DDIT (IT) 3(2), MUMBAI vs. THE BANK OF NOVA SCOTIA, MUMBAI

O R D E R

PER AMARJIT SINGH, JM:

1. On the facts and in the circumstances, the CIT(A) erred in annulling the order u/s. 147 of the IT. Act, without appreciating the fact that the assesses did not declare the A.Y. 2005-06 correct profit within the provisions of 115JB of the IT. Act, as the materials brought on record were not enough and thereby wrongly relied on the Apex Court's decision in Kelvinator India Ld (2002) 250 ITR 1 (SC).

2. On the facts and in the circumstances of the case and in Law the Id CIT(Appeals) erred in annulling the order u/s. 147 of the I.T .Act, without appreciating the fact (hat the assessee did not follow the provisions of 115JB(MAT) of the I. T. Act by not adding back the provisions of bad debt of Rs,2,06,56,501/- created in the previous year and at the same lime claimed deduction of provision of bad debt of Rs.24024483/- written back and credited to P& L account stating that the same was not allowed in curlier years.

3. The Appellant prays that the order of the Id. CIT(Appeals) on the above ground(s) be set aside and that of the Assessing Officer be restored.

4. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary,"

3. The brief facts of the case are that the assessee filed its return of income on31.10.2005 declaring total loss of Rs.9,44,90,280/- for the A.Y. 2005-06. Thereafter, the assessment u/s 143(3) of the Act was completed on 30.12.2008 assessing total loss to the tune of Rs.2,18,61,190/-. Subsequently, it was noticed that the assessee did not follow the provision of Section 115JB of the Act while calculating the net profit. The assessee did not add back the provision of bad debts of Rs.2,06,56,501/- created in the previous year and at the same time, the assessee claimed deduction of the provisions of bad debts of Rs.2,40,24,453/- written back and credited to the P&L Account stating that the same was not allowed in the earlier years. The case was reopened u/s 147 of the Act. Notice u/s 148 dated 29.03.2012 was issued and served upon the assessee. Thereafter, the assessment was ITA. No. 6588/M/2014 A.Y. 2005-06 completed assessing the income to the tune of Rs.1,54,94,667/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who set aside the proceeding in view of provision u/s 147 of the Act, therefore, Revenue has filed the present appeal before us. ISSUE Nos. 1 & 2:- 4. Issue nos. 1 & 2 are inter-connected, therefore, are being taken up together for adjudication. In brief, the revenue has challenged the set aside of proceeding of the AO in view of provision u/s 147 of the Act by the CIT(A) in which the declaration of the correct profit within the provision of Section 115JB of the Act was in question. The appellant Bank of Nova Scotia is banking company incorporated in Canada which had obtained the licence of Reserve Bank of India to carried out banking in India. Bank of Nova Scotia is operating its business in India from the last 20 years through various branches situated at Mumbai, Delhi, Bangalore, Coimbatore and Hyderabad. The appellant’s major business activity is in India in relation to corporate loans, trade finance, retail banking, bill discounting etc. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - “6. I have considered the A.O order as well as the appellant AR's submissions. 1 have also taken note to the appellant's submission as well as the judicial pronouncements furnished by the appellant in support of its contention. Having taken note to the same and also after taking note to the specific observation made A.Y. 2005-06