Case Law Details
Vidras India Ceramics Pvt. Ltd. Vs D.C.I.T. (ITAT Ahmedabad)
The controversy that needs to be addressed so as to whether the assessee is eligible for deduction with respect to the provisions made against the trade debtors in pursuance to the explanation 1 to clause (vii) of section 36(1) of the Act.
As per the explanation 1 to clause (vii) of section 36(1) of the Act there remains no ambiguity to the fact that the provisions made by the assessee with respect to the bad and doubtful debts will not be eligible for deduction. However, we find that the Hon’ble Supreme Court in the case of Vijaya bank Vs. CIT reported in 323 ITR 166 has observed that the assessee is eligible for deduction with respect to the provisions made against the debtors provided it were claimed in the profit and loss account as well as such provision was adjusted against the sundry debtors/ bad and doubtful debts as shown in the balance sheet.
In the case on hand we have seen the relevant page of profit and loss account placed on page 39 of the paper book where the assessee has claimed deduction for the provision of doubtful debts amounting to Rs. 55,69,760/- which was adjusted against the trade receivables as evident from the relevant schedule of the Balance Sheet of the assessee placed on page 34 of the paper book.
Tribunal in the own case of the assessee for the assessment year 2013-14 involving identical facts and circumstances has allowed the issue on hand in its favour in ITA No. 2521/AHD/2017 vide order dated 17.5.2019. The relevant extract is reproduced as under:
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