Document Fragment View
Fragment Information
Showing contexts for: echjay in The Commissioner Of Income Tax, Mumbai ... vs M/S. Echjay Forgings Pvt. Ltd. on 8 February, 2001Matching Fragments
(II) WHETHER THE NET PROFIT WAS REQUIRED TO BE INCREASED BY RS. 1,67,411/- BEING THE PROVISIONS FOR DOUBTFUL DEBTS :
7. Under clause (c) of the Explanation to section 115J of the Act, unless a provision is made for ascertained liabilities, the provision made has to be included in book profit for the purpose of taxation under section 115J of the Act. The assessee, in the present case, has claimed exclusion for the sum of Rs. 1,67,4 11/- from the profit and loss account on the ground that the same has been made as a provision for doubtful debts in respect of an ascertained liability. In this case, on facts, we find that the Department has not disputed the contention of the assessee that the said liability is an ascertained liability. The assessee specifically contended before the Department that the provision has been made to meet ascertained liability. This was never disputed. No finding has been given on this point by the AO. No finding has been given by the First Appellate Authority as to how the above clause (c) of the Explanation stood attracted. On the other hand, theTribunal has followed itsJudgmentin the case of M/s.Echjay Forgings Pvt. Ltd., Mumbai u. DCIT, Spl. Range-30, Mumbai,. Hence, on facts, there is no material before the Court in support of the conclusion drawn by the AO that the provision made by the assessee was in respect of an unascertained liability. Therefore, we have decided this point only on the facts of this case. In the case of Dy. CIT v. Beard sell Ltd., the claim of the assessee was disallowed on the ground that the provision was not for ascertained liabilities and, accordingly, an amount of Rs. 33.49 lacs came to be added to the net profit. In that matter the adjustment, was made under section 143(1)(a) of the Act. Hence, the said Judgment has no application to the facts of the present case. In the present case, the Department has invoked section 143(3) of the Act. Therefore, the Department was required to record a proper finding of fact before adding Rs. 1,67,411/-.