INCOME TAX ACT, 1961

Section 115JB

MAT - Book profit under section 115JB - Provision for doubtful debts - Computation of

Assessee was engaged in business of manufacturing and trading of cosmetic / Fast Moving Consumer Goods (FMCG) such as hair colours, shampoos, creams etc and computed income as per provisions of section 115JB. AO while accepting the book profit under section 115JB held that assessee had failed to take into account provision for doubtful debts. Thus made addition of the same in the hands of assessee. Held: From Schedule-14 of the financial statements of assessee-company, assessee had debited a sum towards provision for doubtful debts and sum towards bad debts written off. This clearly goes to prove that a sum purely represents only provision for doubtful debts and not write-off of bad debts in the books of accounts of assessee by corresponding credit to concerned debtor's account. The very same sum i.e provision for doubtful debts had already been added back by assessee voluntarily in return of income while computing income under normal provisions which goes to strengthen that this sum represents only provision for doubtful debts and not bad debts actually written off in the books. Hence, this amount required to be added back while computing book profits under section 115JB.

REFERRED : CIT v. Hindustan Zinc Ltd. (2007) 291 ITR 391 (SC) : 2007 TaxPub(DT) 1250 (SC) CIT v. British Paints India Ltd. (1991) 188 ITR 44 (SC) : 1991 TaxPub(DT) 0898 (SC) CIT v. Hotline Teletube & Components Ltd. (2008) 175 Taxman. 286 (Del) : 2008 TaxPub(DT) 2212 (Del-HC)

FAVOUR : Against the assessee

A.Y. : 2007-08

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