Mangal Tirth Estates Ltd., Chennai vs Assessee on 20 February, 2008
9. After considering the rival submissions and perusing the orders
of the ld. CIT(A) and material available on record, we find that in
the instant case, the undisputed facts of the case are that in the
assessment framed u/s 143(3) of the Act on 31.3.2006, the Assessing
Officer computed book profit u/s 115JB of the Act without adding
Rs. 185.85 lakhs towards provisions for doubtful debts. The ld. CIT
issued notice u/s 263 and passed order on 20.2.2008 setting aside
8 I.T.A. No. 457/Mds/09
the order of the Assessing Officer and directing him to compute the
book profit for the purposes of section 115JB of the Act after adding
provision for doubtful debts of Rs. 185.85 lakhs and accordingly
enhanced the assessment of the assessee. We find that vide order
dated 6.10.2006, the Kolkata Special Bench of the Tribunal in the
case of Usha Martine Industries [supra] has held that provision for
bad and doubtful debt was not a provision for liability, but was a
provision for diminution of value in asset and therefore, clause (c)
to Explanation of section 115JA of the Act would not be applicable
in respect of provision for bad and doubtful debts.