TRIO ELEVATORS COMPANY (INDIA) LTD.,,AHMEDABAD vs. THE DY.CIT.,CIRCLE-4(1)(2),, AHMEDABAD

PER S. S. GODARA, JUDICIAL MEMBER

This assessee’s appeal for assessment year 2010-11 arises against the CIT(A)-8, Ahmedabad’s order dated 21.01.2015 in case no. CIT(A)-XIV/187/12- 13, CIT(A)-I/219/13-14, in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short “the Act”. Heard both sides. Case file perused.

ITA No. 952/Ahd/15 [Trio Elevators Co. (India) Ltd. vs. DCIT] A.Y. 2010-11 - 2 -

after concluding that the same are not admissible being mere provisions instead of actual expenses. Both parties take us to a co-ordinate bench order in assessee’s case itself ITA No.291/Ahd/2015 dated 22.09.2017 in assessment year 2011-12 remitting the very issue back to the Assessing Officer to be decided in light of hon’ble jurisdictional high court’s full bench decision in Tax Appeal No. 749 of 2012 CIT vs. Vodafone Essar Gujarat Ltd. It further emerges that their lordships’ full bench decision in the mean time has settled the issue in above case in order dated 28.08.2017 reading as under:

“3. The question was answered by the Larger Bench in following manner:

“23. By way of culmination of above judicial pronouncements and statutory provisions, the situation that arises is that prior to the introduction of clause(i) to the explanation to section 115JB, as held by the Supreme Court in case of HCL Comnet Systems and Services Ltd.(supra), the then existing clause (c) did not cover a case where the assessee made a provision for bad or doubtful debt. With insertion of clause (i) to the explanation with retrospective effect, any amount or amounts set aside for provision for diminution in the value of the asset made by the assessee, would be added back for computation of book profit under section 115JB of the Act. However, if this was not a mere provision made by the assessee by merely debiting the Profit and Loss Account and crediting the provision for bad and doubtful debt, but by simultaneously obliterating such provision 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 bad debt, it would amount to a write off and such actual write off would not be hit by clause (i) of the explanation to section 115JB. The judgment in 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. 4. Accordingly, this tax appeal has been placed before us for final disposal in terms of the opinion of the Larger Bench. The relevant facts emerging from the record, as stated by the Tribunal in the impugned judgment, are as under:- “It is a fact that the assessee had made provision for bad and doubtful debts and he same has been charged to the Profit and Loss Account for the year ended 31st March 2003. In the balance sheet as on 31st March 2003 of the assessee, it can be seen that the provision of bad and doubtful debts has been reduced from the gross debtors and net sundry debtors are shown as asset in the balance sheet. Thus the provision for bad and doubtful debts cannot be termed as a provision for liability but is in the nature of diminution in the value of asset.”