Dismissing the appeal of the assessee the Court held that provision for bad and doubtful debts is a provision for unascertained liability, and, thus, same could not be excluded while computing book profits. Court also held that provision made for payment of purchase tax, payment of purchase tax on cane subsidy and provision for wealth tax, in anticipation of Government Notification, were provisions for unascertained liability, liable to be added back while computing book profits .(AY. 1997-98, 1998-99)
EID Parry (India) Ltd. v. ACIT (2019) 265 Taxman 454 / (2020)425 ITR 508 (Mad.)(HC)
S. 115JA : Book profit-Provision for bad and doubtful debts is a provision for unascertained liability, and thus, same could not be excluded while computing book profits-Provision made for payment of purchase tax, payment of purchase tax on cane subsidy and provision for wealth tax, in anticipation of Government Notification, were provisions for unascertained liability, liable to be added back while computing book profits. [S. 36(1)(vii)]