REPRO INDIA LIMITED,LOWER PAREL, MUMBAI vs. COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI

ITA 6698/MUM/2025Status: DisposedITAT Mumbai25 February 2026AY 2018-1919 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal decided the issues as follows: 1. Regarding the addition of Rs. 71,85,261/- on account of profit on sale of fixed assets, the Tribunal held that under the statutory scheme of block of assets, once the sale consideration is reduced from the block and depreciation is computed accordingly under section 43(6), no separate taxation of book surplus can arise unless specifically provided. The AO had not demonstrated that the conditions of section 50 were attracted or that the block ceased to exist. Furthermore, the AO's own show cause notice had marked this amount as 'Allowable' without any independent reasoning in the assessment order to depart from this view. Therefore, the addition was deleted. 2. Regarding the addition of Rs. 19,13,61,566/- being reversal of provision for bad debts, the Tribunal held that the material placed on record demonstrated that the reversal was part of transitional remeasurement under Ind AS and an accounting adjustment. There was no finding by the AO that any deduction was allowed in earlier years for the same provision. In the absence of such a finding and in view of the documentary evidence establishing the accounting nature of the reversal, the addition could not be sustained and was deleted. 3. Regarding the addition of Rs. 15,94,31,254/- being bad debts written off, the Tribunal noted that the dispute was factual and required verification of whether the bad debts were actually written off, corresponding trade receivable accounts were credited, and the write-off was supported by ledger entries and reconciled with financial statements. Since these aspects were not examined by the AO and the learned DR raised this point, the issue was restored to the file of the AO for limited verification. The remand was strictly confined to these points, and the AO was directed to grant a reasonable opportunity of being heard to the assessee. The issue of reversal of provision for doubtful debts was expressly left undecided by the AO on remand, as it was decided in favour of the assessee.

What were the facts?

The assessee, Repro India Limited, filed its return of income for Assessment Year 2018-19 declaring NIL income and losses of Rs. 10,68,34,325/-. The case was selected for limited scrutiny under the E-Assessment Scheme. The Assessing Officer (AO) made an addition of Rs. 35,79,78,081/-. The assessee appealed to the Commissioner of Income-tax (Appeals) [CIT(A)], who partly allowed the appeal by directing re-computation on certain aspects but confirmed the substantive additions. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT) challenging the additions made by the AO and confirmed by the CIT(A). The procedural history involves assessment order dated 09.06.2021 under section 143(3) read with section 144B, and CIT(A) order dated 25.09.2025 under section 250.

What were the issues?

1. Whether the CIT(A) erred in upholding the addition of Rs. 71,85,261/- made by the AO on account of profit on sale of assets as per books of accounts, turning on the provisions related to block of assets and capital gains under the Income Tax Act, 1961. 2. Whether the CIT(A) erred in upholding the addition of Rs. 35,07,92,820/-, comprising Rs. 19,13,61,566/- being reversal of provision for bad debts and Rs. 15,94,31,254/- being bad debts written off, turning on the provisions related to deductions and computation of income under the Income Tax Act, 1961. Assessee's contentions: For the profit on sale of assets, the assessee argued that once the sale consideration was reduced from the block of assets under section 43(6) and depreciation was computed on the adjusted block value, the book profit could not be taxed separately. The assessee also pointed to the AO's show cause notice which marked this amount as 'Allowable'. For the bad debts, the assessee contended that reversal of provision for doubtful debts should not be taxed if the original provision was disallowed in earlier years, and bad debts written off are allowable under the Act. The assessee also raised a ground regarding violation of principles of natural justice, which was not pressed before the Tribunal. Revenue's contentions: The revenue, through the learned DR, did not explicitly present arguments on the profit on sale of assets. For the bad debts written off, the learned DR specifically raised the aspect requiring limited verification by the AO.

Which sections of the Income-tax Act were involved?

Section 43(6),Section 143(3),Section 144B,Section 250,Section 270A,Section 50

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI MAKARAND VASANT MAHADEOKAR

For Appellant: Shri Vijay Mehta (Virtually present), Shri Mayur Kisnadwala (Physically
For Respondent: Shri Umashankar Prasad, Ld. DR
Hearing: 23.02.2026Pronounced: 25.02.2026

PER MAKARAND VASANT MAHADEOKAR, AM:

This appeal by the assessee is directed against the order

dated 25.09.2025 passed by the Commissioner of Income-tax

(Appeals), National Faceless Appeal Centre, Delhi [hereinafter

referred to as “CIT(A)”], under section 250 of the Income-tax Act, 1961[hereinafter referred to as “the Act”], arising from the assessment order dated 09.06.2021 passed under section 143(3) read with section 144B of the Act for Assessmen

The order continues below.

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