ORDER
Beharilal, Accountant Member
1. This appeal of the assessee has been directed against the order of the CIT(A) II Mumbai dated 21/1/2002 for the A.Y. 1997-98. The only ground of appeal taken up by, the assessee reads as follow:
“On the facts and circumstances of the case, the learned CIT(A) erred in confirming the write back of Rs. 4,18,63,920 made by the Assessing Officer Under Section 115JA of the Income-tax Act and treating the same as income of the appellant. The appellant states that the amount written back was not allowed as a deduction and hence every write back would not be treated as income.”
2. The assessee is a limited company and is engaged in the manufacture of non-woven fabrics. The assessee filed its return for the assessment year 1997-98 on December 1, 1997 declaring taxable income of Rs. 82,44,896 under the provisions of Section 115JA of the Income-tax Act, 1961. Subsequently, on June 19, 1998 it filed a revised return declaring loss of Rs. 26,83,740 under the normal provisions of the Act and nil income under Section 115JA of the Act. The only issue for consideration in this case is the computation of the taxable income under the provisions of Section 115JA of the Act. The Assessing Officer observed that the assessee’s annual report shows a net profit of Rs. 5,62,42,271 which includes write back of liabilities of earlier years of Rs. 4,18,63,960. Regarding the write back, the Assessing Officer has stated that during the relevant year the assessee arrived at one time settlement with the Financial Institutions. By letter dated 31/3/97, the Industrial Credit and Investment Corporation of India Ltd. informed the assessee company that as per the terms of one-time settlement a total amount of Rs. 7 crores has to be paid by the assessee to three Financial Institutions (IDBI, ICICI, and IFCI). This was payable in five three month instalments beginning from 31/1/1997 and ending on 15/3/1998. The original loan availed by the assessee from three Financial Institution was Rs. 4.9 crores. As a result of one settlement, the assessee wrote back in its books an amount of Rs. 418.63 lakhs. The Assessing Officer referred to Clause (i) to the explanation to Section 115JA, which deals with amounts withdrawn from any reserves or provision and has stated that the amount written back cannot be considered as withdrawn from a provision or a reserve. The amount written back is a cumulative total of principle and interest payable as per books of the one time settlement. The Assessing Officer has further observed that of the two words used in Section 115JA, the word ‘reserve’ does not apply to the facts of the case. According to him this also cannot be considered as a provision, as stated above, the amount written back constitutes of both principle and interest. The Assessing Officer referred to the provisions of proviso to Explanation to Section 115JA and has stated that even if the amount written back can be termed as a reserve, then it is a reserve created during the A.Y. 1997-98. Thus, according to him, the said reserve has not increased the book-profit of any earlier year and therefore cannot be reduced in term of the Clause (i) to the Explanation to Section 115JA of the Act. Thus, the Assessing Officer concluded that the book-profit of the assessee for the year will remain at Rs. 562.42 lakhs.
3. The learned CIT(A) in his order has observed that the amount of Rs. 4,18,63,920 represents the provision for interest created in the earlier years and written back and credited to the profit and loss account in this year. This amount was not allowed in the relevant years by virtue of Section 43B on account of not having been paid. The learned CIT(A) referred to the order of the Assessing Officer under Section 154 wherein the Assessing Officer has observed that according to the proviso to Explanation (i) below Section 115JA(2) a provision created in a previous year relevant to the assessment year commencing on or after 1/4/1997 shall be reduced from the book profit unless the book profit of such year has been increased by the provision out of this amount was withdrawn. The Assessing Officer further observed that the relevant provision for interest was created prior to the assessment year 1997-98 and therefore, the amount withdrawn out of this provision and credited to the profit and loss account in this year and cannot be reduced from the book profit under this explanation. It was submitted before the learned CIT(A) that the Assessing Officer has misled the aforesaid proviso which refers to such provision which is made in the previous year relevant to the assessment year commencing on or after 1/4/97 and not in any earlier assessment year. The relevant provisions of interest having been made during the period form 1/4/1988 to 31/3/1996, therefore, the said proviso does not apply so as to create a bar against the reduction of book-profit by the amount credited to the profit and loss account in this year out of the said provision. The learned CIT(A) referred to the Explanation (i) which provides for reduction of book profit by the amount withdrawn and credited to the profit and loss account from any reserve and provision, however, the proviso to Explanation (i) excludes from reduction such amount credited to the profit and loss account which is out of the reserve treated or provisions made in the previous year relevant to the assessment year commencing on or after 1/4/97. The learned CIT(A) has, thus, concluded that in the present case, it is undisputed fact that the relevant provision for interest out of which the amount was withdrawn and credited to the profit and loss account in this year was made in the earlier years. Thus, according to the CIT(A), the proviso to Explanation (i) does not come in the way of reduction of book profit by the amount of provision withdrawn and credited to the profit and loss account in this year.
4. The learned CIT(A) however, took up a new issue and observed that when Explanation (i) refers to reserves or provision, it clearly refers to such reserves or provision as are mentioned in Explanation (b) and (c). In the opinion of CIT(A) Clause (b), (c) and (i) are the clauses of the same Explanation below Section 115JA(2). The meaning of the provision in this Explanation is derived from Section 115JA(2) which refers to profit and loss account prepared in accordance with the provisions of Part-III of Schedule-VI of the Companies Act. Clause (b) of the Explanation refers to the amounts carried to any reserve by whatever name called. Thus, the learned CIT(A) has stated that when the interest was provided in the books of account in the earlier years, such provision could not be said to be a “reserve”. A reserve denotes transfer of profit below the line or an account created out of capital receipts. It does not form part of the profits i.e. that the net result of revenue and expenses. As regards Clause (c) referring to amount or amounts set-aside to provisions made for meeting liabilities, other than ascertained liabilities. Thus, the learned CIT(A) has stated that a provision for interest could not be said to be a provision for meeting an unascertained liability within the meaning of this clause. The CIT(A) has also stated that the fact that it was not allowed as deduction under the Income-tax Act by virtue of Section 43B does not render it a provision towards unascertained liability within the meaning of the Companies Act. Thus, according to the CIT(A) the amount written off in this year out of the provisions of interest on the basis of one-time settlement with the lenders did not represent an amount withdrawn from the provision for an unascertained liability within the meaning of the Explanation below Section 115JA(2). Thus, the learned CIT(A) held that this amount could not be reduced from the book profit. The learned CIT(A), therefore, has justified in not reducing this amount from the book profit by the Assessing Officer.
5. The learned counsel for the assessee contended that Section 115JA(2) pertains to the determination of ‘Book Profits’ for the current year only. The learned counsel argued that the facts of this case are undisputed as has been confirmed by the Assessing Officer in his order passed Under Section 154 of the Act. The Assessing Officer has confirmed that there was a waiver of Rs. 418 lakhs out of the existing liability of the assessee towards the said Financial Institutions, which consisted entirely of interest and liquidated damages etc. It has also been acknowledged that there was no waiver in respect of the principle amount of loans of Rs. 490 lakhs. The Assessing Officer has also acknowledged that the above-mentioned waived amount of interest had been taken in the books prior to 1/4/96 and also the interest amount were not allowed as deduction in the assessments of any of the earlier years. The learned counsel, therefore, argued that the Assessing Officer ultimately held in the said order under Section 154 that the amount of Rs. 418 lakhs credited to the accounts by ways of amount written back is not to form income of the assessee to be computed in the ordinary way. The learned counsel also referred to the order of the learned CIT(A) and has submitted that the learned CIT(A) has held that so far as the reserves and provisions created up to 31/3/96 are concerned, the proviso under consideration would neither be applicable nor would stand as a bar in the matter of deduction of the amount under consideration. The learned CIT(A) also held that the aforesaid proviso to Clause (i) of the Explanation does not come in the way of reduction of the book profit by the amount of provision withdrawn and credited to the profit and loss account in this year.
6. The learned counsel referred to the findings of the learned CIT(A) regarding ‘the reserve and provision’. The learned CIT(A) held that the amount written off in this year out of the provision of interest on the basis of one-time settlement with the lenders did not represent an amount withdrawn form the ‘provision’ for an unascertained liability within the meaning of the Explanation below Section 115JA(2) and hence, this amount could not be reduced from the book profit. The learned counsel argued that the learned CIT(A) erred in equating the expression ‘provision’ as appearing in Clause (i) with the expression ‘provision made for meeting liabilities, other than ascertained liabilities’ as used in Clause (c) of the aforesaid Explanation to Section 115JA(2). The learned counsel pointed out that the expression ‘provision’ as such, has been used even Clauses (a) and (d) also which point has missed the attention of learned CIT(A). The learned counsel referred to the Hon’ble Supreme Court decision in the case of Metal Box Company of India Ltd. v. Their Workman (1969) 73 ITR 53, especially he referred to page 68 wherein the Supreme Court has held as follow:
“An amount set aside out of profits and other surpluses, not designed to meet a liability, contingency, commitment or diminution in value of assets known to exist at the date of the balance sheet is a reserve but an amount set aside out of the profits and other surplueses to provide for any known liability of which the amount cannot be determined with substantial accuracy is a provision.”
7. The learned counsel also referred to the judgment of Bombay High Court in the case of Indian Smelting and Refining Co. Ltd. (1977) 107 ITR 793 wherein the Bombay High Court referred to the above judgment of the Supreme Court for the definition of “Reserve” and “provision”. The learned counsel argued that in the present case, the liabilities towards payment of interest to the Financial Institutions were provided in the accounts of the assessee indifferent years prior to 1997-98. The liabilities were existing liabilities. The subsequent fact that the liabilities were ultimately waived shows that the actual liabilities could not have been ascertained exactly. The learned counsel, therefore, referred to the decision of the Supreme Court in the case of Metal Box Company of India Ltd. (supra) and contended that a provision was made in the accounts of the assessee in respect of the liabilities towards payment of interest to the Financial Institutions. During the year correspond to A.Y. 1997-98, the interest was waived to the extent of Rs. 418 lakhs and the corresponding amount was written back in the accounts of the assessee. The leaned counsel, therefore, argued that the amount was withdrawn from the earlier provisions created in respect of meeting the liability towards payment of interest to Financial Institutions. The learned counsel also referred to Clause (i) of the Explanation to Section 115JA(2) and contended that simply the expression ‘provision’ has been used. The same expression has been used in earlier Clauses (a) (c) and (d). In Clause (c) again, there is a further qualification to the extent that the provision should be of the nature of provision made for meeting liabilities, other than ascertained liabilities. This qualification is expressly used in Clause (c) above but not in any other clauses like (a), (d) or (i). The learned counsel argued that in the absence of such a specific qualifying expression in any of these three clauses, so far as the Clauses (a), (d) and (i) are concerned, the expression “provision” has got to be considered in general manner relating to provisions as defined by the Supreme Court and as considered above. The further restriction of the provision being meeting for liabilities other than ascertained liabilities cannot be brought to Clauses (a), (d) and (i). Thus, the learned counsel contended that so far as the applicability of Clause (i) is concerned, it would suffice if the amount be withdrawn from any reserve or provision and if the amount is credited to profit and loss account. According to the learned counsel, there is no need at all that the provision must have been made for meeting liabilities other than ascertained liabilities. The learned counsel, therefore, contended that the arguments put forward by the learned CIT(A) trying to place further restrictions on the definition of the expression “provision” in Clause (i) cannot be considered to hold good. The learned counsel, therefore, submitted that since all the conditions as laid down in Clause (i) of the Explanation to Section 115JA(2) are satisfied in the present case, therefore, the Clause (i) should be allowed to come into play and the amount of write book of Rs. 418 lakhs be directed to be allowed from the book profits for the purpose of computation of income under Section 115JA of the Act.
8. The learned counsel also filed notes on “provision”. He has referred to the Law Lexicon where the provision has been defined as follows:
“A Provision is a charge against profits. It is created to meet liabilities which are known and foreseeable, but whose exact timing and hence whose quantification above are uncertain at the moment.”
The learned counsel has, thus, stated that provision has to be created in the accounts in respect of liabilities whose natures are more or less ascertained, although the exact quantum involved may be uncertain. The learned counsel has also referred to the companies Act wherein the word “provision” occurs in the Proforma of Balance-sheet as per Schedule VI, Part-I. The expression ‘Provision’ comes under the head “Current liabilities and Provisions” in the “liability” side of the balance-sheet. The classifications of provisions as given in Companies Act in this regard are as follows.
“[(8) Provision for taxation
(9) Proposed Dividends
(10) For contingencies
(11) For provident fund scheme
(12) For insurance, pension and similar staff benefits schemes
(13) Other provision]”
The learned counsel has, thus pointed out that most of the types mentioned therein are in respect of liabilities whose nature is certain. Only “Provisions for contingencies and other Provisions” may be considered to be provision relating to liabilities whose nature is not certain. The learned counsel therefore, referred to Clause (c) of Explanation to Section 115JA(2). This refers to “the amount or amounts set aside to provision made for meeting liabilities, other than ascertained liabilities”. The learned counsel has, thus, stated that the implication of this particular clause is that the amount debited to profit and loss account and set aside to provision made for meeting ascertained liabilities will not be added back in terms of the Explanation. On the other hand only amounts representing provision in respect of unascertained liabilities, if debited to profit and loss account will be added back. The learned counsel contended that the very nature of this clause itself shows that Legislature merely wanted to deny debit of items representing unascertained liabilities in the computation of adjusted book profits. The learned counsel further pointed out that Clause (i) and subsequent clause of the Explanation work in a reserve direction. According to this clause, any amount withdrawn from any reserves or provisions, if credited to profit and loss account will have to be reduced in computing the adjusted book profits. The idea is that only pure items of income should be taken into consideration while amounts credited to the profit and loss account by being withdrawn from any reserves or provisions are not to be considered in as much as they do not correctly represent income of the year, the credit merely being done by adjusting the reserves or provision already created in the past. It is thus, stated that the question of consideration of whether the provision is in respect of ascertained or unascertained liabilities does not arise here because in both the cases, the provision is brought forward from past; and during the year under consideration the said amount of provision is written back in the accounts by being credited to profit and loss account. Thus, according to the learned counsel, there is no need to import the idea of “Provisions made for meeting liabilities other than ascertained liabilities” from Clause (c) to Clause (i) in as much as scope of applicability of two clauses are completely different.
9. The learned counsel further contended that the learned CIT(A) has decided this issue in favour of the assessee on the basis that the proviso to Explanation (i) does not come in the way of reduction of book profit by the amount of provision withdrawn and credited to he profit and loss account in this year. Thus, the basis on which the Assessing Officer made the disallowance has been found erroneous by the learned CIT(A). The learned CIT(A) however, retained the disallowance on the basis of a totally different reasons which have not been discussed in the order of the Assessing Officer. Thus, according to the learned Counsel, it amounts to enhancement and the learned CIT(A) should have given an opportunity to the assessee before making the disallowance. The learned counsel, therefore, contended that the order passed by the learned CIT(A) is bad in law and the same deserves to be quashed.
10. The learned Department Representative contended that the provisions of Clause (i) of the Explanation to Section 115JA of the Act are not applicable to the instant case. He mainly relied on the order of the learned CIT(A) and contended that Explanation (i) provides for reduction of book-profit by the amount withdrawn and credited to the profit and loss account in this year out of the said provision. The proviso to Explanation (i) excludes from reduction such amount credited to the profit and loss account which is out of Reserve created or provisions made in the previous year relevant to the assessment year commencing on or after 1/4/1997. The learned Department Representative supported the findings of the learned CIT(A) by arguing that in the present case, the relevant provision for interest out of which the amount was withdrawn and credited to the profit and loss account in this year was made in the earlier years hence the proviso to Explanation (i) does not come in the way of reduction of the book profit by the amount of provision withdrawn and credited to the profit and loss account in this year. However, he also agreed with the CIT(A) that a provision for interest could not be said to be a provision for meeting an unascertained liability within the meaning of Clause (a) of the Explanation under Section 115JA(2) of the Act. He argued that the amount written off in this year out of provisions of interest on the basis of one-time settlement with the lenders did not represent an amount withdrawn from “Provision” for an unascertained liability within the meaning of the Explanation below Section 115JA(2). Thus he fully supported the findings of the learned CIT(A) that this amount, therefore, could not be reduced from the book-profit.
11. We have carefully considered the submissions made by the rival parties. We have also gone through the written submissions filed by the learned counsel and the other documents produced before us. The assessee had borrowed an amount of Rs. 4.90 crores from three Financial Institutions (supra) during the year ended on March 31, 1989. As on 31st March 1996, total outstanding loan alongwith interest amounted to Rs. 11.18 crores. During the year under consideration the assessee had entered into negotiation with the Financial Institutions for one-time settlement of the above outstanding balance. The Financial Institutions agreed to waive compound interest, liquidated damages and part of simple interest in consideration for the assessee paying back principal funded interest and part of simple interest aggregating to Rs. 7 crores in five three monthly instalments. Thus the Financial Institutions waived Rs. 4.18 crores being compound interest, balance simple interest and liquidated charges. The aforesaid amount of Rs. 4.18 crores. which was waived by the Financial Institutions, was written back by the assessee below the line in its profit and loss account for the year ended on 31st March, 1997. The assessee however, did not consider this amount as part of the book profits in view of provisions of Clause (i) of the Explanation to Section 115JA(2) of the Act. The Assessing Officer held that the provision of the aforesaid Clause (i) of the Explanation to Section 115JA of the Act were not applicable. Consequently, he included the above write back in the computation of book profit for the year. The learned CIT(A) however, held that the proviso to Clause (i) of the Explanation does not come in the way of reduction of the book profit by the amount of provisions withdrawn and credited to the profit and loss account in this year. However, the CIT(A) disallowed the claim of the assessee form a completely different and new angle. According to him when Clause (i) of the Explanation refers to reserve or provision, it clearly refers to such reserve or provision as are mentioned in Clauses (b) and (c) of the Explanation. According to him the meaning of the words “Reserve and Provision” in Clause (i) should be the same as used in Clauses (b) and (c). In his opinion, a reserve denote transfer of profit below the line, or on account created out of capital receipt and the same does not form part of profit. Regarding Clause (c) of the Explanation, the CIT(A) has stated that the same refers to amount or amounts to provisions made for meeting liabilities, other than ascertained liabilities. According to hi, a provision for interest could not be said to be a provision for meeting an unascertained liability within the meaning of this clause. He has further stated that the fact that it has not been allowed as deduction under the Income-tax Act by virtue of Section 43B, does not render it is provision towards unascertained liability within the meaning of Companies Act. The CIT(A), thus, held that the amount written off in this year out of the provision of interest on the basis of one-time settlement with the lenders did not represent an amount withdrawn from the provision for an uncertained liability within the meaning of the Explanation below Section 115JA(2) and hence this amount could not be reduced from the book-profit.
12. For the purpose of Section 115JA of the Act, the Explanation defines as to what is meant by the “Book Profit” means the net profit as shown in the profit and loss account for the relevant previous year as prepared under Sub-section (2). Such book profits will be increased to such net profit by addition of the amounts mentioned in Clause (a) to (f) of the Explanation, if these are debited to the profit and loss account. The figure so arrived at will be reduced by the amounts mentioned in Clauses (i) to (ix) of the Explanation if they are credited to the profit and loss account. Thus, the book profit means, the net profit as shown in the profit and loss account prepared in accordance with the provision of Sub-section (2) as increased by the various amounts given in Clauses (a) to (f) Clause (c) of Explanation in effect provides for adding back to the net profits, the amounts provided for as a ‘provision’ or unascertained liability. The provisions, therefore, made for ascertained liability are not to be added back to determine the book profits. In the case of unascertained liability, the addition has to be made only if the amount has been debited to the profit and loss account. The profit and loss account prepared in accordance with the provision of Sub-section (2) and increased by the amounts mentioned in Clauses (a) to (f) of the Explanation is to be reduced further by the amounts mentioned in Clauses (i) to (ix) of the Explanation to arrive at book-profits. Thus, Clause (c), of the Explanation refers to unascertained liability and if any provision is made against such liability during the year under consideration, the same has to be added back if the profit and loss account is debited by that amount to arrive at ‘book profit’. Clause (i) of the explanation reads as follows:
“The amount withdrawn from any reserves or provision if such amount is credited to the profit and loss account, provided that such amount withdrawn shall not be reduced from the book-profits where such reserves or provisions were made after 1/4/1997 unless the book-profit of such year has been earlier increased by this reserves or provision.”
The language of this clause is, therefore, without any ambiguity and it clearly lays down that any amount withdrawn from any reserves or provisions if such amount is credited to the profit and loss account. This clause also does not mention that the reserves or provisions should pertain to the assessment year under consideration. It appears that the learned CIT(A) has got confused with the provisions of Clause (c) and Clause (i) of the explanation which are infact two different provisions and also operates differently in two different situations, Clause (c) operates when the assessee has made a provision for a liability which may be unascertained or ascertained. In case, the liability is unascertained, the book-profit has to be increased by that amount. The intention of the legislature was to levy the Minimum Alternate Tax (MAT) on the real “book-profits”. As the unascertained liability has not accrued during the year under consideration, therefore, the same has to be added back if the same is claimed in the profit and loss account to arrive at the real profits. So far as Clause (i) is concerned, it only pertain to the withdrawal of the amount from reserves or provisions and credited to profit and loss account. This amount has to be reduced from the net profit as shown in the profit and loss account to arrive at the correct “Book Profit” for the purpose of Section 115JA of the Act. The intention of the Legislature is to charge Minimum alternate Tax on the real profits and not on artificial profits. These provisions were made in the earlier years for the expenditure incurred in those years, but the department did not allow it on the basis that the liability provided for was unascertained or the same was not paid during the relevant year. Therefore, these amounts have already been included in the book-profits of the earlier years and accordingly the tax has been levied on these amounts. Therefore, if these amounts are not excluded from the net profit as shown in the profit and loss account, they would be subject to tax again. The legislature in their wisdom has brought this provision on the statute to avoid the situation of taxing the same amount twice. In fact the MAT has to be levied on the real book profits, which have been earned by the companies during the relevant assessment years and no t on artificial income, which has not accrued to the companies but has been credited to the profit and loss account as per the accounting principles. In the present case, the assessee has not earned the income of Rs. 4.18 crores. This was the provision, which had been written back to the profit and loss account as per the accounting principles. The department would have been fully justified in making the disallowance if these provisions would have been allowed as expenditure in the profit and loss account in the respective earlier assessment years. Therefore, in our opinion the learned CIT(A) is not justified in comparing the two provision of the Explanation given in Clause (c) and Clause (i). In fact, these two provisions have been brought on the statute for determining the real book profits for the purpose of levying the MAT. The comparison drawn by the learned CIT(A) is, therefore, without any basis and the same does not require any consideration.
13. The next important issue is regarding the provision made towards unascertained liability. According to the CIT(A) a provision for interest could not be said to be a provision for meeting an unascertained liability within the meaning of Clause (c) of the Explanation. It is stated that if the interest was not allowed as deduction under the Income-tax Act by virtue of Section 43B, it does not render it a provision towards unascertained liability within the meaning of the Companies Act. We do not find any force in the findings of the learned CIT(A). A provision made for a certain future liability, which can be ascertained with substantial accuracy, is an accrued liability. If such known liability cannot be ascertained and can only be estimated and a provision is made, such provision being a charge on the profits will be deductible. If the liability is anticipated but cannot be determined, it may be only contingent for which a reserve may be created by way of appropriation from profits and hence such amount will not be eligible for deduction. In the present case the assessee anticipated the interest but it was not determinable. Therefore, the assessee created a provision for such unascertained liability. The assessee was not entitled for any deduction for this uncertain liability. The very fact that the department did not allow this liability on the basis of non-payment Under Section 43B of the Act supports this view that the liability was not exactly known to the assessee, therefore, the same was not paid. If the liability would have been exactly determinable, the assessee would have not created the provision but would have paid the same and the claim would have been made in the profit and loss account on the basis that the liability is ascertainable. The fact that the liability has not been allowed Under Section 43B, does not change the character of the liability which was unascertainable.
14. So as the expression “Provision” is concerned, the learned counsel has rightly pointed out that a provision has to be created in the accounts in respect of the liabilities whose nature is more or less ascertained although, the exact quantum involved may be uncertain. This view is fully supported with the decision of the Supreme Court in the case of Metal Box Company of India Ltd. (supra). So far as the present case is concerned, the liabilities towards payment of interest to the Financial Institutions were provided in the accounts of the assessee in different years prior to A.Y. 1997-98. The liabilities were existing liabilities. The subsequent fact that the liabilities were ultimately waived shows that the actual liabilities could not have been ascertained exactly. Therefore, the provision was made in the accounts of the assessee in respect of liabilities towards payment of interest to the Financial Institutions. During the year corresponding amount was written back in the accounts of the assessee. Thus, the amount was withdrawn from the earlier provisions created in respect of meeting the liability towards payment of interest to the Financial Institutions. We also find substance in the arguments of the learned counsel that the word “Provision” has been used in Clause (i) of the Explanation. This “Provision” has not been used with any further qualification as it has been done in Clause (c) of the Explanation. Similar word “Provision” has been used in Clauses (a) and (d) without any qualification. Therefore, the word “Provision” in these clauses has to be understood in general terms unlike the same word used in Clause (c) of the Explanation wherein it has been qualified with the expression other than ascertained liabilities. Therefore, the words ascertained and unascertained liabilities cannot be introduced in Clauses (a), (d) and (i) of the explanation. Therefore, so far as the applicability of Clause (i) is concerned, it would be sufficient if the amount be withdrawn from any reserve or provision and if the amount is credited to the profit and loss account.
15. The contention of the learned counsel that the CIT(A) retained the disallowance on the basis of totally different reasons which actually amounted to enhancement and, therefore, the learned CIT(A) should have given an opportunity to the assessee before making the disallowance does not require any consideration in view of our findings in the aforesaid paragraphs.
16. In view of the discussion above since all the conditions as laid down in Clause (i) of the Explanation to Section 115JA(2) are satisfied in the present case, therefore, the Assessing Officer is directed to deduct the amount of write back of Rs. 4.18 crores from the book profits for the purpose of computation of income under Section 115JA of the Act.
17. As a result, the appeal is allowed.