Schindler India Private Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that trade receivable shown as net of provision for doubtful debts would not be hit by section 115JB(i) of the Income Tax Act. Accordingly, addition of provision of bad and doubtful debts to book profits computed u/s. 115JB not sustained.
Facts- Vide the present appeal, the assessee has challenged the action of the AO as confirmed by the DRP in terms of addition of provision of bad and doubtful debts to the books profits computed u/s. 115JB of the Act.
The assessee has also sought direction to the AO to allow MAT credit u/s.115JAA of the Act amounting to Rs.1,87,30,304/- claimed by the assessee in its return of income.
Conclusion- Held that the assessee has not merely created a provision and debited the amount in the profit and loss account and credited the provision for doubtful debts but at the same time, such provision for doubtful debts has been reduced by the corresponding amount from the gross trade receivables on the asset side of the balance sheet and at the end of the year, the trade receivable have been shown as net of the provision for doubtful debts and the same will therefore clearly amount to a write off and such actual write off would not be hit by clause (i) of the explanation (I) to Section 115JB of the Act and the decisions of the Hon’ble Bombay High Court as well as that of the Hon’ble Gujarat High Court supports the case of the assessee. In light of the same, the ground of the appeal so taken by the assessee is allowed.
