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