COMMISSIONER OF INCOME TAX Vs. EICHER LTD.

JUDGEMENT

(1.) 3968/D/2002 relevant for the asst. yr. 1999 -2000 [reported as Asstt. CIT vs. Eicher Ltd. (2006) 101 TTJ (Del) 369 - - Ed.].

(2.) The only question that has arisen is with regard to the decision of the AO in adding the amount being the provision made by the assessee for bad and doubtful debts for the purposes of increasing book profits under s. 115JA of the IT Act. We find from the assessment order that the AO has given absolutely no reason for increasing the book profits. 3. Be that as it may, before the CIT(A) the assessee contended that the book profits could not be increased in the manner as has been done by the AO because of Expln. (c) under s. 115JA(2) of the Act. This Explanation reads as follows :

(3.) The CIT(A) also considered the provisions of Part III of Sch. VI to the Companies Act, which defines the term 'provision'. Clause 7(1)(b) thereof defines 'provision' to mean any amount written off or retained, inter alia by way of providing for any known liability of which the amount cannot be determined with substantial accuracy.