ORDER SHEET ITA NO.93 OF 2007 IN HIGH COURT AT CALCUTTA Special Jurisdiction(Income Tax) ORIGINAL SIDE COMMISSIONER OF INCOME TAX, KOLKATA-II Versus BALMAR LAWRIE & CO LTD. BEFORE: Hon'ble JUSTICE GIRISH CHANDRA GUPTA Hon'ble JUSTICE ARINDAM SINHA Date : 11th March, 2015. MR.P.K.BHOWMICK, ADVOCATE FOR APPELLANT MR.N.K.PODDAR,SR.ADVOCATE, MR.ASHOK GUPTA, MR.V.TIBREWAL,ADVOCATES FOR RESPONDENT Court : subject matter of challenge in this appeal is judgment and order dated 6th October, 2006 pertaining to assessment year 2002-03. question formulated at time when appeal was preferred reads as follows; Whether on facts and circumstances of case Learned Tribunal was justified in law in deleting 2 provision for diminution in value of investment on ground that explanation (c) of Section 115-JB is not applicable for diminution in value of assets and diminution in value of asset is not provision for liability? Briefly stated facts of case are as follows: assessee made provision to extent of sum of Rs.2,10,41,506/- for diminution in value of asset. Assessing Officer held that aforesaid provision was within mischief of Clause (c) of Explanation (1) to section 115JB and, therefore, he added back said sum to book profit. C.I.T. (Appeals) was of opinion that aforesaid provision was not hit by Clause (c) of Explanation (1) and therefore, provision could not have been added back to book profit. learned Tribunal affirmed views expressed by C.I.T.(Appeals). Revenue has come in appeal and aforesaid question was formulated. 3 important change was made by Finance Act No.2 of 2009, which is introduction of Clause (i) in Explanation (1) which reads as follows; (i) amount or amounts set aside as provision for diminution in value of any asset. impugned judgment is unexceptionable on basis of law as it stood on day when judgment was delivered. Tribunal had no occasion to refer to judgment in C.I.T. Vs. HCL Comnet Systems and Services Ltd. reported in (2008) 305 ITR 409, wherein following view was taken: In present case, debt under consideration is debt receivable by assessee. provision for bad and doubtful debt, therefore, is made to cover up probable diminution in value of asset, i.e., debt which is amount receivable by assessee. Therefore, such provision cannot be said to be provision for liability, because even if debt is not recoverable no 4 liability could be fastened upon assessee. In present case, debt is amount receivable by assessee and not any liability payable by assessee and, therefore, any provision made towards irrecoverability of debt cannot be said to be provision for liability. Therefore, in our view, item (c) of Explanation is not attracted to facts of present case. In circumstances, Assessing Officer was not justified in adding back provision for doubtful debts of Rs.92,15,187 under clause (c) of Explanation to section 115JA of 1961 Act. Therefore, there can be no dispute that provision to guard against diminution in value of assets will not be within mischief of Clause (c) of Explanation (1). But question is whether after introduction of Clause (i) with effect from 1st April, 2001, which is retrospective amendment brought in by Finance Act No.2 of 2009, appeal can be disposed 5 of on basis of law as it stood when appeal was decided by learned Tribunal. Mr.Poddar, learned senior Advocate, appearing for assessee/respondent submitted that question formulated has to be answered. Whereas Mr.Bhowmik, learned Advocate appearing for appellant/revenue submitted that question for consideration always was whether provision made to guard against diminution in value of assets is to be added to book profit. Previously question was covered by Clause (c) to Explanation (1) but now question is directly covered by Clause (i), therefore, there is no question why benefit of amendment should not be given to revenue. There is also no reason why appeal should be decided on basis of judgment in case of C.I.T. Vs. HCL Comnet Systems and Services Ltd.(supra) relied upon by Mr.Poddar. 6 We have carefully considered submissions advanced by learned Advocates appearing for parties and are of opinion that appeal is continuation of proceedings and appeal has to be decided on basis of law as it is and not on basis as it was. Today existence of Clause (i) quoted above is indisputable. Therefore, question has to be answered in favour of revenue. question originally framed is reformulated as follows: Whether provision made by assessee to guard against diminution in value of assets can be added back to book profit under Section 115JB? appeal is thus allowed and question is answered in affirmative in favour of revenue. (GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) sb. Commissioner of Income -tax, Kolkata - II v. M/s. Balmer Lawrie & Co. Ltd