The Tax Publishers2021 TaxPub(DT) 0272 (Kol-Trib) : (2021) 085 ITR (Trib) 0001

INCOME TAX ACT, 1961

Section 115JB

Provision for diminution in investments which actually amounted to 'write off' of provision from assets side would not attract clause (i) of the Explanation 1 to sub-section (2) of section 115JB. Accordingly, no addition was called for.

MAT - Computation of book profit - AO made addition of provision for diminution in the value of investments - Provision actually written off by assessee

AO while computing book profits of assessee-company under section 115JB made addition of provision for diminution in the value of investments. Assessee's case was that it was not a mere provision but was actual write off.Held: Provision of Rs. 298 million created during the year was debited in profit and loss account for the year and provision written back during the year amounted to Rs. 312 million was credited in profit and loss account. This showed that it was not a mere creation of 'provision for diminution in investments' by debiting profit and loss account but simultaneously corresponding amount from investments shown on the asset side of the balance-sheet was also reduced/adjusted. In other words, the investments in the assets side that were recorded in books were net of provision. Thus, provision for diminution in investments would amount to an actual 'write off' of provision from assets side and, therefore, would not attract clause (i) of the Explanation 1 to sub-section (2) of section 115JB. Accordingly, no addition was called for.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2002-03


INCOME TAX ACT, 1961

Section 115JB

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