SOUTHERN PETROCHEMICAL INDUSTRIES CORPORATION LTD.,CHENNAI vs. ITO, CHENNAI

आयकर अपीलीय अिधकरण “ए” �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHENNAI माननीय �ी महावीर िसंह, उपा ! एवं माननीय �ी मनोज कुमार अ%वाल ,लेखा सद( के सम!। BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ ITA No.84/Chny/2023 (िनधा)रण वष) / Assessment Year: 2008-09) M/s. Southern Petrochemical Income Tax Officer बनाम Industries Corporation Limited Corporate Ward-3(1) 88, Spic House, Mount Road, Guindy, Chennai-600 034. / Vs. Chennai-600 032. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AAACS-4668-K (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri R. Vijayaraghavan & Shri Saroj Kumar Parida (Advocates)-Ld. ARs � थ�कीओरसे/Respondent by : Shri Nilay Baran Som (CIT) & Shri AR V Sreenivasan (Addl. CIT)-Ld. DRs सुनवाईकीतारीख/Date of Hearing : 16-10-2023 घोषणाकीतारीख /Date of Pronouncement : 10-01-2024 आदेश / O R D E R

Manoj Kumar Aggarwal (Accountant Member)

6.3 The CIT(A) /NFAC ought to have appreciated that the liability to pay electricity tax has arisen and a demand has been made by TNEB on the appellant for this amount. Merely because the amount has been disallowed under section 43B under the normal computation cannot be the basis for disallowance of the same for the purpose of determining the book profits. 6.4 The CIT(A) /NFAC ought to have appreciated that only accrued liability which is otherwise allowable can be disallowed under section 43B and therefore electricity tax which was disallowed under section 43B, cannot be disallowed for the purpose of computing book profits on the ground it is an unascertained liability. 7.1 The CIT(A) / NFAC erred in confirming the disallowance of Rs.34,21,57,586/- being provision for bad debts while computing the book profits. 8.1 The CIT(A)/NFAC erred in confirming disallowance under section 14A well computing book profits under section 115 JB (Para .6.1 at Page 50).

As is evident, the additions / disallowance which forms the subject matter of this appeal are i.e., (i) Disallowance u/s 14A; (ii) Disallowance of proportionate interest expenditure; (iii) Disallowance of Bad debts written-off; (iv) Disallowance of 50% expenditure towards R&D facility: (v) Disallowance of Electricity Tax u/s 43B as well as u/s 115JB; (vi) Adjustment of provision for Bad Debts u/s 115JB. 2. The Ld. AR advanced arguments on impugned issues citing various judicial decisions and also filed written submissions to support the case of the assessee. The revenue also advanced arguments and filed written submissions in support of impugned order. Having heard rival submissions and upon perusal of case records, our adjudication would be as given in succeeding paragraphs. The assessee being resident corporate assessee is stated to be engaged in manufacturing and marketing of fertilizers, pharma, biotech products and providing engineering services. 3. Disallowance u/s 14A 3.1 The assessee earned exempt dividend income for Rs.827.61 Lacs which led Ld. AO to trigger disallowance u/s 14A. The assessee submitted that no specific expenditure was incurred to earn the

dividend. In the alternative, the assessee offered disallowance of Rs.16.55 Lacs towards pro-rate expenditure incurred for earning the exempt income. However, rejecting the same, Ld. AO computed disallowance in terms of Rule 8D(2) and worked out disallowance of Rs.548.28 Lacs which include direct expense disallowance u/r 8D(2)(i) for Rs.16.55 Lacs, interest expenditure disallowance u/r 8D(2)(ii) for Rs.507.78 Lacs and indirect expenditure disallowance u/r 8D(2)(iii) for Rs.23.94 Lacs. The same was added while computing normal income as well as while computing Book Profits u/s 115JB. 3.2 During appellate proceedings, the assessee, inter-alia, submitted that considering those investments which have yielded exempt income during the year, the indirect expense disallowance would work out to be Rs.23.94 Lacs. The assessee also tabulated the investment made by it in various entities which are extracted on page no.11 of the impugned order. With respect to each of the entities, the assessee submitted that the investments were made in earlier years out of surplus funds and no borrowings were used to make the said investments. There were no new investments during the year. 3.3 However, Ld. CIT(A) held that the data furnished by the assessee was only the cash surplus available with the assessee. The actual routing of surplus money into investment was also not demonstrated. The Ld. CIT(A) provided partial relief and held that the advances made to sister concerns as well as foreign subsidiaries were to be excluded while computing the disallowance. Finally, impugned disallowance was worked out to be Rs.531.94 Lacs which include direct expense disallowance u/r 8D(2)(i) for Rs.16.55 Lacs, interest expenditure disallowance u/r 8D(2)(ii) for Rs.491.44 Lacs and indirect expenditure

disallowance u/r 8D(2)(iii) for Rs.23.94 Lacs. Aggrieved, the assessee is in further appeal before us. 3.4 From the fact, it emerges that the assessee has earned exempt dividend income during the year and offered suo-motu disallowance of Rs.16.55 Lacs during the course of assessment proceedings. In such a situation, it was incumbent on the part of Ld. AO to record an objective satisfaction as to why the said disallowance was not acceptable. The application of Rule 8D was not mechanical but it has to be proceeded by an objective satisfaction of Ld. AO. In the absence of such a satisfaction, impugned disallowance could not be sustained. Another pertinent fact is that all the investments have been made prior to financial year 1999-2000 out of surplus own funds available in the respective years of investment as tabulated by the assessee during appellate proceedings. There are no new investments during the year. Therefore, interest disallowance u/r 8D(2)(ii) could not be sustained. The suo-motu disallowance of Rs.16.55 Lacs as offered by assessee is not direct expense disallowance since the same is pro-rata salary expenditure which could be said to be attributable to activity of investment. Therefore, considering the fact of the case, the impugned disallowance stand restricted to the extent of Rs.23.94 Lacs and the remaining disallowance stand deleted. The corresponding grounds stand partly allowed. 3.5 So far as the adjustment of this disallowance u/s 115JB is concerned, we find that this issue is covered in assessee’s favor by the decision of Special bench of Tribunal in the case of Vireet Investments Pvt. Ltd. (165 ITD 27) which held that disallowance u/s 14A r.w.r. 8D has no application while computing the book profit u/s 115JB.

Respectfully following the same, we direct Ld. AO not to make this adjustment u/s 115JB. The corresponding grounds raised by the assessee stand allowed. 4. Disallowance of proportionate Interest Expenditure 4.1 The assessee claimed interest expenditure of Rs.27820.24 Lacs against loan liabilities of Rs.254130.75 Lacs. However, it was noted by Ld. AO that the assessee advanced various sum to group entities which are tabulated in para 4.1 of the assessment order as under: - No. Name of the Party Amount (In Lacs) 1. SPIC Fertilizers & Chemicals Ltd. 1630.03 (SFCL, FZE), Dubai 2. Indo Jordan Chemicals Ltd. (IJCL) 4754.18 3. Ind-ITAL Chemicals Ltd. (TPL) 6.01 4. SPIC Petrochemicals Ltd. (SPC) 318.91 5. SPEL semiconductor Ltd. 0.35 6. National Aromatics and Petrochemicals 1463.36 Corp. Ltd. (NAPCL) 7. Tuticorin Alkali Chemicals and 608.67 Fertilizers Ltd. (TAC) 8. SPIC Jet Engg. Construction Ltd. 5.52 Total 8787.03 The assessee, inter-alia, submitted that own funds were utilized to make those investments. The assessee also relied on the decision of Hon’ble Supreme Court in the case of CIT V/s S.A. Builders (288 ITR 1) to bolster its claim. However, rejecting the same, Ld. AO computed proportionate disallowance of Rs.961.93 Lacs. 4.2 During appellate proceedings, the assessee assailed the impugned disallowance on the ground that all these investments had business nexus and also raised plea of sufficiency of own funds to make these investments. However, rejecting the submissions of the assessee, Ld. CIT(A) confirmed the impugned disallowance except disallowance made against advances given to M/s Tuticorin Alkali Chemicals and

Fertilizers Ltd. (TAC). The adjudication of Ld. CIT(A) reduced the impugned disallowance to Rs.895.30 Lacs against which the assessee is in further appeal before us. 4.3 We find that this issue has been decided by us in assessee’s favor in ITA No. 204/Chny/2023 for AY 2004-05 as under: - Our findings and Adjudication 11. From the facts, it emerges that impugned advances have been given by the assessee in the ordinary course of business to all these entities. The investments have been made in joint ventures entities though the projects may not have fructified for the assessee. It could be seen that SFCL, FZE is 100% subsidiary of SFCL Mauritius in which the assessee owns stake of 83.54%. The investment made by the assessee was for expansion of assessee’s business. This business of this entity is stated to be having direct nexus with the assessee’s main business of manufacturing of Urea and fertilizers etc. The assessee has undertaken to buy back the entire production of Urea from this entity. The ministry of chemicals and fertilizers, vide its letter dated 03.12.1998, informed the assessee that import of urea by assessee from this entity will be given preference. The aforesaid facts substantiate the arguments that investments made by the assessee had direct business nexus and therefore, the test of commercial expediency, in our opinion, was duly satisfied by the assessee. It could be said that the investments were made in furtherance of business interest and the ratio of decision of Hon’ble Supreme Court in the case of CIT V/s S.A. Builders (288 ITR 1) would favor the case of the assessee. In this decision, it was held by Hon’ble Court that once nexus was established between the expenditure and the purpose of the business, which need not necessarily be the business of the assessee itself, revenue could not disallow the claim assuming what was reasonable. In fact, Tribunal in ITA No.232/Chny/2022 order dated 23.09.2022 for AY 2017-18, in similar issue, quashed revisionary proceedings on the ground that the loss of investments so made by the assessee was a business loss and the same was one of the possible views. Considering the same, the view taken by Ld. AO in allowing the business loss was upheld. To allow the expenditure, it would not be necessary that the project should fructify. Considering all these facts, we would hold that impugned disallowance against this entity could not be sustained. Similarly, the investments made in IJCL were made as a joint venture investment. This entity was to manufacture phosphoric acid and the entire production was to be sold to the assessee. The assessee made 60% contribution in this entity. The venture was to ensure supply of critical raw material for the assessee. Simply because the project could not fructify would not disentitle the claim of the assessee that it had business connection with this entity. The investment made by the assessee has RBI approval vide letter dated 22.09.1994 which is placed on page nos.100 & 101 of paper-book-1. This being so, disallowance of interest either u/s 37(1) or u/s 36(1)(iii) could not be said to be justified. We order so. The advances given to SPEL have been given by the assessee as a promoter entity to meet its debt obligations and capital expenditure. The advances were given by the assessee to this entity only up-to financial year 2000-01. During impugned year, the advances made by the assessee have been converted into equity shares. In

earlier years, when the advances were given, the assessee is having sufficient own interest free funds to make these investments. The working of the same has been given on page nos. 7 & 8 of the paper-book-1. Similar findings have been rendered by us in assessee’s own case vide ITA No.170/Chny/2023 for AY 2003-04. Therefore, the assessee’s ground would succeed to that extent both on commercial expediency as well as on the ground of having sufficient own funds. M/s NAPCL is a joint venture entity of the assessee to produce Benzene, orthoxylene, paraxylene and PTA. However, the project has failed to commence production which has led to impugned disallowance. Nevertheless, there is direct business nexus of making the investment. The reason for delay in execution of the project is the fact that there was delay in getting regulatory approvals which is beyond the control of the assessee. The assessee has entered into MOU with Chennai Petroleum Corporation Limited to establish a large petrochemical plant near Chennai. The plant was to produce raw material for the assessee. The same has resulted into formation of this entity. As per the terms of MOU, the expenses of the joint venture are to be shared equally by the joint venture entities. Considering the same, the assessee has advances sum to this entity towards it share of the expenditure of the project. The investment would ultimately convert into equity shares. All these facts would establish the claim of the assessee that the investment had direct business nexus and therefore, no disallowance could have been made for this investment. Regarding investment in SPC, upon perusal of page no. 182 of the paper-book, it could be noted that the assessee has, in fact, charged interest from this entity. The outstanding loan amount including interest has been converted into equity and bonds which is evident from assessee’s financial statements. Therefore, there is no question of disallowing interest against this investment. The Ld. AR has pointed out that there is no investment made by the assessee in SPIC Technologies Ltd. for Rs.2200.66 Lacs. In fact, the assessee has made investment of Rs.220.66 Lacs in another entity viz. M/s SPIC Bio technologies Ltd. The Ld. AR has stated that the assessee has surplus net owned funds in the year in which the advances were given. The position of net owned funds has been summarized on page nos. 34 to 37 of paper book-2 along with extract of Balance Sheet, Profit & Loss Account and status of reserves and Surplus. After going through the same, we concur with the submissions of Ld. AR that the assessee had surplus net funds and disallowance need not be made in terms of decision of Hon’ble Supreme Court in the case of CIT V/s Reliance Industries Ltd. (307 CTR 121) which held that it could be presumed that the investments were made out of interest free funds available with the assessee. The ratio of decision of Hon’ble Madras High Court in CIT V/s Hotel Savera (239 ITR 795) as well the decision of Hon’ble Bombay High Court in CIT V/s Reliance Utilities (313 ITR 340) also supports the case of the assessee. The interest disallowance on inter-corporate deposits of Rs.675 Lacs has been deleted by us in assessee’s own case vide ITA No.170/Chny/2023 for AY 2003-04 on the ground that in the year when these deposits were placed, the assessee had sufficient own funds to make the investments. Taking consistent view, no disallowance is called for against these ICDs. Finally, considering the facts and circumstances of the case, the impugned disallowance of Rs.5519.30 Lacs as sustained in impugned order could not be sustained in law. We order so.

In the above order, detailed findings have been rendered by us with respect to each of the parties under consideration. We have concurred with the plea of business nexus as well as sufficiency of own funds. The facts are quite similar in this year. Therefore, taking the same stand, the impugned disallowance stands deleted. The grounds raised in the appeal stand allowed accordingly. 5. Disallowance of bad-debts written-off. 5.1 The assessee wrote-off bad debts for Rs.75.59 Lacs and furnished division wise break-up details of the same. The assessee submitted that the same have arisen on account of non-settlement of dues by sundry debtors to whom the assessee had made sales in earlier years. The assessee made all the efforts including legal action and finally found that the said dues have become irrecoverable. Accordingly, the same has been written off and claimed as deduction u/s 36(1)(vii). However, Ld. AO partially accepted the claim made by the assessee and made disallowance of bad debts for Rs.44.37 Lacs pertaining to pharma and Agri business activities on the ground that the assessee did not produce adequate supporting details. 5.2 During appellate proceedings, the assessee submitted that it made sale of enzyme products (pharma division) to M/s Arun International from 25.11.1998 onwards. However, the payment was not received from the dealer and legal action was taken for recovery of debts which did not yield any results. Therefore, the said amount was written-off. Similarly assessee’s SPIC Agri biotech Center spent an amount of Rs.25.43 Lacs towards initial development of high yielding micro propagated produce. The expenditure was incurred during January, 2006 to November, 2006 to bring framer from various places to visit the

site and sample plants were given to farmers for cultivation. The said expenditure was shown under the project during financial year 2007-08 and the same was charged-off and claimed as debts written off. However, all these submissions were rejected by Ld. CIT(A) on the ground of non furnishing of details as well as on the ground that the expenditure pertained to earlier assessment years Aggrieved, the assessee is in further appeal before us. 5.3 So far as the debts written-off against M/s Arun international are concerned, we find that the assessee has made sales to this party in earlier years. However, the payment was not received from the dealer and legal action was taken for recovery of debts which did not yield any results. Therefore, the said amount was written-off. Clearly this amount is allowable as deduction u/s 36(1)(vii) in terms of ratio of decision of Hon’ble Supreme Court in the case of TRF Ltd. (323 ITR 397). We order so. 5.4 So far as the expenditure of Rs.25.43 Lacs is concerned, the nature of expenditure is such that it could be termed as revenue expenditure. The assessee has spent amount to propagate new varieties of produce and to facilitate visit of farmers and distribution of samples. Such expenditure is incurred in the ordinary course of business. The same has been charged off in this year and not claimed in earlier years. Therefore, there are no reasons to disallow the same. This item would be allowable as business expenditure. We order so. The corresponding grounds raised by the assessee stand allowed. 6. Disallowance of 50% expenditure towards R&D facility 6.1 The assessee claimed deduction for R&D expenses u/s 35(2AB) at the rate of 150% on amount of Rs.61.16 Lacs as spent by the

assessee. In support, the assessee filed letter dated 01.06.2006 for renewal of recognition of in-house R&D facility granted by the Department of Scientific and Industrial Research (DSIR) recognizing the R&D facility up-to 31.03.2009. But the assessee did not furnish any evidence to show that it had entered into an agreement with DSIR for cooperation in R&D facility. Therefore, the additional claim of Rs.30.58 Lacs was denied. The Ld. CIT(A) upheld the same on the ground that though the assessee furnished Form 3CK, however, it failed to furnish approval in Form 3CM from prescribed authority. Unless the expenditure is approved by way of Form 3CM, the deduction could not be allowed to the assessee. Aggrieved, the assessee is in further appeal before us. 6.2 This issue has been decided by us in assessee’s favor in ITA No.210/Chny/2023 for AY 2007-08 as under:- We find that this issue stood covered in assessee’s favor by the decision of this Tribunal in M/s Caplin Point Laboratories Ltd. (ITA No.1887/Chny/2018 dated 03.08.2022) wherein it was held as under: - Our finding and Adjudication 5. The undisputed fact that emerges are that the assessee has set-up in house R & D facility which has been approved by the prescribed authority and the assessee is eligible to claim deduction u/s 35(2AB). The point of dispute is only for quantum. The approving authority has granted approval for revenue expenditure only from 28.01.2014 whereas the assessee has claimed expenditure incurred throughout the financial year. We find that Ld. CIT(A) has sought distinction in the case law of Hon’ble Madras High Court in CIT Vs Wheels India Limited (2011) 336 ITR 513. However, after studying this case law, we find that the analogy of this case law would be applicable to the facts of the present case. The Hon’ble Court concurring with the decision of Hon’ble Gujarat High Court in CIT V/s Claris Life sciences Ltd. (326 ITR 251), held as under: - 5. We are in full agreement with the reasoning which weighed with the Division Bench of the Gujarat High Court while holding that de hors any specific dates specified in the certificate of the prescribed authority, namely DSIR, once the prescribed authority approved the existence of research and development facility and the expenditure incurred on such scientific research, the assessee would be entitled for the expenditure incurred for the whole of the assessment year and cannot be granted in a truncated manner. The facts in case law of Hon’ble Gujarat High Court in CIT V/s Claris Life sciences Ltd. (supra) were quite identical wherein it was noted that DSIR approval was only

from 27.02.2001 to 31.03.2003 but the assessee claimed weighted deduction for entire expenses as incurred during the year. The claim was allowed by Ld. AO w.e.f. 27.02.2001. However, Tribunal allowed the claim for the whole of the year. Affirming the decision of Tribunal, Hon’ble Court held as under: - "The Tribunal has also considered rule 6(5A) and Form 3CM and come to the conclusion that a plain and harmonious reading of the rule and Form clearly suggests that once the facility is approved, the entire expenditure so incurred on development of the research and development facility has to be allowed for weighted deduction as provided by section 35AB(2). The Tribunal has also considered the legislative intention behind the above enactment and observed that to boost the research and development facility in India, the Legislature has provided this provision to encourage the development of the facility by providing deduction of weighted expenditure. Since what is stated to be promoted was development of facility, the intention of the Legislature by making the above amendment is very clear that the entire expenditure incurred by the assessee on development of facility, if approved, has to be allowed for the purpose of weighted deduction." The cited decisions of Tribunal also favor the case of the assessee. Therefore, respectfully following the analogy of decision of Hon’ble Madras High Court in CIT Vs Wheels India Limited (2011) 336 ITR 513, we direct Ld. AO to grant full deduction to the assessee. Taking the same view, we direct Ld. AO to allow impugned deduction to the assessee. The corresponding grounds stand disposed-off accordingly.

Taking consistent view in the matter, we delete the impugned disallowance as made by Ld. AO. 7. Disallowance of Electricity Tax u/s 43B as well as u/s 115JB 7.1 The assessee debited contingent liability of Rs.9.97 Lacs towards power generation and electricity tax. The same remained unpaid during the year and therefore, Ld. AO held that disallowance u/s 43B would be attracted. It transpired that Govt. of Tamil Nadu enacted Tamil Nadu Tax on consumption of sale of Electricity Act, 2003 which enabled the state government to impose electricity tax @5% of power cost on Tamil Nadu Electricity Board (TNEB) power supply and 10 paisa per unit on self-generated power. The levy of the same was disputed by the assessee before Hon’ble High Court of Madras. The issue was decided favorably. However, to nullify the effect of the same, Govt. of Tamil Nadu brought a validation act called Tamilnadu Tax on consumption or

sale of Electricity (Amendment) validation Act, 2007 which was again challenged by the assessee before Hon’ble High Court of Madras. The Hon’ble Court vide order dated 27.11.2008 directed that authorities could raise the demand but could not disconnect the power supply on account of non-payment. In other words, there was stay on collection of the demand and therefore, this amount was not remitted by the assessee. In the said background, the assessee submitted that this amount was not hit by the provisions of Sec.43B and therefore, full claim was to be allowed. The assessee also pleaded that this being an ascertained liability, it could not be adjusted u/s 115JB. 7.2 However, rejecting the same, the Ld. AO held that these were statutory dues and hit by the provisions of Sec.43B. Further, the final quantification of the electricity tax was continent on the happening of future event. Therefore, the same was to be adjusted u/s 115JB also. 7.3 The Ld. CIT(A) upheld the disallowance on the ground that this amount remained unpaid and hit by the provisions of Sec.43B.The adjustment thereof u/s 115JB was also confirmed on the ground that it was contingent liability. Aggrieved, the assessee is in further appeal before us. 7.4 We find that this issue has been decided by us against the assessee in assessee’s appeal ITA No.204/Chny/2023 for AY 2004-05 as under: - 9.4 From the facts, it emerges that the constitutional validity of the state levy is sub-judice before Hon’ble High Court of Madras. The Hon’ble Court has stayed the recovery of demand subject to deposit of Rs.200 Lacs by the assessee. The same has been deposited by the assessee. The assessee has also computed additional liability of Rs.98.67 Lacs as per applicable computations. Both these items have been debited in the Profit & Loss Account. However, it remains a fact that this liability has not yet crystallized and the same is merely in the nature of contingent and an unascertained liability only which may or may not arise. Undoubtedly, the same is covered

under the provisions of Sec.43B. Therefore, the same has to be disallowed in normal computations as well as while computing Book Profits u/s 115JB also. Therefore, we confirm the stand of lower authorities and dismiss the grounds raised by the assessee in both the appeals.

Facts being the same, taking consistent view, we confirm the impugned order on this issue. The corresponding grounds stand dismissed. 8. Adjustment of Provision for Bad Debts u/s 115JB 8.1 The assessee made provision of Rs.134.21 Crores which was offered to tax under normal provision. However, the same was not adjusted while computing book profits u/s 115JB. The assessee submitted that the provision was made for diminution in value of the assets i.e., reduction in the value of recoverable and therefore, these were ascertained liabilities. Reliance was placed on the decision of Hon’ble Supreme Court in the case of HCL Comnet Systems and Services Ltd. (305 ITR 409) for the submission that any provision made towards irrecoverability of debt could not be said to be a provision for liability. The assessee also submitted that as per Explanation (1) to the second proviso to Sec.115JB(2), the amount set aside for provision made for meeting liability other than ascertained liability ought to be added back while computing book profits u/s 115JB. Further, the second proviso to Sec.115JB was brought in only by the Finance act No.2 of 2009 and therefore, said adjustment would not be justified. In the alternative, it was submitted that the same may be allowed as deduction in the year in which such provisions were reversed and credited to profit & Loss Account. 8.2 However, rejecting assessee’s submissions and considering the amendment made by Finance Act, 2009, Ld. AO held that this amount was to be adjusted u/s 115JB.

8.3 During appellate proceedings, the assessee reiterated the submissions made during revisionary proceedings. However, Ld. CIT(A), considering the amendment made by Finance Act 2009, with effect from 01.04.2001 to Explanation 1 to Sec.115JB wherein clause (i) was introduced by which any provision made towards diminution in value in an asset has to be added back with the book profits, confirmed the adjustment made by Ld. AO. The amendment made by Finance Act 2009 was applicable to the facts of the case. The deduction could be allowed only in the relevant AY in which such provisions are reversed and credited to the Profit & Loss account. Therefore, the action of Ld. AO was upheld against which the assessee is in further appeal before us. 8.4 We find that similar issue has been decided by us against the assessee in assessee’s appeal ITA No.205/Chny/2023 for AY 2004-05 as under: - 16.4 From the fact itself, it is very clear that the provision made by the assessee towards bad and doubtful debt was towards unascertained liability only. The same is also evident from the fact that provision made against SSIL was reversed in subsequent years and full amount due against that entity was claimed as deduction. The amendment brought in by Finance Act, 2009 with retrospective effect was clearly applicable to the facts of the case. The remaining provisions were against marketing debts which were mostly due from government departments. As rightly held, the dues from government departments could not be considered as doubtful. The aforesaid provision could also not be considered as any diminution in value of assets since these are mere provisions which may or may not crystallize for the assessee and therefore, these are nothing but mere provisions for unascertained liabilities. The Bad Debts claimed by the assessee is a double claim. Therefore, on both the issues, the impugned order does not require any interference on our part. This appeal stands dismissed.

Facts being same, taking consistent stand in the matter, we confirm the adjudication of Ld. CIT(A) on this issue. The corresponding ground stand dismissed.

Conclusion 9. The appeal stands partly allowed in terms of our above order. Order pronounced on 10th January, 2024

Sd/- Sd/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा45 / VICE PRESIDENT लेखा सद7 / ACCOUNTANT MEMBER चे9ई Chennai; िदनांक Dated :10-01-2024 DS आदेशकीAितिलिपअ%ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. � थ�/Respondent 3. आयकरआयुA/CIT 4. भागीय�ितिनिध/DR 5. गाडFफाईल/GF