High Court Of Delhi
CIT vs. Eicher Ltd.
Section 115JA
Asst. Year 1999-2000
Madan B. Lokur & Vipin Sanghi, JJ.
IT Appeal No. 1219 of 2006
29th August, 2006
Counsel Appeared
Ms. P.L. Bansal, for the Appellant : Ms. Kavita Jha, for the Respondent
JUDGMENT
By the court :
The Revenue is aggrieved by an order dt. 27th Jan., 2006 passed by the Tribunal, Delhi Bench ‘C’ in ITA No. 3968/D/2002 relevant for the asst. yr. 1999-2000 [reported as Asstt. CIT vs. Eicher Ltd. (2006) 101 TTJ (Del) 369—Ed.].
The only question that has arisen is with regard to the decision of the AO in adding the amount being the provision made by the assessee for bad and doubtful debts for the purposes of increasing book profits under s. 115JA of the IT Act. We find from the assessment order that the AO has given absolutely no reason for increasing the book profits.
Be that as it may, before the CIT(A) the assessee contended that the book profits could not be increased in the manner as has been done by the AO because of Expln. (c) under s. 115JA(2) of the Act. This Explanation reads as follows : “For the purposes of this section, “book profit” means the net profit as shown in the P&L a/c for the relevant previous year prepared under sub-s. (2), as increased by— (a) xxxx (b) xxxx (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; (d) xxxx (e) xxxx (f) xxxx” A bare perusal of the above Expln. (c) makes it clear that the increase shall be of the amount or amounts set aside for meeting liabilities other than ascertained liabilities. In the present case, there does not appear to be any dispute about the fact that liability was ascertained. Ex facie, therefore, Expln. (c) is not applicable.
The CIT(A) also considered the provisions of Part III of Sch. VI to the Companies Act, which defines the term ‘provision’. Clause 7(1)(b) thereof defines ‘provision’ to mean any amount written off or retained, inter alia by way of providing for any known liability of which the amount cannot be determined with substantial accuracy.
So far as the present case is concerned, the accuracy has been determined fully, or at least there is no controversy about it. In any event, the occasion for resorting to the provisions of the Companies Act does not arise, since in our opinion, a reading of Expln. (c) of s. 115JA(2) of the IT Act itself is very clear. The CIT(A) allowed the appeal of the assessee and that was upheld by the Tribunal in the impugned order.
In view of our discussion above, while commending the view of the CIT(A), we do not find that the Tribunal has taken an unreasonable view.
On the contrary, this view is justified from a plain reading of the statute. We are of the opinion that no substantial question of law arises for our consideration. Dismissed.
[Citation : 287 ITR 170]
