Usha MartIn Industries Ltd. Vs. Joint Commissioner of Income Tax - Court Judgment

Excerpt:
1. this appeal of the assessee for the asst. yrs. 1997-98 is against the order of cit(a) dt. 12th march, 1999. in this appeal, the assessee has taken ten grounds. however, ground no. 10 is general in nature and requires no adjudication. whereas in ground nos. 1 to 9 there is only one issue relating to the confirmation by the learned cit(a) of the prima facie adjustment made by the ao in the intimation issued under section 143(1)(a) of the act in the form of disallowance of the following two sums while computing the book profit of the assessee for the purpose of section 115ja of the act and accordingly, the total income of the assessee had been calculated with reference to 30 per cent of such book profit. provision made for doubtful debts and advances rs. 1,56,00,000 provision made for wealth-tax payable rs. 1,25,000 2. we considered it necessary to state the relevant facts before taking up the issues involved in this appeal for our consideration.3. the assessee was a domestic company and has since been merged with usha beltron ltd. being another domestic company w.e.l 1st oct., 1997, the assessee was engaged in the business of, inter alia, manufacture and sale of steel wires and ropes for industrial units, in the return of income filed for the assessment year under appeal, the total income worked out to a loss. since the assessee had disclosed profits in the p&l a/c for the previous year relevant to the assessment year under appeal, the assessee made a computation of its book profit for the purpose of the provisions of section 115ja of the act and disclosed an amount of rs. 4,35,57,179 being 30 per cent of the book profit as its deemed total income in the relevant assessment year. thus, the aggregate of income-tax and surcharge on such deemed total income worked out to rs. 1,87,29,590. in the return of income, the assessee, after claiming credit of the tax deducted at source, payment of advance tax and self assessment tax claimed an amount of rs. 423 as refundable.3.2 the return of income filed by the assessee was processed by the ao under section 143(1)(a) of the act as per intimation dt. 20th nov., 1998. in the said intimation the ao added back two sums being rs. 1,56,00,000 and rs. 1,25,000 to the net profit as per p&l a/c for the purpose of computing the book profit within the meaning of section 115ja of the act. in view of the above, the total income of the assessee for the relevant assessment year was computed in the said intimation at a figure of rs. 4,82,74,680 being 30 per cent of the recomputed figure of book profit. accordingly, the ao imposed tax and surcharge aggregating rs. 2,87,58,112 on the assessee. as a result of the said action of the ao contained in the intimation issued under section 143(1)(a) of the act dt. 20th nov., 1998, the assessee filed appeal before the first appellate authority. it is observed that the assessee filed a written submission before the learned cit(a) and contended that the assessee had, inter alia, made two provisions in the p&l a/c prepared for the relevant previous year in accordance with parts n and iii of schedule vi of the companies act, viz., provision for doubtful debts and advance amounting to rs. 1,65,00,000 and provisions for wealth-tax amounting to rs. 1,75,000 and the ao had wrongly, inter alia, disallowed both the said sums while computing the book profit within the meaning of section 115ja of the act in the intimation issued under section 143(1)(a) of the act. the assessee also raised an alternative contention before the cit(a) that the ao could not make the adjustment and the said could not be termed as prima facie mistake apparent from the record so as to suffer disallowance in an intimation issued under section 143(1)(a) of the act. it is observed that the assessee placed reliance on cbdt circular no. 689 dt. 24th aug., 1994, reported in (1994) 209 itr 75 (st) and also the decision of the bombay high court in the case of khatau junkar ltd. v. k.s.pathania dy. cit (1992) 196 itr 55 (bom) and submitted that the mumbai high court held that the scope of the power to make prima facie adjustment under section 143(1)(a) of the act is somewhat co-terminus with the power to rectify a mistake apparent from record under section 154 of the act. therefore, in order to make a prima facie adjustment in an intimation passed under section 143(1)(a) of the act, the mistake must be apparent from the record. it is also observed that the assessee also placed reliance before cit(a) on the decision of the supreme court in the case of t.s. balaram, ito v. volkart bros. and ors. (1971) 82 itr 50 (sc) and submitted that the supreme court held that a mistake apparent from the record must be an obvious and patent mistake and not something which could be established by a long drown process of reasoning of points on which there may conceivably be two opinions. it is also suggested that the assessee also relied on before the learned cit(a) the decision of the calcutta high court in the case of cit v.satya namyanan bhalotia (1994) 74 taxman 34 (cal) and submitted that the calcutta high court held that when a mistake has to be discovered on the interpretation or construction of the provisions of the act it can never be a mistake apparent from the record, 3.3 relying on the aforesaid decisions the assessee contended that the provisions made by the assessee for doubtful debts and advances amounting to rs. 1,56,00,000 would not be construed as a provision made for meeting liabilities and, therefore, the same could not be disallowed while computing the book profit under section 115ja of the act. similarly, for the disallowance made with respect to the provision made for wealth-tax amounting to rs. 1,25,000 the assessee contended before the learned cit(a) that the authorised representative presumably invoked the provisions of clause (a) of the explanation appended below section 115ja(2) of the act which contemplates the disallowance of the payment or provision made for income-tax for the purpose of computing the book profit within the meaning of section 115ja of the act but the provision made for the payment of wealth-tax which is chargeable under wt act, 1957, could not be equated with a provision for income-tax which is chargeable under the act. it is observed that the learned cit(a) by his impugned order dt. 12th march, 1999, did not agree with the assessee and confirmed the order of the ao. it is relevant to state the operative part of the order of the learned cit(a) which is as under: "i have considered the submission of the learned authorised representative, the mercantile procedure and parts ii and iii of schedule vi to the companies act. but i am not inclined to believe that the assessee was required to make this provision for doubtful debts on sound accounting principles as canvassed by them. i find from the computation of total income provided by the appellant for the assessment in which they have themselves added provision for doubtful debts and advances. therefore, there was no reason for making this account following the diametrically opposite stops which cannot be reasonciled. on the other hand it is argued that the provision was made on sound accounting principle as if the debts have actually become doubtful and thereby reducing the book profit and deducting it from the total income. in view thereof i do not find any mistake on part of the ao in adjusting rs. 1,56,00,000 while issuing intimation under section 143(1)(a). in the case of provision for wealth-tax also the assessee has not been able to come up with any satisfactory explanation as to why this provision had to be made and therefore this adjustment was also uphold." being further aggrieved, the assessee is in second appeal before the tribunal.4. during the course of hearing of the appeal the learned authorised representative of the assessee sri r.k. mitra made his detailed submissions by taking us to the provisions of section 115ja, section 143(1)(a) of the act and made his submissions on the lines of the submissions as made before the first appellate authority. on the other hand, the learned departmental representative justified the orders of the authorities below and submitted that the provisions made for doubtful debts of rs. 1,56,00,000 and the wealth-tax liability of rs. 1,25,000 created by the assessee were covered respectively by the provision of clause (c) and clause (a) of explanation to section 115ja of the act. in regard to the alternative plea of the assessee for jurisdiction of the ao to make prima facie adjustment under section 143(1)(a) of the act the learned departmental representative relied on the order of the cit(a), the relevant portion of which we have stated hereinabove.5. we have carefully considered the orders of the authorities below and the rival submissions of the learned representatives. we have gone through the statement of facts of the case filed before learned cit(a) and the cases relied upon by the learned authorised representative of the assessee in the statement of facts, filled before the learned cit(a) and the cases cited before us. in order to consider the issue involved we consider it necessary to state the scope of the relevant part of the section 143(1)(a) and section 115ja of the act.6. section 143(1)(a) of the act, as it stood at the material time, inter alia, provided that if on the basis of a return of income filed by the assessee, any tax or interest was found due after adjustment of tax deducted at source, advance tax and other taxes paid, and intimation was to be sent to the assessee, specifying the sums so payable. similarly, if any refund was due to the assessee, it would be granted. therefore, such an intimation could be issued only on the basis of the return of income. the first proviso to section 143(1)(a) of the act permitted certain adjustments to be made while calculating the tax or interest payable or while granting a refund which are of any arithmetical error in the return, accounts or documents accompanying it; (ii) any loss carried forward, deduction, allowance or relief, which on the basis of information available in such return, accounts or documents accompanying it was prima facie admissible but not claimed in the return; (iii) any loss carried forward, deduction, allowance or relief which was claimed in the return of income, but which on the basis of the information available in such return, accounts or documents accompanying it was prima facie inadmissible.6.2 further, the term book profit has been defined in the explanation to section 115ja(2) of the act to mean net profit as reflected in the p&l a/c of a company prepared for the relevant previous year, as drawn up as per parts i and iii of schedule vi to the companies act subject to certain adjustment by way of increase in respect of certain sums as referred to in clauses (a) to (f) of the said explanation and deduction in respect of certain sums as referred to in clauses (i) to (ix) of the said explanation.6.3 the adjustment referred to in clauses (a) to (f) of the said explanation are as under : (a) the amount of income-tax paid or payable and the provision therefor; (c) the amount or amounts set aside to provisions made for meeting liabilities other than ascertained liabilities; (d) the amount by way of provision for losses of subsidiary companies; (f) the amount or amounts of expenditure relating to any income to which any of the provision of chapter iii of the act applies.6.4 before we consider as to whether the provisions made by the assessee fall within any of the clauses of section 115ja(2) of the act, as stated hereinabove, we also consider the term 'provision' and 'reserve'. since the terms 'provision' and 'reserve' have not been defined in the act, it is necessary to consider the meaning assigned to them in the companies act as the relevant section deals with the assessment of companies. in this respect we may state that the bombay high court in the case of petrosil oil co. ltd. v. cit (1999) 236 itr 220 (bom) held by following a decision of the apex court in the case of homah trading co. ltd. v. cit (1959) 36 itr 215 (sc) that for the purpose of considering a provision of the act dealing with the assessment of companies, undefined words used in the said provision may be interpreted by importing the definition accorded to it in the companies act. the terms 'provision' and 'reserve' have been defined in clause 7(1) of part iii of schedule vi to the companies act as under: "(a) the term 'provision' has been defined to mean, subject to sub-section (2) of the said clause, any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy, (b) the term 'reserve' has been defined in a negative way so as not to include any amount written off or retained by way of providing for depreciation, renewals or diminution in the value of assets or retained by way of providing for any known liability." 6.5 on perusal of clause (a) to (f) of explanation to section 115ja(2) of the act and we find that the only relevant clause for the purpose of provision for doubtful debts of rs. 1,56,00,000 made by the assessee can be clause (c) but this clause is only for those provision with respect to liabilities and that too unascertained liabilities. the said clause does not cover provision made for diminution in value of assets.therefore, we agree with the learned authorised representative of the assessee that the provision of rs. 1,56,00,000 could not be added back to the net profit as per the p&l a/c by invoking the provision of clause (c) of the explanation appended to section 115ja(2) of the act.6.6 further, the provision of rs. 1,56,00,000 made for doubt debts and advances could not be held to be a reserve within the meaning of clause 7(2) of part iii of schedule vi to the companies act, which we have stated hereinabove and accordingly, clause (b) of the explanation appended below section 115ja(2) of the act is also not applicable to it.7. now coming to the provision for wealth-tax of rs. 1,25,000 made by the assessee which have also been added by the authorities below to the net profit for computing the book profit within the meaning of section 115ja of the act, we hold that clause (a) of the said explanation provides for disallowance of any provision made for income-tax only.since the term wealth-tax chargeable under wt act, 1957, cannot be held as income-tax, the provision of rs. 1,25,000 made in the p&l a/c for its liability to pay wealth-tax cannot be added back to the net profit for the purpose of computing the book profit by invoking the provision of clause (a) or any other clause being clauses (b) to (f) of the explanation of section 115ja(2) of the act. we agree with the contention of the learned authorised representative of the assessee that a provision made for wealth-tax cannot be equated to any liability towards income-tax and accordingly, cannot be disallowed while computing the book profit by invoking clause (a) of the explanation to section 115ja(2) of the act.8. further, at the time of hearing of the appeal, learned authorised representative of the assessee also referred to pp. 6 and 7 of the paper book which is a copy of the affidavit of the learned authorised representative of the assessee stating that no submission either oral or written was made before the learned git(a) that the provision for bad debts and advances were reflected in the balance sheet as reduction from the value of the relevant assets for the purpose of computing the book profit under section 115ja of the it act as stated by the learned cit(a) in the impugned order. he urged that it was submitted that the provision for doubtful debts was made on the basis of a prudent and bona fide decision which was taken after considering the chances of recovery of the impugned debts and advances and that the said provision was reflected in the balance sheet as on 31st march, 1997, as reduction from the value of the relevant assets being debts and advances and such reflection was done as per the provision of the companies act, 1956.9. in view of the above, we hold that the sum of rs. 1,56,00,000 and rs. 1,25,000 could not be added back to the net profit for the purpose of computing the book profit within the meaning of section 115ja of the act since the same do not fall under any of the clauses (a) to (f) of the explanation to section 115ja(2)-of the act because they are the only adjustments which could be made in the form of additions for the purpose of computing book profit under the act.10. in view of our above finding, we do not consider it necessary to deal with the alternative submission of the assessee as to whether the provisions made by the assessee for doubtful debts and wealth-tax liability could be adjusted by the ao in the intimation issued under section 143(1)(a) of the it act.11. the last ground of appeal viz. ground no. 9 of the appeal is as under : "that the learned cit(a) erred in not dealing with the contentions of the appellant preferred in ground no. 9 of the memorandum of appeal filed with the learned cit(a), namely the denial of the ao of credit for income-tax deducted at source amounting to rs. 12,07,079." 12. it is observed that the assessee contended before the cit(a) in the grounds of appeal filed before him that the ao failed to grant the assessee credit for income-tax deducted at source amounting to rs. 12,07,079. on perusal of the order of the learned cit(a) we agree with the learned authorised representative of the assessee that the learned cit(a) has not dealt with the said ground while disposing of the appeal of the assessee. accordingly, we restore this issue to the cit(a) to consider this ground after giving due opportunity of hearing to the assessee. accordingly, this ground of appeal is allowed.13. in the result, the appeal of the assessee is allowed in terms of our order as indicated above.

Judgment:
1. This appeal of the assessee for the asst. yrs. 1997-98 is against the order of CIT(A) dt. 12th March, 1999. In this appeal, the assessee has taken ten grounds. However, Ground No. 10 is general in nature and requires no adjudication. Whereas in ground Nos. 1 to 9 there is only one issue relating to the confirmation by the learned CIT(A) of the prima facie adjustment made by the AO in the intimation issued under Section 143(1)(a) of the Act in the form of disallowance of the following two sums while computing the book profit of the assessee for the purpose of Section 115JA of the Act and accordingly, the total income of the assessee had been calculated with reference to 30 per cent of such book profit.

Provision made for doubtful debts and advances Rs. 1,56,00,000 Provision made for Wealth-tax payable Rs. 1,25,000 2. We considered it necessary to state the relevant facts before taking up the issues involved in this appeal for our consideration.

3. The assessee was a domestic company and has since been merged with Usha Beltron Ltd. being another domestic company w.e.l 1st Oct., 1997, The assessee was engaged in the business of, inter alia, manufacture and sale of steel wires and ropes for industrial units, In the return of income filed for the assessment year under appeal, the total income worked out to a loss. Since the assessee had disclosed profits in the P&L a/c for the previous year relevant to the assessment year under appeal, the assessee made a computation of its book profit for the purpose of the provisions of Section 115JA of the Act and disclosed an amount of Rs. 4,35,57,179 being 30 per cent of the book profit as its deemed total income in the relevant assessment year. Thus, the aggregate of income-tax and surcharge on such deemed total income worked out to Rs. 1,87,29,590. In the return of income, the assessee, after claiming credit of the tax deducted at source, payment of advance tax and self assessment tax claimed an amount of Rs. 423 as refundable.

3.2 The return of income filed by the assessee was processed by the AO under Section 143(1)(a) of the Act as per intimation dt. 20th Nov., 1998. In the said intimation the AO added back two sums being Rs. 1,56,00,000 and Rs. 1,25,000 to the net profit as per P&L A/c for the purpose of computing the book profit within the meaning of Section 115JA of the Act. In view of the above, the total income of the assessee for the relevant assessment year was computed in the said intimation at a figure of Rs. 4,82,74,680 being 30 per cent of the recomputed figure of book profit. Accordingly, the AO imposed tax and surcharge aggregating Rs. 2,87,58,112 on the assessee. As a result of the said action of the AO contained in the intimation issued under Section 143(1)(a) of the Act dt. 20th Nov., 1998, the assessee filed appeal before the first appellate authority. It is observed that the assessee filed a written submission before the learned CIT(A) and contended that the assessee had, inter alia, made two provisions in the P&L a/c prepared for the relevant previous year in accordance with Parts n and III of Schedule VI of the Companies Act, viz., provision for doubtful debts and advance amounting to Rs. 1,65,00,000 and provisions for wealth-tax amounting to Rs. 1,75,000 and the AO had wrongly, inter alia, disallowed both the said sums while computing the book profit within the meaning of Section 115JA of the Act in the intimation issued under Section 143(1)(a) of the Act. The assessee also raised an alternative contention before the CIT(A) that the AO could not make the adjustment and the said could not be termed as prima facie mistake apparent from the record so as to suffer disallowance in an intimation issued under Section 143(1)(a) of the Act. It is observed that the assessee placed reliance on CBDT Circular No. 689 dt. 24th Aug., 1994, reported in (1994) 209 ITR 75 (St) and also the decision of the Bombay High Court in the case of Khatau Junkar Ltd. v. K.S.Pathania Dy. CIT (1992) 196 ITR 55 (Bom) and submitted that the Mumbai High Court held that the scope of the power to make prima facie adjustment under Section 143(1)(a) of the Act is somewhat co-terminus with the power to rectify a mistake apparent from record under Section 154 of the Act. Therefore, in order to make a prima facie adjustment in an intimation passed under Section 143(1)(a) of the Act, the mistake must be apparent from the record. It is also observed that the assessee also placed reliance before CIT(A) on the decision of the Supreme Court in the case of T.S. Balaram, ITO v. Volkart Bros. and Ors. (1971) 82 ITR 50 (SC) and submitted that the Supreme Court held that a mistake apparent from the record must be an obvious and patent mistake and not something which could be established by a long drown process of reasoning of points on which there may conceivably be two opinions. It is also suggested that the assessee also relied on before the learned CIT(A) the decision of the Calcutta High Court in the case of CIT v.Satya Namyanan Bhalotia (1994) 74 Taxman 34 (Cal) and submitted that the Calcutta High Court held that when a mistake has to be discovered on the interpretation or construction of the provisions of the Act it can never be a mistake apparent from the record, 3.3 Relying on the aforesaid decisions the assessee contended that the provisions made by the assessee for doubtful debts and advances amounting to Rs. 1,56,00,000 would not be construed as a provision made for meeting liabilities and, therefore, the same could not be disallowed while computing the book profit under Section 115JA of the Act. Similarly, for the disallowance made with respect to the provision made for wealth-tax amounting to Rs. 1,25,000 the assessee contended before the learned CIT(A) that the authorised representative presumably invoked the provisions of Clause (a) of the Explanation appended below Section 115JA(2) of the Act which contemplates the disallowance of the payment or provision made for income-tax for the purpose of computing the book profit within the meaning of Section 115JA of the Act but the provision made for the payment of wealth-tax which is chargeable under WT Act, 1957, could not be equated with a provision for income-tax which is chargeable under the Act. It is observed that the learned CIT(A) by his impugned order dt. 12th March, 1999, did not agree with the assessee and confirmed the order of the AO. It is relevant to state the operative part of the order of the learned CIT(A) which is as under: "I have considered the submission of the learned authorised representative, the mercantile procedure and parts II and III of Schedule VI to the Companies Act. But I am not inclined to believe that the assessee was required to make this provision for doubtful debts on sound accounting principles as canvassed by them. I find from the computation of total income provided by the appellant for the assessment in which they have themselves added provision for doubtful debts and advances. Therefore, there was no reason for making this account following the diametrically opposite stops which cannot be reasonciled. On the other hand it is argued that the provision was made on sound accounting principle as if the debts have actually become doubtful and thereby reducing the book profit and deducting it from the total income. In view thereof I do not find any mistake on part of the AO in adjusting Rs. 1,56,00,000 while issuing intimation under Section 143(1)(a).

In the case of provision for wealth-tax also the assessee has not been able to come up with any satisfactory explanation as to why this provision had to be made and therefore this adjustment was also uphold." Being further aggrieved, the assessee is in second appeal before the Tribunal.

4. During the course of hearing of the appeal the learned authorised representative of the assessee Sri R.K. Mitra made his detailed submissions by taking us to the provisions of Section 115JA, Section 143(1)(a) of the Act and made his submissions on the lines of the submissions as made before the first appellate authority. On the other hand, the learned Departmental Representative justified the orders of the authorities below and submitted that the provisions made for doubtful debts of Rs. 1,56,00,000 and the wealth-tax liability of Rs. 1,25,000 created by the assessee were covered respectively by the provision of Clause (c) and Clause (a) of Explanation to Section 115JA of the Act. In regard to the alternative plea of the assessee for jurisdiction of the AO to make prima facie adjustment under Section 143(1)(a) of the Act the learned Departmental Representative relied on the order of the CIT(A), the relevant portion of which we have stated hereinabove.

5. We have carefully considered the orders of the authorities below and the rival submissions of the learned representatives. We have gone through the statement of facts of the case filed before learned CIT(A) and the cases relied upon by the learned authorised representative of the assessee in the statement of facts, filled before the learned CIT(A) and the cases cited before us. In order to consider the issue involved we consider it necessary to state the scope of the relevant part of the Section 143(1)(a) and Section 115JA of the Act.

6. Section 143(1)(a) of the Act, as it stood at the material time, inter alia, provided that if on the basis of a return of income filed by the assessee, any tax or interest was found due after adjustment of tax deducted at source, advance tax and other taxes paid, and intimation was to be sent to the assessee, specifying the sums so payable. Similarly, if any refund was due to the assessee, it would be granted. Therefore, such an intimation could be issued only on the basis of the return of income. The first proviso to Section 143(1)(a) of the Act permitted certain adjustments to be made while calculating the tax or interest payable or while granting a refund which are of any arithmetical error in the return, accounts or documents accompanying it; (ii) any loss carried forward, deduction, allowance or relief, which on the basis of information available in such return, accounts or documents accompanying it was prima facie admissible but not claimed in the return; (iii) any loss carried forward, deduction, allowance or relief which was claimed in the return of income, but which on the basis of the information available in such return, accounts or documents accompanying it was prima facie inadmissible.

6.2 Further, the term book profit has been defined in the Explanation to Section 115JA(2) of the Act to mean net profit as reflected in the P&L A/c of a company prepared for the relevant previous year, as drawn up as per Parts I and III of Schedule VI to the Companies Act subject to certain adjustment by way of increase in respect of certain sums as referred to in Clauses (a) to (f) of the said Explanation and deduction in respect of certain sums as referred to in Clauses (i) to (ix) of the said Explanation.

6.3 The adjustment referred to in Clauses (a) to (f) of the said Explanation are as under : (a) the amount of income-tax paid or payable and the provision therefor; (c) the amount or amounts set aside to provisions made for meeting liabilities other than ascertained liabilities; (d) the amount by way of provision for losses of subsidiary companies; (f) the amount or amounts of expenditure relating to any income to which any of the provision of Chapter III of the Act applies.

6.4 Before we consider as to whether the provisions made by the assessee fall within any of the clauses of Section 115JA(2) of the act, as stated hereinabove, we also consider the term 'provision' and 'reserve'. Since the terms 'provision' and 'reserve' have not been defined in the Act, it is necessary to consider the meaning assigned to them in the Companies Act as the relevant section deals with the assessment of companies. In this respect we may state that the Bombay High Court in the case of Petrosil Oil Co. Ltd. v. CIT (1999) 236 ITR 220 (Bom) held by following a decision of the apex Court in the case of Homah Trading Co. Ltd. v. CIT (1959) 36 ITR 215 (SC) that for the purpose of considering a provision of the Act dealing with the assessment of companies, undefined words used in the said provision may be interpreted by importing the definition accorded to it in the companies Act. The terms 'provision' and 'reserve' have been defined in Clause 7(1) of Part III of Schedule VI to the Companies Act as under: "(a) The term 'provision' has been defined to mean, subject to Sub-section (2) of the said clause, any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy, (b) The term 'reserve' has been defined in a negative way so as not to include any amount written off or retained by way of providing for depreciation, renewals or diminution in the value of assets or retained by way of providing for any known liability." 6.5 On perusal of Clause (a) to (f) of Explanation to Section 115JA(2) of the Act and we find that the only relevant clause for the purpose of provision for doubtful debts of Rs. 1,56,00,000 made by the assessee can be Clause (c) but this clause is only for those provision with respect to liabilities and that too unascertained liabilities. The said clause does not cover provision made for diminution in value of assets.

Therefore, we agree with the learned authorised representative of the assessee that the provision of Rs. 1,56,00,000 could not be added back to the net profit as per the P&L A/c by invoking the provision of Clause (c) of the Explanation appended to Section 115JA(2) of the Act.

6.6 Further, the provision of Rs. 1,56,00,000 made for doubt debts and advances could not be held to be a reserve within the meaning of Clause 7(2) of Part III of Schedule VI to the companies Act, which we have stated hereinabove and accordingly, Clause (b) of the Explanation appended below Section 115JA(2) of the Act is also not applicable to it.

7. Now coming to the provision for wealth-tax of Rs. 1,25,000 made by the assessee which have also been added by the authorities below to the net profit for computing the book profit within the meaning of Section 115JA of the Act, we hold that Clause (a) of the said Explanation provides for disallowance of any provision made for income-tax only.

Since the term wealth-tax chargeable under WT Act, 1957, cannot be held as income-tax, the provision of Rs. 1,25,000 made in the P&L a/c for its liability to pay wealth-tax cannot be added back to the net profit for the purpose of computing the book profit by invoking the provision of Clause (a) or any other clause being Clauses (b) to (f) of the Explanation of Section 115JA(2) of the Act. We agree with the contention of the learned authorised representative of the assessee that a provision made for wealth-tax cannot be equated to any liability towards income-tax and accordingly, cannot be disallowed while computing the book profit by invoking Clause (a) of the Explanation to Section 115JA(2) of the Act.

8. Further, at the time of hearing of the appeal, learned authorised representative of the assessee also referred to pp. 6 and 7 of the paper book which is a copy of the affidavit of the learned authorised representative of the assessee stating that no submission either oral or written was made before the learned GIT(A) that the provision for bad debts and advances were reflected in the balance sheet as reduction from the value of the relevant assets for the purpose of computing the book profit under Section 115JA of the IT Act as stated by the learned CIT(A) in the impugned order. He urged that it was submitted that the provision for doubtful debts was made on the basis of a prudent and bona fide decision which was taken after considering the chances of recovery of the impugned debts and advances and that the said provision was reflected in the balance sheet as on 31st March, 1997, as reduction from the value of the relevant assets being debts and advances and such reflection was done as per the provision of the Companies Act, 1956.

9. In view of the above, we hold that the sum of Rs. 1,56,00,000 and Rs. 1,25,000 could not be added back to the net profit for the purpose of computing the book profit within the meaning of Section 115JA of the Act since the same do not fall under any of the Clauses (a) to (f) of the Explanation to Section 115JA(2)-of the Act because they are the only adjustments which could be made in the form of additions for the purpose of computing book profit under the Act.

10. In view of our above finding, we do not consider it necessary to deal with the alternative submission of the assessee as to whether the provisions made by the assessee for doubtful debts and wealth-tax liability could be adjusted by the AO in the intimation issued under Section 143(1)(a) of the IT Act.

11. The last ground of appeal viz. ground No. 9 of the appeal is as under : "That the learned CIT(A) erred in not dealing with the contentions of the appellant preferred in Ground No. 9 of the memorandum of appeal filed with the learned CIT(A), namely the denial of the AO of credit for income-tax deducted at source amounting to Rs. 12,07,079." 12. It is observed that the assessee contended before the CIT(A) in the grounds of appeal filed before him that the AO failed to grant the assessee credit for income-tax deducted at source amounting to Rs. 12,07,079. On perusal of the order of the learned CIT(A) we agree with the learned authorised representative of the assessee that the learned CIT(A) has not dealt with the said ground while disposing of the appeal of the assessee. Accordingly, we restore this issue to the CIT(A) to consider this ground after giving due opportunity of hearing to the assessee. Accordingly, this ground of appeal is allowed.

13. In the result, the appeal of the assessee is allowed in terms of our order as indicated above.