M/S Biocon Ltd., 20T... v. The Dy. Commissioner...

PER GEORGE GEORGE K, JUDICIAL MEMBER : This appeal preferred by the assessee is directed against the order of the learned Commissioner of Income-tax (Appeals)-LTU, Bangalore dated 30.3.2009. The assessment year concerned is 2000-

2. The solitary issue that was argued by the AR during the course of hearing was, whether CIT(A) is justified in adding back doubtful advances amounting to Rs.6,97,968/-, while computing the book profit u/s 115JA of the Act. ITA No.635/B/09 2 The brief facts of the case are as follows :

3. The assessee is a company engaged in the business of manufacture and sale of bio-chemicals and enzymes. The assessee filed return of income for the concerned asst. year on 30/03/2001 declaring a loss of Rs.29,465,399/- as per the provisions of Income- tax and a tax liability of Rs.2,882,780/- on its book profit as per the provisions of sec. 115JA of the Act. Assessment order was passed u/s 143(3) of the Act on 31.1.03 disallowing depreciation of Rs.229,404/- and allowing an additional deduction u/s 35(2AB) of the Act of Rs.12,481,800/- as per the normal provisions of the Act. However, the book profits offered to tax by the assessee u/s 115JA of the Act was accepted by the AO and no adjustment was made in this regard in the assessment order passed on 31.1.03. 3.1 Thereafter notice u/s 148 original was issued on 2.3.07. Pursuant to the same, assessment was completed u/s 143(3) read with sec. 147 on 24.10.07, wherein following adjustment was made: Added back the amounts claimed as provision for bad and doubtful debts and provision for advances amounting to Rs.3,930,104/- and Rs.697,968/- respectively in arriving at the book profits u/s 115JA of the Act. ITA No.635/B/09 3

4. On further appeal, the CIT(A) followed the decision of the Honble Supreme Court in the case CIT Vs. HCL Comnet Systems & Services Ltd., 305 ITR 409 and held that AO was not justified in adding back the provision for bad and doubtful debts of Rs.39,30,104/-. However, he upheld the addition of Rs.6,97,968/- made on account of doubtful advances. The relevant portion of the CIT(A)s order is reproduced. In view of the ratio of the decision of the Honble Supreme Court supra, the addition of Rs.6,97,968/- made on account of doubtful advance is hereby up-held. However, the AO was not justified in adding back the provision for bad and doubtful debts of Rs.39,30,104/- under clause (c) of the Explanation to sec. 115JA of the

I.T Act, 1961. The AO is, therefore, directed to recalculate the book profit accordingly. The assessee being aggrieved by the order of the CIT(A) is in appeal before us.

5. The AR fairly submitted that, the issue in question is covered against the assessee in light of the legislature amendment of sec. 115JA by Finance Act 2009 with retrospective effect from 1.4.98. The AR stated that clause (g) to explanation was inserted and in light of the insertion, provision for doubtful advances had to be added back, while computing book profit u/s 115JA of the Act. ITA No.635/B/09 4

6. We have heard the rival submissions and perused the material on record. In the light of the legislature amendment vide insertion of clause (g) to explanation, we are of the view that, the issue has to be necessarily decided against the assessee and in favour of the revenue. Therefore, we are of the view that the AO has correctly added back doubtful advances, while computing book profit u/s 115JA of the Act.

7. In the result, the appeal filed by the assessee is dismissed. Pronounced in the open court on 20th Nov, 2009. Sd/- Sd/- (AKBAR BASHA) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER Bangalore Dated : 20 /11/09 Vms. Copy to :

1. The Assessee

2. The Revenue

3. The CIT concerned.

4. The CIT(A) concerned.

5. DR

6. GF

7. GF, ITAT, New Delhi. By order Asst. Registrar, ITAT, Bangalore.