Failure of AO to consider book profit provisions renders assessment erroneous

Assessment Year : 2004- 05

O R D E R

PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :

Assessment dispute: ITAT Chennai ruling on book profit computation, bad debts provision, and disputed tax liabilities under Section 115JB.

In this appeal, assessee assails the assumption of jurisdiction by CIT, under Section 263 of the Income-tax Act, 1961 (hereinafter called “the Act”), considering the assessment order dated 19.12.2006 for the impugned assessment year as erroneous and prejudicial to the interest of the Revenue.

2. Grounds raised by the assessee can be grouped into two. First group assails the order of the CIT in relation to computation of book profits for the purpose of Section 11 5JB of the Act. Second group assails the order of the CIT in relation to certain items not considered by A.O., while computing the income of the assessee under normal provisions.

3. Of the above, grounds relating to aspects concerning book profit computation under Section 11 5JB of the Act can be summarised as under:-

(i) Provision for bad and doubtful debts an advance of Rs. 16,03,61,290/- to one M/s Sical Ships (India) Ltd.