The assessee-company\u00a0was engaged in the business of purchase and\u00a0distribution\u00a0of electric\u00a0power. It had made a provision for bad and doubtful debts. The Assessing Officer had disallowed the said provision made by the assessee as unascertained liability while computing book profit. The tribunal held that, in the P&L account Rs. 22.89 crore was provided for with the narration \u2018bad and doubtful debts\/ written off\u2019. It was not specified whether it was a provision or a write off. Assessee was maintaining a separate provision account wherein it was shown the bad debts written off was of Rs. 25.43 crore. Such write off was an ascertained liability. It was held that assessee was eligible for deduction of entire Rs. 25.43 crore whereas it had claimed a lower deduction of Rs. 22.89 crore. Held, no addition can be made qua Rs. 22.89 crore and also, no direction can be made to AO to grant higher benefit to the extent of Rs. 25.43 crore.<\/p>\n
The Tribunal also held that prior period expose cannot be added while computing book profits as the AO cannot go beyond the accounts maintained in accordance with the Companies Act.<\/p>\n
The Tribunal held that provision for leave encashment was an ascertained liability and therefore, cannot be added to the book profit.<\/p>\n
The Tribunal held that provision for non-moving and obsolete stock was not a provision and was also not debited to P&L account and therefore, cannot be added to book profit.<\/p>\n
The Tribunal also, held that provision for fringe benefit tax was not similar to provision for income tax and that fringe benefit was a liability of the employer therefore, cannot be added to book profit. (AY. 2009-10)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 115JB : Book profit \u2013Provision for bad and doubtful debts – Assessee made a provision for bad and doubtful debts \u2013 It was maintaining a separate provision account \u2013 Certain bad debts were written off in such account \u2013 Provision amount lesser than the bad debts written off \u2013 Held, assessee eligible for higher deduction \u2013 Held, therefore, provision amount cannot be termed as unascertained liability and has to be allowed \u2013 Held, tribunal cannot direct AO to allow greater deduction-Prior period expose cannot be added while computing book profits-Provision for leave encashment ascertained liability and therefore, cannot be added to book profit-Provision for non-moving and obsolete stock not a provision and also not debited to P&L account and therefore, cannot be added to book profit- Provision for fringe benefit tax not similar to provision for income tax and that fringe benefit was a liability of the employer therefore, cannot be added to book profit.[S. 36(1)(vii), 36(1)(viia)]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3217","post","type-post","status-publish","format-standard","hentry","category-digest"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-PT","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/3217","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=3217"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/3217\/revisions"}],"predecessor-version":[{"id":5472,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/3217\/revisions\/5472"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=3217"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=3217"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=3217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}