|The Tax Publishers2021 TaxPub(DT) 0826 (Mum-Trib)
INCOME TAX ACT 1961
Once the assessee writes back certain provisions in its books of account as they are no longer required and takes the same into income, it cannot deduct the same from computation of income, on the ground that in the earlier assessment years these provisions were disallowed.
Assessment - Provision for estimated loss on contracts - Part of provision written back - Impact of reversal of provision on computation of income, whether assessee can deduct the provision written off
In assessment year 2012-13 assessee company wrote back provision for loss made in the earlier assessment years (2009-10 & 2010-11) from loss on contract and the same had been offered as income in the Computation of Income. However, AO disallowed the same on account of disallowances made in earlier assessment years. Held: Disallowances in earlier years had not been accepted by the assessee. The assessee was very much contesting the disallowances. So, no impact of those disallowances can be considered in this year. The assessee in this year had written back the provisions made in earlier years as the assessee was of the view that they are no longer required. Hence, once the assessee writes back certain provisions as no longer required and takes the same into income, it cannot deduct the same from computation of income, on the ground that in the earlier year these provisions were disallowed. As the assessee is contesting the disallowances and for 1 year (assessment year 2009-10) it has even succeeded at ITAT. In this view of the matter, the assessee was claiming double deduction during the year. Hence, granting relief to the assessee would held as erroneous.
FAVOUR : Against the assessee
A.Y. : 2012-13
IN THE ITAT, MUMBAI BENCH
SUBSCRIBE FOR FULL CONTENT