DCIT 10(1), MUMBAI v. ZYMA LOBORATORIES LTD, MUMBAI

ITA 6932/MUM/2013 | 2007-2008
Pronouncement Date: 27-04-2015 | Result: Dismissed

Appeal Details

RSA Number 693219914 RSA 2013
Assessee PAN AAACZ0199A
Bench Mumbai
Appeal Number ITA 6932/MUM/2013
Duration Of Justice 1 year(s) 4 month(s) 29 day(s)
Appellant DCIT 10(1), MUMBAI
Respondent ZYMA LOBORATORIES LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-04-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 27-04-2015
Assessment Year 2007-2008
Appeal Filed On 28-11-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI R.C. SHARMA ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 6932/M/2013 ASSESSMENT YEAR: 2007 - 08 DCIT 10(1) 455 4 TH FLOOR AAYAKAR BHAVAN MUMBAI - 40002 0 VS. M/S. ZYMA LABORATORIES LTD. 159 C.S.T. ROAD KALINA SANTACRUZ (E) MUMBAI 400 09 8 PAN: AAAC Z0199A (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SMT. VASANTI PATEL A.R. REVENUE BY : SHRI LOVE KUMAR D.R. DATE OF HEARING : 2 7 .04. 201 5 DATE OF PRONOUNCEMENT : 27.04. 2015 O R D E R PER VIJAY PAL RAO JUDICIAL MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 04 .0 9.2013 OF CIT(A) ARISING FROM THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT FOR THE ASSESSMENT YEAR 2007 - 08. THE REVENUE H AS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED BY ASSESSING OFFICER U/S 271 (1)(C) OF THE ACT OF RS. 3 78 72 818/ - . 1.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT PROVISION FOR DOUBTFUL DEBT IS AN UNCERTAIN LIABILI TY. 1.3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT INCOME OF THE ASSESSEE WAS TAXED UNDER ITA NO. 6932 /M/2013 M/S. ZYMA LABORATORIES LTD. 2 NORMAL PROVISIONS OF THE ACT IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX AC T 1961 AND NOT U /S II5JB OF THE INCOME TAX ACT. 2. THE APPELLANT CRAVES LEAVE TO ADD AMEND VARY OMIT OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF APPEAL. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30.01.07 DECLARING LOSS OF RS.7 60 868/ - UNDER NORMAL PROVISIONS OF ACT AND NEGATIVE BO OK PROFIT OF RS.31 51 08 081/ - UNDER SECTION 115JB OF THE ACT . WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) THE ASSESSING OFFICER ( AO ) HAS COMPUTED THE TOTAL INCOME OF RS.4 44 20 473/ - UNDER NORMAL PROVISIONS OF ACT AND BOOK PROFIT UNDER SECTION 1 15JB WAS COMPUTED AT RS.2 65 61 630/ - . WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT THE AO HAS ADDED PROVISION OF DOUBTFUL DEBT AT RS.33 70 29 327/ - DUE TO RETROSPECTIVE AMENDMENT BY THE FINANCE ACT 2009 W.E.F. 01.04.01 WHEREBY INSERTED CLAUSE (I) OF THE EXPLANATION 1 TO SECTION 115JB OF THE ACT A PART FROM AN ADDITION ON ACCOUNT OF PROVISION FOR DIMINUTION IN VALUE OF INVESTMENT AT RS.4 500/ - . T HE ADDITION MADE UNDER NORMAL PROVISIONS OF THE ACT WERE DELETED BY THE LD. CIT(A) EXCEPT FOR THE DEPRECIATION ADDITION OF RS.1 72 689/ - . SUBSEQUENTLY THE AO LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF THE ADDITION SURVIVED AFTER THE APPEAL EFFECT ON ACCOUNT OF DEPRECIATION ON THE ASSET AT RS.1 72 689/ - AND ADDITION UNDE R SECTION 115JB F OR PROVISION OF DOUBTFUL DEBT OF RS.34 16 3 9 808 / - AMOUNTING TO RS.11 45 56 268/ - VIDE ORDER DATED 31.03.12. SUBSEQUENTLY THE PENALTY DEMAND WAS REVISED TO RS.3 78 72 818/ - VIDE RECTIFICATION ORDER DATED 25.04.12 UNDER SECTION 154 OF THE ACT. THE ASSESSEE CHALLENGED THE ACTION OF THE AO LEVYING THE PENALTY UNDER SECTION 271(1)(C) BEFORE THE LD. CIT(A). THE LD. ITA NO. 6932 /M/2013 M/S. ZYMA LABORATORIES LTD. 3 CIT(A) HAS CANCELLED THE PENALTY LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. 3. WE HAVE HEARD THE LD. D.R. AS WELL A S THE LD. A.R. AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. IT IS PERTINENT TO NOTE THAT IN THE CASE OF THE ASSESSEE THE TOTAL INCOME ASSESSED BY THE AO UNDER THE NORMAL PROVISIONS OF ACT IS OF RS.4 44 20 473/ - AS AGAINST THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT AT RS.2 65 61 630/ - . HOWEVER IN THE QUANTUM PROCEEDINGS THE LD. CIT(A) HAS DELETED THE ADDITION MADE BY THE AO UNDER THE NORMAL PROVISIONS OF ACT EXCEPT THE ADDITION ON ACCOUNT OF DEPRECIATION ON HOUSE PROPERTY WHICH WAS OFFERED TO TAX B Y THE ASSESSEE SUO - MOT T O DUE TO INADVERTENT MISTAKE IN THE CLAIM. AFTER GIVING EFFECT TO THE ORDER OF THE LD. CIT(A) THE DEMAND OF TAX ON THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT WOULD BE MORE THAN THE COMPUTATION OF INCOME UNDER THE NORMAL PROVISIO NS OF ACT. THE AO LEVIED THE PENALTY IN RESPECT OF THE DEPRECIATION DISALLOWANCE OF RS.1 72 689/ - AS WELL AS THE ADDITION TO THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT ON ACCOUNT OF PROVISION FOR DOUBTFUL DEBTS AT RS.33 70 29 327/ - AS WELL AS ON ACCOU NT OF PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT AT RS.4 500/ - . AS REGARDS THE DISALLOWANCE OF DEPRECIATION ON HOUSE PROPERTY IS CONCERNED WE NOTE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE OFFERED THIS AMOUNT TO TAX AND EXP LAINED THAT IT WAS A BONAFIDE MISTAKE/OMISSION WHILE CLAIMING THE DEPRECIATION ON THE HOUSE PROPERTY. THE LD. CIT(A) HAS DELETED THE PENALTY AGAINST THE DISALLOWANCE OF DEPRECIATION OF RS.1 72 689/ - AS UNDER: WE WILL CONSIDER THE FIRST ISSUE REGARDING T HE LEVYING OF PENALTY ON DEPRECIATION AMOUNT ADDED BY THE A.O. IN THE ASSESSMENT ORDER AT RS.1 72 689/ - . APPELLANT WHILE FILING THE RETURN OF INCOME HAD CLAIMED DEPRECIATION AMOUNT OF RS.3 28 065/ - . THIS INCLUDED DEPRECIATION OF R S. 1 72 689/ - ON OFFICIAL P REMISES THE INCOME FROM WHICH WAS OFFERED TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ITA NO. 6932 /M/2013 M/S. ZYMA LABORATORIES LTD. 4 DURING THE ASSESSMENT PROCEEDINGS THE APPELLANT SUBMITTED THAT THERE WAS ERROR IN THE CLAIM OF DEPRECIATION OF R S .1 72 689/ - ON OFFICIAL PREMISES AND APPELLANT SUO MOTTO OFFERED THE SAID DE P RECIATION AMOUNT FOR THE DISALLOWANCE. THE APPELLANT ALSO SUBMITTED THAT THIS CLAIM WAS INADVERTENT HENCE NO PENALTY HAS TO BE LEVIED AS APPELLANT HAS VOLUNTARILY POINTED OUT ERROR IN THE CLAIM. IF THERE IS INADVERTENT MISTAKE BY THE APPELLANT AND CLAIMED ANY AMOUNT WHILE FILING THE RETURN AND LATER REALIZED IT AND OFFERED AS INCOME THE HON'BLE SUPRENE COURT IN THE CASE OF PRICE WATERHOUSE COOPERS (P) LTD. VS. CIT 348 ITR 306 (SC) WHEREIN IT IS HELD AS UNDER: 'SECTION 271(1)(C ) READ WITH SECTION 37(1) OF THE INCOME TAX ACT 1962 - PENALTY - FOR CONCEALMENT OF INCOME - BONA FIDE MISTAKE - ASSESSMENT YEAR 2000 - 01 ASSESSEE F IRM FILED ITS RETURN OF INCOME ALONGW I TH TAX AUDIT REPORT - IN ITS TAX AUDIT REPORT IT WAS INDICATED THAT P ROVISION TOWARDS PAYMENT OF GRATUITY WAS NOT ALLOWABLE BUT IT FAILED TO ADD PROVISION FOR GRATUITY TO ITS TOTAL INCOME - WHETHER IT WAS A BONAFIDE AND INADVERTENT ERROR - HELD YES - WHETHER ASSESSEE WAS NOT GUILTY OF EITHER FURNISHING INACCURATE PARTICULA RS OR ATTEMPTING TO CONCEAL ITS INCOME - HELD YES - WHETHER IMPOSITION OF PENALTY WAS UNJUSTIFIED - HELD YES.' THE HON'BLE S UPREME COURT CLEARLY HELD T HAT IF THERE IS ANY BONAFIDE INADVERTENT MISTAKE FOUND APPELLANT CANNOT B E LEVIED EITHER FOR FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF ITS INCOME. HENCE PENALTY LEVIED ON ERROR IN THE CLAIM OF DEPRECIATION IS CANCELLED. 4. THE EXPLANATION OF THE ASSESSEE THAT THIS CLAIM WAS INADVERTENT AND THE ASSESSEE HAS VOLUNTARILY POINTED OUT THE ERROR IN THE CLAIM WAS FOUND TO BE A BONAFIDE EXPLANATION OF THE ASSESSEE. THE LD. CIT(A) DELETED THE PENALTY QUA THIS ADDITION BY FOLLOWING THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF PRICE WATE RHOUSE COOPERS (P) LTD. VS. CIT 348 ITR 306 (SC) . WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(A) AS FAR AS ACCEPTING THE EXPLANATION OF THE ASSESSEE AS A BONAFIDE EX PLANATION WHICH IS ALSO CLEAR FROM THE ASSESSMENT ORDER WHEREIN THE ASSESSEE OFFERED THE AMOUNT OF RS.1 72 689 / - ON ACCOUNT OF INADVERTENT CLAIM MADE IN THE RETURN OF INCOME BEING DEPRECIATION ON THE HOUSE PROPERTY. THE ACCOUNTS OF THE ASSESSEE ARE AUDITED BY THE AUDITOR AND THIS MISTAKE COULD NOT BE DETECTED EVEN BY THE ITA NO. 6932 /M/2013 M/S. ZYMA LABORATORIES LTD. 5 AUDITOR THEREFORE IN VIEW OF THE JUDGMEN T OF THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS (P) LTD. VS. CIT (SUPRA) WE DO AGREE WITH THE VIEW OF THE LD. CIT(A) ON THIS ACCOUNT. MOREOVER WHEN THE COMPUTATION WAS FINALLY MADE AFTER GIVING EFFECT TO THE LD. CITS(A) ORDER A S PER THE PROVISIONS OF SECTION 115JB THEN THE DISALLOWANCE UNDER THE NORMAL PROVISIONS OF THE ACT ON ACCOUNT OF DEPRECIATION ON HOUSE PROPERTY WOULD NOT LEAD TO CONCEALMENT OF INCOME OR TAX EVASION AS HELD BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE O F CIT VS. ALEO MANALI HYDRO POWER (P.) LTD. 219 TAXMAN 90 AS RELIED UPON BY THE LD. A.R. OF THE ASSESSEE. 5. AS REGARDS THE PENALTY AGAINST THE ADDITION MADE IN THE BOOK PROFIT UNDER SECTION 115JB ON ACCOUNT OF PROVISION FOR DOUBTFUL DEBTS THE LD. CIT (A) HAS CONSIDERED THIS ISSUE AS UNDER: FURTHER TO IT A.O. HAD LEVIED PENALTY ON PROVISION FOR DOUBTFUL DEBTS WHICH IT ADDED U/S.115JB OF THE ACT. WHILE FILING THE RETURN OF INCOME APPELLANT HAD CLAIMED THE PROVISION OF DOUBTFUL DEBTS AMOUNT AND DEBITE D THIS AMOUNT IN P&L ACCOUNT. THE APPELLANT HAD FILED ITS RETURN OF INCOME ON 31.10.2007 THE APPELLANT DID NOT ADD THE SAID AMOUNT WHILE COMPUTING THE BOOK PROFIT U/S.11 5JB OF THE ACT ON THE BASIS OF THE DECISI O NS IN THE CASE OF CIT VS. ECHJAY FORGINGS PV T. LTD. 251 ITR 15 (BO M ) AND CIT VS. HCL COMNET SYSTEMS & SERVICES LTD. 305 ITR 409 (SC) WHEREIN IT WAS HELD THAT ASSESSEE WERE ELIGIBLE FOR PROVISION OF DOUBTFUL DEBTS. HOWEVER THE ACT WAS AMENDED RETROSPECTIVELY BY THE FINANCE ACT 2009 W.R.E.F.01.04.20 01 IN CLAUSE ( I ) OF EXPLANATION 1 TO SEC. 115JB OF THE ACT WHERE IT IS STATED THAT PROVISION OF DOUBTFUL DEBTS ARE TO BE ADDED TO THE COMPUTATION OF B OOK PROFIT. ON EXAMINATION OF T H ESE DETAILS THE APPELLANT HAD FILED ITS RETURN OF INCOME ON 31.10.2007 AND AMENDMENT TO ACT BY FINANCE ACT 2009 FOR LEVYING THE PENALTY. THE ACT PREVALENT AT THE DATE OF THE FILING OF RETURN IS RELEVANT FOR LEVYING OF PENALTY U/S.271(1)(C) IN VIEW OF SUPREME COURT DECISION IN THE CASE OF BRIJ MOHAN VS. CIT (1979) 120 ITR I (SC). FURTHER TO IT EVEN IN CIT VS. YAHOO INDIA (P ) LTD . (2013) 33 TAXMANN.COM 332 (BO M ) IT HAS HELD AS UNDER: 'SECTION 271 (1) (C) OF THE INCOME - TAX ACT 1961 - PENALTY - FOR CONCEALMENT OF INCOME ( DISALLOWANCE OF BONAFIDE CLAIM EFFECT OF ) - ASSESSING OFFICER L EVIED PENALTY UNDER SECTION 271(1)(C) UPON ASSESSEE ON GROUND THAT IN REGULAR ASSESSMENT AMOUNT PAID BY AS SE SSEE TO A FOREIGN COMPANY WITHOUT DEDUCTING TAX AT SOURC E HAD BEEN DISALLOWED ITA NO. 6932 /M/2013 M/S. ZYMA LABORATORIES LTD. 6 BY INVOKIN G PROVISIONS OF SECTION 40(A) - IN QUANTUM APPEAL DISALLOW ANCE MADE BY ASSESSING OFFICER HAD BEEN DELETED BY TRIBUNAL - REVENUE CHALLENGED ORDER OF TRIBUNAL BY PLACING RELIANCE ON EXPLANATION 5 INTRODUCED TO SECTION 9 BY FINANCE ACT 2012 WITH RETROSPECTIVE EFFECT FROM 01.06.1976 - WHETHER VERY FACT THAT LAW HAD BEEN AMENDED WITH R ETROSPECTIVE EFFECT CLEARLY SHOWED THAT ISSUE WAS DEBATABLE AND IN ABSENCE OF ANY FAILURE TO DISCLOSE MATERIAL FACT S PENALTY LEVIED UNDER SECTION 27 1 (1)(C) WAS NOT JUSTIFIED - HELD YES.' IT IS CLEARLY HELD THAT IT IS RETROSPECTIVE AMEND MENT OF THE ACT PENALTY CANNOT B E LEVIED. FOLLOWING THE ABOVE DECISION THE PENALTY LEVIED BY A.O. IS CANCELLED. MOREOVER A.O'S ADDITION IS U/S.115 J B FOR PROVISION OF DOUBTFUL DEBTS AND PENALTY WAS LEVIED UNDER NORMAL PROVISIONS OF THE ACT U/S.271(1)(C) O F THE ACT IN SUCH A CASE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. NA L WA SONS INVESTMENTS LTD. (2012) 21 TAXMANN.COM IT IS HELD AS UNDER: SECTION 271 (1)(C) READ WITH SECTION 115 JB OF THE INCOME - TAX ACT 1961 - FOR CO NCEALMENT OF INCOME - ASSESSMEN T YEAR 2001 - 02 - ASSESSEE FILED ITS RETURN OF INCOME DECLARING CERTAIN LOSS - WHILE MAKING ASSESSMENT ASSESSING OFFICER MADE DISALLOWANCES ON ACCOUNT OF PF CONTRIBUTION MADE BELATEDLY DEDUCTION CLAIMED UNDER SECTION 80HHC A ND DEPRECIATION CLAIMED ON MACHINERY PURCHASED ON LAST DAY OF YEAR - HOWEVER AS INCOME SO COMPUTER UNDER NORMAL PROCEDURE WAS LESS THAN INCOME DETERMINED UNDER SECTION 11 5JB ASSESSEE WAS ASSESSED UNDER SECTION 115JB - THEREAFTER ASSESSING OFFICER IMPOSE D PENALTY UNDER SECTION 271(1) ( C) IN RESPECT OF AFO RESAID THREE ADDITIONS HOLDING THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME - WHETHER THROUGH THERE WAS CONCEALMENT YET THAT WOULD HAVE REPERCUSSION ONLY WHEN ASSESSEE WOULD HAVE BEEN D ON E UNDER NORMAL PROCEDURE - HELD YES - WHETHER WHEN ASSESSMENT WAS MADE ON I NCOME COMPUTED UNDER SECTION 11 5JB AND TAX HAD BEEN PAID ON INCOME SO COMPUT ED AFORESAID CONCEALMENT DID N OT LEAD TO TAX EV ASION AND THEREFORE NO PENALTY COULD HAVE BEEN IMPOSED ON ASSESSEE - HELD YES.' IN THIS CASE IT IS CL EAR THAT ANY ADDITION IN SEC. 1 15JB PENALTY CANNOT BE IMPOSED U/S.271(1)(C) UNDER NORMAL PROVISION OF THE ACT. FOLLOWING THE ABOVE DECISION OF THE SUPREME COURT PENALTY LEVIED BY A.O. IS CANCELLED. THIS GR OUND OF APPEAL IS ALLOWED . 6. WE FURTHER NOTE THAT THE AO HAS MADE THE ADDITION IN THE BOOK PROFIT AS PER THE AMENDED PROVISIONS OF SECTION 115JB VIDE FINANCE ACT 2009 RETROSPECTIVELY W.E.F. 01.04.01. AT THE TIME OF FILING THE RETURN OF INCOME THERE WA S NO SUCH PROVISION EXIST UNDER SECTION 115JB AND IT WAS ONLY A SUBJECT ITA NO. 6932 /M/2013 M/S. ZYMA LABORATORIES LTD. 7 MATTER OF INTERPRETATION. THE PRE - AMENDED PROVISION WAS CONSIDERED BY THE SUPREME COURT IN THE CASE OF CIT VS. HCL COMNET SYSTEMS & SERVICES LTD. 305 ITR 409 (SC) WHEREIN THE HONBL E SUPREME COURT HAS HELD IN PARA 8 AS UNDER: 8 . AS STATED ABOVE THE SAID EXPLANATION HAS PROVIDED SIX ITEMS I.E. ITEM NOS. ( A ) TO ( F ) WHICH IF DEBITED TO THE PROFIT AND LOSS ACCOUNT CAN BE ADDED BACK TO THE NET PROFIT FOR COMPUTING THE BOOK PROFIT. I N THIS CASE WE ARE CONCERNED WITH ITEM NO. ( C ) WHICH REFERS TO THE PROVISION FOR BAD AND DOUBTFUL DEBT. THE PROVISION FOR BAD AND DOUBTFUL DEBT CAN BE ADDED BACK TO THE NET PROFIT ONLY IF ITEM ( C ) STANDS ATTRACTED. ITEM ( C ) DEALS WITH AMOUNT(S) SET ASIDE AS PROVISION MADE FOR MEETING LIABILITIES OTHER THAN ASCERTAINED LIABILITIES. THE ASSESSEES CASE WOULD THEREFORE FALL WITHIN THE AMBIT OF ITEM ( C ) ONLY IF THE AMOUNT IS SET ASIDE AS PROVISION; THE PROVISION IS MADE FOR MEETING A LIABILITY; AND THE PROV ISION SHOULD BE FOR OTHER THAN ASCERTAINED LIABILITY I.E. IT SHOULD BE FOR AN UNASCERTAINED LIABILITY. IN OTHER WORDS ALL THE INGREDIENTS SHOULD BE SATISFIED TO ATTRACT ITEM ( C ) OF THE EXPLANATION TO SECTION 115JA. IN OUR VIEW ITEM ( C ) IS NOT ATTRACTED . THERE ARE TWO TYPES OF 'DEBT'. A DEBT PAYABLE BY THE ASSESSEE IS DIFFERENT FROM A DEBT RECEIVABLE BY THE ASSESSEE. A DEBT IS PAYABLE BY THE ASSESSEE WHERE THE ASSESSEE HAS TO PAY THE AMOUNT TO OTHERS WHEREAS THE DEBT RECEIVABLE BY THE ASSESSEE IS AN AMOU NT WHICH THE ASSESSEE HAS TO RECEIVE FROM OTHERS. IN THE PRESENT CASE 'DEBT' UNDER CONSIDERATION IS 'DEBT RECEIVABLE' BY THE ASSESSEE. THE PROVISION FOR BAD AND DOUBTFUL DEBT THEREFORE IS MADE TO COVER UP THE PROBABLE DIMINUTION IN THE VALUE OF ASSET I. E. DEBT WHICH IS AN AMOUNT RECEIVABLE BY THE ASSESSEE. THEREFORE SUCH A PROVISION CANNOT BE SAID TO BE A PROVISION FOR LIABILITY BECAUSE EVEN IF A DEBT IS NOT RECOVERABLE NO LIABILITY COULD BE FASTENED UPON THE ASSESSEE. IN THE PRESENT CASE THE DEBT IS THE AMOUNT RECEIVABLE BY THE ASSESSEE AND NOT ANY LIABILITY PAYABLE BY THE ASSESSEE AND THEREFORE ANY PROVISION MADE TOWARDS IRRECOVERABILITY OF THE DEBT CANNOT BE SAID TO BE A PROVISION FOR LIABILITY. THEREFORE IN OUR VIEW ITEM ( C ) OF THE EXPLANATION IS NOT ATTRACTED TO THE FACTS OF THE PRESENT CASE. IN THE CIRCUMSTANCES THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING BACK THE PROVISION FOR DOUBTFUL DEBTS OF RS. 92 15 187 UNDER CLAUSE ( C ) OF THE EXPLANATION TO SECTION 115JA OF THE 1961 ACT. 7. TH US PRIOR TO THE AMENDMENT VIDE FINANCE ACT 2009 THERE COULD NOT BE ANY ADDITION ON COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB OF THE ACT ON ACCOUNT OF PROVISION FOR DOUBTFUL DEBTS. HENCE AT THE TIME OF FILING THE RETURN OF INCOME THE ISSUE OF MAKING ADDITION IN THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT ON ACCOUNT OF PROVISION FOR DOUBTFUL DEBTS WAS A HIGHLY DEBATABLE ISSUE AND RATHER IT WAS DECIDED BY THE HONBLE SUPREME COURT IN FAVOUR OF THE ITA NO. 6932 /M/2013 M/S. ZYMA LABORATORIES LTD. 8 ASSESSEE. ACCORDINGLY THE PENALTY IS NOT JUSTIFIED AGAINST THE ADDITION MADE IN THE BOOK PROFIT ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS. 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 27. 04. 201 5 . SD/ - SD/ - ( R.C. SHARMA ) ( VIJAY PAL RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 27. 04.2015 . * KISHORE SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT C ONCERNED MUMBAI THE CIT ( A) CONCERNED MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.