARNING TAX FREE INCOME. ADMITTEDLY, NO EXPENDITURE IS INCURRE D IN PURCHASING THE DIVIDEND BEARING UNITS. IT IS ONLY BECAUSE THE UNI TS ARE SOLD AT A LOSS IMMEDIATELY AFTER RECEIVING THE DIVIDED INCOME, THE REVENUE WANTS TO TREAT THE LOSS AS A DEEMED EXPENDITURE INCURRED FOR EARNI NG TAX FREE DIVIDEND INCOME. WHAT SECTION 14A CONTEMPLATES IS THE EXPEN DITURE ACTUALLY INCURRED FOR EARNING TAX FREE INCOME AND NOT ASSUMED EXPENDI TURE OR DEEMED EXPENDITURE. IN THESE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL IN REJECTING THE ALTERNATIVE ARGUMENT OF THE REVENUE CANNOT BE F AULTED. THERE IS NO EXPENDITURE INCURRED FOR EARNING DIVIDEND INCOME AN D EVEN UNDER THE NEWLY INSERTED SECTION 94(7), THE LOSS ARISING FROM THE T RANSACTION IN QUESTION IS NOT CONSIDERED AS AN EXPENDITURE INCURRED FOR EARNING D IVIDEND INCOME. ITA NO5976/M/12 A.Y.2008-09 10 24. CONSIDERING THE ABOVE, WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF THE LD. CIT(A) IN ALLOWING THIS ISSUE IN FAVOUR OF THE ASSESSEE. THIS GROUND OF APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 4.43 HAVING TAKEN NOTE OF THE AFORESAID DECISION OF HONBLE ITAT, INDORE WHICH IS BASED ON JURISDICTIONAL BOMBAY HIGH COURT DECISI ON REPORTED IN 310 ITR 421, I AM NOT IN AGREEMENT WITH THE A.O.S ALTERNA TIVELY ACTION ALSO THAT THE LOSS OF RS.46,94,62,365/-, WHICH WAS INCURRED TO TH E APPELLANT WILL AMOUNTS TO EXPENDITURE IN RELATION TO EXEMPT INCOME AND HEN CE TO BE ADDED TO BOOK PROFIT U/S.115JB OF THE ACT. ACCORDINGLY THE A.O. S THIS FINDING IS ALSO CONSIDERED TO BE NOT CORRECT AND JUSTIFIED. ACCORD INGLY THE APPELLANTS REQUEST, AS MADE ABOVE IN ITS SUBMISSION IS ACCEPTE D AND THE APPELLANTS APPEAL IS ALLOWED HOLDING THAT THE LOSS CANNOT BE H ELD TO BE EXPENDITURE AS CLAIMED BY THE A.O. IN RELATION TO EXEMPT INCOME. ACCORDINGLY, THE ADDITION SO MADE BY THE A.O. TO BOOK PROFIT IS DELETED. THU S, THE APPELLANTS APPEAL IS ALLOWED. 5. THE LEARNED DR SUBMITTED THAT ASSESSEE DEBITED A N AMOUNT OF DIMINUTION IN VALUE OF INVESTMENT TO PROFIT & LOSS ACCOUNT AND CREDIT THE ASSETS THEN IT WOULD CONSTITUTE A WRITE OFF AN ACTU AL ASSETS. HOWEVER, IF AN ASSESSEE DEBITS DIMINUTION IN VALUE OF INVESTMENT T O THE PROFIT & LOSS ACCOUNT AND MAKES A CORRESPONDING CREDIT TO CURRENT LIABILI TIES AND PROVISION ON THE LIABILITIES SIDE OF THE BALANCE SHEET, THEN IT WOUL D CONSTITUTE A PROVISION OF DIMINUTION IN VALUE OF INVESTMENT AND WOULD NOT BE ENTITLED TO DEDUCTION. 6. ON THE OTHER HAND, LEARNED COUNSEL OF THE ASSESS EE SUBMITTED THAT ASSESSEE HAS NOT MADE ANY PROVISION IN BOOKS OF ACC OUNT OF DIMINUTION IN VALUE OF CURRENT INVESTMENT AND THE CURRENT INVESTM ENT IS STATED IN THE BALANCE SHEET IS AT LOWER OF THE COST AND FAIR VALUE RESULT ANT FIGURE OF DIMINUTION IN VALUE AMOUNTING TO RS.46,94,62,365/- IS DEBITED THE INCOME AND EXPENDITURE ACCOUNT AS DIMINUTION VALUE OF INVESTMENT. THE LE ARNED AR SUBMITTED THAT AS PER ACCOUNTING STANDARD 13 IS PRESCRIBED BY THE INS TITUTE OF CHARTERED ACCOUNTANTS OF INDIA FOR ACCOUNTING FOR INVESTMENTS MANDATORY FOR EVERY COMPANY, THE CLAUSE 14,15 AND 16 IS RELEVANT. AS P ER ABOVE ACCOUNTING ITA NO5976/M/12 A.Y.2008-09 11 STANDARD IT IS CLEAR THAT WHENEVER THERE IS DECLINE IN THE VALUE OF CURRENT INVESTMENT, THE SAME SHOULD BE CHARGED TO PROFIT AN D LOSS STATEMENT AND VALUE ITS INVESTMENTS AT THE LOWER OF COST AND FAIR VALUE . THUS FOLLOWING THE ACCOUNTING STANDARD-13, THE CURRENT INVESTMENTS WAS CARRIED IN THE FINANCIAL STATEMENT AT ITS FAIR VALUE AS ON 31/03/2008 AND FA LL IN THE VALUE AMOUNTING TO RS.46,94,62,365/- DEBITED TO INCOME AND EXPENDITURE ACCOUNT TOWARDS DIMINUTION IN THE VALUE OF INVESTMENTS. THE LEARNE D AR ALSO RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF COMMISSIONER OF INCOME TAX VS. VODAPHONE ESSAR GUJARAT LTD. WHEREIN THE HONBLE HIGH COURT IN TAX APPEAL NO.749 OF 2012 HAS CONSIDERING THE DECISION OF VARIOUS DECISION OF HONBLE SUPREME COURT IN CASE OF M/S.VI JAYA BANK VS. COMMISSIONER OF INCOME TAX (323 ITR 0166) AND SOUTH ERN TECHNOLOGIES LIMITED VS. JT. COMMISSIONER OF INCOME TAX (320 ITR 577). THE LEARNED AR SUBMITTED THAT THE ISSUE IN CONTROVERSY IS DIRECTLY COVERED BY DIVISION BENCH OF GUJARAT HIGH COURT, THEREFORE REVENUE APPEAL IS DISMISSED. 7. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE P ARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT C IT(A) HAS OBSERVED THAT A DEBIT OF RS.46,94,62,365/- APPEARING IN PROFIT & LO SS ACCOUNT IS NOT A PROVISION SET ASIDE FOR DIMINUTION IN VALUE OF CURR ENT INVESTMENT BUT THE ACTUAL CHARGE TO PROFIT & LOSS ACCOUNT WHICH HAS BEEN WRIT TEN OFF IN VALUE OF CURRENT ASSETS. WE FIND THAT ON PERUSAL OF SECTION 115JB O F THE ACT IS VERY CLEAR THAT APPELLANT COMPANY REQUIRE TO ADDED BACK THE BOOK PR OFIT SET ASIDE AS PROVISION FOR DIMINUTION IN VALUE OF INVESTMENT UNDER THE CIR CUMSTANCES WHAT IS REQUIRED TO BE DECIDED WHETHER THE AMOUNT OF RS.46,94,62,365 /- DEBITED TO PROFIT & LOSS ACCOUNT SET ASIDE A PROVISION OR HAS BEEN WRIT E OFF AS A LOSS AGAINST THE VALUE OF ASSETS. THE ASSESSEE HAS MADE INVESTMENT IN MUTUAL FUND IN MARCH 2008. THE INTENTION OF THE ASSESSEE WAS TO HOLD A SHORT PERIOD AND ACCORDINGLY CLASSIFIED THE SAID INVESTMENT AS CURRENT INVESTMEN T IN BALANCE SHEET OF THE ASSESSEE COMPANY AS ON 31.03.2008. THE ASSESSEE CO MPANY SOLD THIS UNIT IN ITA NO5976/M/12 A.Y.2008-09 12 APRIL, 2008 I.E. WITHIN A PERIOD OF ONE MONTH. THE ASSESSEE COMPANY REQUIRED TO DRAW ITS ACCOUNTS IN ACCORDANCE WITH PART II OF SCHEDULE VI OF THE COMPANIES ACT AS PROVIDED IN SECTION 211 OF THE COM PANIES ACT, 1956. AS PER ACCOUNTING STANDARD THE STANDARD FOR ACCOUNTING OF INVESTMENT IS MANDATORY IN NATURE CLASSIFIES DIFFERENT TREATMENT OF ACCOUNTING OF CURRENT INVESTMENT AND LONG TERM INVESTMENT. THE CURRENT I NVESTMENT IS REQUIRED TO BE STATED IN ACCOUNTS AT LOWER OF COST OR FAIR VALUE A S ON BALANCE SHEET DATE. WHEREAS WHEN THERE IS FALL IN THE VALUE OF INVESTME NT, PROVISION IS REQUIRED TO BE MADE IN ACCOUNTS. AS PER AMENDED PROVISIONS OF SECTION 115JB REQUIRES PROVISION FOR DIMINUTION IN VALUE OF INVESTMENT TO BE ADDED BACK TO DETERMINE MINIMUM ALTERNATE TAX. FAIR VALUE OF UNITS OF MUTU AL FUNDS WAS LOWER THAN ITS COST BY RS.46,94,62,365/- AND THE SAME BEING CU RRENT INVESTMENT, THE APPELLANT FOLLOWING MANDATORY ACCOUNTING STANDARD 13, CHARGED RS.46,94,62,365/- TO PROFIT & LOSS ACCOUNT AND PREP ARED ITS ACCOUNTS IN ACCORDANCE WITH SCHEDULE VII PROVIDED IN SECTION 21 1 OF THE COMPANIES ACT 1956. THE ASSESSEE HAD CREDITED THE DIFFERENCE BET WEEN 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. SUCH ACCOUNTING T REATMENT IS IMPOSSIBLE WHERE THE PROVISION IS MADE INSTEAD OF WRITE OFF. 8. WE FIND THAT CONSIDERING THE ABOVE FACTS A DEBIT OF RS.46,94,62,365/- APPEARING IN PROFIT & LOSS ACCOUNT IS NOT A PROVISI ONS SET ASIDE FOR DIMINUTION IN VALUE OF INVESTMENT BUT A ACTUAL CHARGE TO THE P ROFIT & LOSS ACCOUNT WHICH HAS BEEN WRITTEN OFF AGAINST THE VALUE OF THE CURRE NT ASSET. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT DEBIT OF RS.46,94,62,365/- APPEARING IN PROFIT & LOSS ACCOUNT IS NOT A PROVISION OF SET ASIDE FOR DIMINUT ION IN VALUE OF INVESTMENT BUT THE ACTUAL CHARGED FOR THE LOSS IN THE DIMINUTI ON IN VALUE OF INVESTMENT. THEREFORE, WE ARE OF THE VIEW THAT FOR THE BOOK PRO FIT PURPOSE OF SECTION 115JB IS NOT REQUIRED TO BE INCREASED BY RS.46,94,62,365/ - AS THE SAME IS NOT IN THE NATURE OF PROVISION. ITA NO5976/M/12 A.Y.2008-09 13 9. WE FIND THAT RECENTLY HONBLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. VODAPHONE ESSAR GUJA RAT LTD. WHEREIN THE HONBLE HIGH COURT IN TAX APPEAL NO.749 OF 2012 HAS DISCUSSED THE ISSUE IN DETAIL BY DISCUSSING DECISION HONBLE SUPREME COURT IN CASE OF M/S.VIJAYA BANK VS. COMMISSIONER OF INCOME TAX (323 ITR 0166) AND SOUTHERN TECHNOLOGIES LIMITED VS. JT. COMMISSIONER OF INCOME TAX (320 ITR 577) HELD AS UNDER:- 11. FURTHER, RECENTLY THE HONBLE HIGH COURT OF GU JARAT IN CASE OF COMMISSIONER OF INCOME TAX VS. VODAPHONE ESSAR GUJARAT LTD. DECI DED AFTER REFERENCE WAS MADE TO THE LARGER BENCH FOR CONSIDERATION OF T HE FOLLOWING QUESTION: WHETHER IN VIEW OF DECISION OF THE SUPREME COURT I N CASE OF VIJAYA BANK (SUPRA), JUDGEMENT IN CASE OF DEEPAK NITRITE L IMITED (SUPRA) WAS NOT CORRECTLY DECIDED AND, THEREFORE, LATER JUD GEMENT IN CASE OF INDIAN PETROCHEMICALS CORPORATION LTD. (SUPRA) LAYS DOWN THE CORRECT LAW? THE HONBLE HIGH COURT OF GUJARAT OBSERVED THE FOLL OWINGS: 20. ABOVE DECISIONS OF SUPREME COURT IN CASES OF S OUTHERN TECHNOLOGIES LTD. (SUPRA) AND VIJAYA BANK (SUPRA) T HUS BRING OUT A CLEAR DISTINCTION BETWEEN A CASE WHERE THE ASSESSEE MAY MAKE A PROVISION FOR DOUBTFUL DEBTS AND A CASE WHERE THE A SSESSEE MAY MAKE A PROVISION FOR DOUBTFUL DEBTS AND A CASE WHERE THE ASSESSEE AFTER CREATING SUCH A PROVISION FOR BAD AND DOUBTFUL DEBT BY DEBITING IN PROFIT & LOSS ACCOUNT ALSO SIMULTANEOUSLY REMOVES S UCH PROVISION FROM ITS ACCOUNT BY REDUCING THE CORRESPONDING AMOU NT FROM THE LOANS AND ADVANCES ON THE ASSET SIDE OF THE BALANCE SHEET. THE LATER WOULD BE AN INSTANCE OF WRITE-OFF AND NOT A MERE PR OVISION. FURTHER OBSERVED THAT: 23. BY WAY OF CULMINATION OF ABOVE JUDICIAL PRONOUN CEMENTS AND STATUTORY PROVISIONS, THE SITUATION THAT ARISES IS THAT PRIOR TO THE INTRODUCTION OF CLAUSE (I) TO THE EXPLANATION TO SE CTION 115JB, AS HELD BY THE SUPREME COURT IN CASE OF HCL COMNET SYSTEMS AND SERVICES LTD. (SUPRA), THEN THE EXISTING CLAUSE (C) DID NOT COVER A CASE WHERE THE ASSESSEE MADE A PROVISION FOR BAD OR DOUBTFUL D EBT. WITH INSERTION ITA NO5976/M/12 A.Y.2008-09 14 OF CLAUSE (I) TO THE EXPLANATION WITH RETROSPECTIVE EFFECT, ANY AMOUNT OR AMOUNTS SET ASIDE FOR PROVISION FOR DIMINUTION I N THE VALUE OF THE ASSET MADE BY THE ASSESSEE, WOULD BE ADDED BACK FOR COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB OF THE ACT. HOWEVE R, IF THIS WAS NOT A MERE PROVISION MADE BY THE ASSESSEE BY MERELY DEB ITING THE PROFIT AND LOSS ACCOUNT AND CREDITING THE PROVISION FOR BA D AND DOUBTFUL DEBT, BUT BY SIMULTANEOUSLY OBLITERATING SUCH PROVI SION FROM ITS ACCOUNTS BY REDUCING THE CORRESPONDING AMOUNT FROM THE LOANS AND ADVANCES ON THE ASSET SIDE OF THE BALANCE SHEET AND CONSEQUENTLY, AT THE END OF THE YEAR SHOWING THE LOANS AND ADVANCES ON THE ASSET ASIDE OF THE BALANCE SHEET AS NET OF THE PROVISION FOR BA D DEBT, IT WOULD AMOUNT TO A WRITE OFF AND SUCH ACTUAL WRITE OFF WOU LD NOT BE HIT BY CLAUSE (I) OF THE EXPLANATION TO SECTION 115JB. TH E JUDGMENT IN THE CASE OF DEEPAK NITRITE LIMITED (SUPRA) FELL IN THE FORMER CATEGORY WHEREAS FROM THE BRIEF DISCUSSION AVAILABLE IN THE JUDGMENT IT APPEARS THAT CASE OF INDIAN PETROCHEMICALS CORPORATION LTD. (SUPRA) FELL IN THE LATER CATEGORY. 10. RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE DEPARTMENTAL APPEAL. ORDER PRONOUNCED IN THE OPEN COURT ON 15.01.2018. SD/- SD/- (RAJESH KUMAR) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 15.01.2018. * MP . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, MUMBAI ITA NO5976/M/12 A.Y.2008-09 15 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI