JUDGMENT : Harsha Devani, J. 1. In this appeal under section 260A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the appellant revenue has challenged the order dated 13.4.2018 passed by the Income Tax Appellate Tribunal, Ahmedabad 'B' Bench, Ahmedabad (hereinafter referred to as the "Tribunal") in ITA No. 1163/Ahd/2014. 2. Vide order dated 26.3.2019, this court had admitted the appeal on the following substantial question of law:-- "Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in deleting disallowance of provision for diminution in value of investment of Rs. 13,85,00,000/- while computing book profit under section 115JB of the Income-tax Act, 1961?" 3. The assessment year is 2003-04 and the relevant accounting period is the previous year 2002-03. In this case, the assessee filed the return of income for assessment year 2003-04 on 17.11.2003 declaring nil total income. Assessment was completed under section 143(3) of the Act on 31.3.2006 determining nil total income and book profit at Rs. 16,01,06,069/-. In the assessed book profit, an addition of Rs. 13,85,00,000/- was made on account of provision for diminution in the value of investment. It appears that the matter went up to the Tribunal, which by an order dated 30.6.2011, set aside the order passed by the Commissioner (Appeals) and restored certain issues to the file of the Assessing Officer for adjudication afresh in the light of the discussion made in its order after allowing reasonable opportunity of hearing to the assessee. 4. The Assessing Officer, thereafter, framed assessment under section 143(3) read with section 254 of the Act and added the provision for diminution in value of investment of Rs. 13,85,00,000/- in the computation of book profit under section 115JB of the Act. The assessee carried the matter in appeal before the Commissioner (Appeals), who upheld the order passed by the Assessing Officer. The assessee carried the matter in further appeal before the Tribunal and succeeded. 5. Mr. M.R. Bhatt, Senior Advocate, learned counsel for the appellant submitted that provision for bad debt and actual write off of bad debts under section 36(1) (vii) of the Act for a banking company is entirely different and affects business profits, whereas in the case of the assessee such provision for diminution of value of investment and its write off will effect long term/short term capital gain. Referring to the decision of this court in the case of CIT v. Vodafone Essar Gujarat Ltd. [2017] 85 taxmann.com 32/397 ITR 55, it was submitted that in case of Vijaya Bank v. CIT [2010] 323 ITR 166 (SC), the assessee therein, besides debiting the profit and loss account and creating a provision for bad and doubtful debt, had simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from loans and advances/debtors on the asset side of the balance sheet and consequently at the end of the year, the figures of loans and advances or the debtors on the asset side of the balance sheet was shown as net of the provision of bad debt; whereas in the present case there are two more aspects which are required to be looked into. Firstly, that there are varied types of investments and it is not clear as to in case of which investment there is diminution of profit, which has not been answered by the Tribunal; secondly, whether the reduction or gain is in the nature of long term or short term capital gain. 5.1. Reference was made to paragraph 33 of the Accounting Standards produced by the learned counsel for the assessee, to submit that the same have not been complied with as there is no write off as noted by the Commissioner (Appeals), which factor has not been considered by the Tribunal. It was submitted that, therefore, the provisions of clause (i) of the Explanation to section 115JB(2) of the Act would be squarely applicable to the facts of the present case and that the Assessing Officer had rightly added the amount set aside as provision for diminution in the value of investment to the book profit computed under section 115JB of the Act. 6. On the other hand, Mr. B.S. Soparkar, learned advocate for the respondent assessee, submitted that the Commissioner (Appeals) was wrong in stating that the assessee has not shown the details correctly. The attention of the court was invited to the relevant entries in the balance sheet which form part of the paper book, to point out that all the facts are clearly reflected therein (reference to which shall be made at an appropriate stage). The attention of the court was invited to the relevant entries in the balance sheet which form part of the paper book, to point out that all the facts are clearly reflected therein (reference to which shall be made at an appropriate stage). As regards the contention raised by the learned counsel for the revenue that it is not clear as to whether the reduction or gain is in the nature of long term or short term capital gain, it was submitted that in the absence of any transfer there is no question of showing capital gain or loss. It was submitted that the Tribunal was wholly justified in holding that the amount of Rs. 13.85 crore shown as diminution in value of investment is not liable to be added while computing the book profit under section 115JB of the Act and that the appeal being devoid of merit deserves to be dismissed. 7. The sole question that arises for consideration in this appeal is whether the provision for diminution in the value of investment of Rs. 13.85 crore made by the assessee is required to be added while computing the book profit under section 115JB of the Act. 8. The Explanation to sub-section (2) of section 115JB of the Act says that for the purposes of that section, 'book profit' means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2) as increased by the factors enumerated thereunder. Clause (i) thereof reads as under:- "(i) the amount or amounts set aside as provision for diminution in the value of any asset;" 9. What is required to be examined is whether in the facts of the present case, the amount of Rs. 13.85 crores which is provision for diminution in value of assets, required to be added to the book profit while computing the net profit under section 115JB of the Act. 10. In this regard it may be germane to refer to the decision of this court in the case Vodafone Essar Gujarat Ltd. (supra), wherein the court has held thus:-- "18. 10. In this regard it may be germane to refer to the decision of this court in the case Vodafone Essar Gujarat Ltd. (supra), wherein the court has held thus:-- "18. It can thus be seen that in case of Southern Technologies Ltd. (supra), the Supreme Court explained that if an assessee debits an amount of doubtful debt to the Profit and Loss account and credits the asset account like sundry debtor's account, it would constitute a write off of an actual debt. On the other hand, if an assessee debits provision for doubtful debt to the Profit and Loss account and makes a corresponding credit to the current liabilities and provisions on the liabilities side of the balance sheet, then it would constitute a provision for doubtful debt and in such a case after 1.4.1989, the assessee could claim no deduction under section 36(1)(vii) of the Act. 19. This principle was further clarified in case of Vijaya Bank (supra) by observing that in case on hand, the assessee besides debiting the profit and loss account and creating a provision for bad and doubtful debt, had simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from loans and advances/debtors on the asset side of the balance sheet and consequently, at the end of the year, the figure of loans and advances or the debtors on the asset side of the balance sheet was shown as net of the provision for the bad debt. Thereafter, the Supreme Court rejecting the Revenue's contention that for the bank to take benefit of section 36(1)(vii), must close the account of the debtors, decided the question in favour of the assessee. 20. Above decisions of Supreme Court in cases of Southern Technologies Ltd. (supra) and Vijaya Bank (supra) thus bring out a clear distinction between a case where the assessee may make a provision for doubtful debt and a case where the assessee after creating such a provision for bad and doubtful debt by debiting in Profit and Loss account also simultaneously removes such provision from its account by reducing the corresponding amount from the loans and advances on the asset aside of the balance sheet. The later would be an instance of write off and not a mere provision. 21. The later would be an instance of write off and not a mere provision. 21. Karnataka High Court in case of Yokogawa India Ltd. (supra) applying such principle found that case on hand was one of a debt which was an amount receivable by the assessee and not any liability payable by the assessee and observed that clause (c) of the explanation to section 115JA/115JB, would not apply. In context of applicability of clause (i) to the explanation, relying on the decision of Supreme Court in case of Vijaya Bank (supra), the Court observed that there is a dichotomy between actual write off and provision for bad and doubtful debt. A mere debit to the Profit and Loss account would constitute a bad and doubtful debt but it would not constitute actual write off. However, if simultaneously such amount is obliterated from the accounts by reducing corresponding loans and advances on the asset side, the same would amount to a write off. It was concluded as under: "...Therefore, after the Explanation the assessee is now required not only to debit the P&L A/c but simultaneously also reduce the loans and advances or the debtors from the assets side of the balance sheet to the extent of the corresponding amount so that, at the end of the year, the amount of loans and advances/debtors is shown as net of the provisions for the impugned bad debt. Therefore, in the first place if the bad debt or doubtful debt is reduced from the loans and advances or the debtors from the assets side of the balance sheet the Explanation to s. 115JA or 115JB is not at all attracted." 22. In case of Kirloskar Systems Ltd. (supra), the Karnataka High Court adopted the same principle. 23. By way of culmination of above judicial pronouncements and statutory provisions, the situation that arises is that prior to the introduction of clause (i) to the Explanation to section 115JB, as held by the Supreme Court in case of HCL Comnet Systems and Services Ltd. (supra), the then existing clause (c) did not cover a case where the assessee made a provision for bad or doubtful debt. With insertion of clause (z) to the explanation with retrospective effect, any amount or amounts set aside for provision for diminution in the value of the asset made by the assessee, would be added back for computation of book profit under section 115JB of the Act. However, if this was not a mere provision made by the assessee by merely debiting the Profit and Loss Account and crediting the provision for bad and doubtful debt, but by simultaneously obliterating such provision from its accounts by reducing the corresponding amount from the loans and advances on the asset side of the balance sheet and consequently, at the end of the year showing the loans and advances on the asset aside of the balance sheet as net of the provision for bad debt, it would amount to a write off and such actual write off would not be hit by clause (i) of the Explanation to section 115JB. The judgment in case of Deepak Nitrite Limited (supra) fell in the former category whereas from the brief discussion available in the judgment it appears that case of Indian Petrochemicals Corporation Ltd. (supra), fell in the later category." 11. Thus, what the court has held in the above decision, is that if the provision for diminution in value of investment is not a mere provision made by the assessee by merely debiting the profit and loss account and crediting the provision for bad and doubtful debt, but by simultaneously obliterating such provision from its account by reducing the corresponding amount from the loans and advances on the asset side of the balance sheet and consequently, at the end of the year showing the loans and advances on the asset side of the balance sheet as net of the provision for bad debt, it would amount to a write off and such actual write off would not be hit by clause (i) of the Explanation to sub-section (2) of section 115JB of the Act. 12. The facts of the case are required to be examined in the light of the above principles. 13. Before adverting to the merits of the rival contentions, it may be germane to refer to Accounting Standard (AS) 13, which provides for "Accounting for Investments" and deals with accounting for investments in the financial statements of enterprises and related disclosure requirements. The facts of the case are required to be examined in the light of the above principles. 13. Before adverting to the merits of the rival contentions, it may be germane to refer to Accounting Standard (AS) 13, which provides for "Accounting for Investments" and deals with accounting for investments in the financial statements of enterprises and related disclosure requirements. Accounting Standard 13 is in three parts, Introduction: comprised of paragraphs 1-3, Explanation comprised of paragraphs 4-25 and Main Principles comprised of paragraphs 26-35. Under the Explanation Part of Accounting Standard 13, paragraphs 14 to 19 fall under the heading "Carrying Amount of Investments". Paragraphs 14 to 16 thereunder deal with current investments, whereas paragraphs 17 to 19 deal with long-term investments. Paragraph 17, inter alia, says that long term investments are usually carried at cost. However, when there is a decline, other than temporary, in the value of a long term investment, the carrying amount is reduced to recognise the decline. Paragraph 18 says that long-term investments are usually of individual importance to the investing enterprise. The carrying amount of long-term investments is, therefore, determined on an individual investment basis. Paragraph 19 says that where there is a decline, other than temporary, in the carrying amounts of long term investments, the resultant deduction in the carrying amount is charged to the profit and loss statement. The reduction in the carrying amount is reversed when there is a rise in the value of the investment, or if the reasons for the reduction no longer exist. 14. Paragraph 25 of the Explanation part of Accounting Standard 13 deals with "Disclosure" and provides thus: "25. The following disclosures in financial statements in relation to investments are appropriate: (a) The accounting policies for the determination of carrying amount of investments; (b) The amounts included in profit and loss statement for: (i) interest, dividends (showing separately dividends from subsidiary companies), and rentals on investments showing separately such income from long term and current investments. The following disclosures in financial statements in relation to investments are appropriate: (a) The accounting policies for the determination of carrying amount of investments; (b) The amounts included in profit and loss statement for: (i) interest, dividends (showing separately dividends from subsidiary companies), and rentals on investments showing separately such income from long term and current investments. Gross income should be stated, the amount of income tax deducted at source being included under Advance Taxes Paid; (ii) Profits and losses on disposal of current investments and changes in the carrying amount of such investments; (iii) Profits and losses on disposal of long term investments and changes in the carrying amount of such investments; (c) significant restrictions on the right of ownership, realizability of investments or the remittance of income and proceeds of disposal; (d) the aggregate amount of quoted and unquoted investments, giving the aggregate market value of quoted investments; (e) other disclosures as specifically required by the relevant statute governing the enterprise." 15. Paragraphs 31 and 32 fall under the heading "Carrying Amount of Investments" in the third part of Accounting Standard 13 viz. Main Principles. Paragraph 32 thereof, which is relevant for the present purpose, says that investments classified as long term investments should be carried in the financial statements at cost. However, provision for diminution shall be made to recognise a decline, other than temporary, in the value of the investments, such reduction being determined and made for each investment individually. 16. Paragraph 33 falls under the heading "Changes in Carrying Amounts of Investments" and reads thus: "33. Any reduction in the carrying amount and any reversals of such reductions should be charged or credited to the profit and loss statement." 17. The facts of the present case may be examined in the light of the principles enunciated by the Supreme Court as well as this court in the decisions on which reliance has been placed by the learned counsel for the respective parties as well as the above referred provisions of Accounting Standard 13. 18. A perusal of the "Details of provision for diminution in value of investment" for assessment year 2003-04 as reflected in the Balance Sheet (at page 57 of the paper book) shows that provision created in the year is of Rs. 69,46,73,244/- Provision written back on account of rise in value as per paragraph 33 of Accounting Standard 13 is Rs. 55,61,73,244/-. 69,46,73,244/- Provision written back on account of rise in value as per paragraph 33 of Accounting Standard 13 is Rs. 55,61,73,244/-. The net amount of provision debited to Profit and Loss is Rs. 69,46,73,244/- minus Rs. 55,61,73,244/- which comes to Rs. 13,85,00,000/-. 19. A perusal of the details of "Provision for Diminution in the Value of Investments" as on 31st March, 2003 (page 60 of the paper book) shows that the total provision required as on 31st March, 2003 is Rs. 839,621,779/-; provision available as on 31st March, 2002 is Rs. 701,121,779/-; and the provision for the year ended 31st March, 2003 is Rs. 138,500,000/-. 20. Schedule IV of the Schedule annexed to and forming part of the accounts (page 31 of the paper book), shows that the total investment as at 31st March, 2003 is Rs. 5,742,306,638/-. Deducting the amount of provision for diminution in value of investments viz., 839,621,779/- the total investment as at 31st March, 2003 comes to Rs. 4,902,684,859/-. It may be noted that the provision for diminution in value of investment as at 31st March, 2002 is Rs. 701,121,779/- and the provision in diminution of value of investments as at 31st March, 2003 is Rs. 839,621,779/-. The difference between the provision for diminution of value of investment as at 31st March, 2002 and 31st March, 2003 is Rs. 13,85,00,000/-. This amount of Rs. 13,85,00,000/-, which is the provision for diminution in value of investment for the year under consideration, is duly reflected in the Profit and Loss account. Thus, the entry is routed through profit and loss account. 21. In terms of the accounting standards, in view of the decline in the value of the provisions created in the current year (as shown at page 57 of the paper book) the carrying amount of such investments has been reduced and in case of provisions where there was a rise in the value, the provisions are written back and the net amount of provision has been debited to the profit and loss account. Thus, insofar as the provision for diminution of value of investment to the extent of Rs. 13.85 crores is concerned, the same has actually been reduced from the asset side of the balance sheet and, therefore, is in the nature of a write off. Under the circumstances, the amount of Rs. Thus, insofar as the provision for diminution of value of investment to the extent of Rs. 13.85 crores is concerned, the same has actually been reduced from the asset side of the balance sheet and, therefore, is in the nature of a write off. Under the circumstances, the amount of Rs. 13.85 crore though bearing the nomenclature of provision for diminution of value of investment, having been actually written off, cannot be added to the book profit under section 115JB(2)(i) of the Act. 22. Insofar as the contention that the details of the investments in respect of which there was a diminution in value are not provided is concerned, the Commissioner (Appeals) has recorded in the audited Profit & Loss account, on the expenditure side there are provisions for diminution in value of investments of Rs. 13,85,00,000/- (last year NIL); this provision is against the total provision in balance sheet of Rs. 83,96,21,779/-; no details are available in any form or category that to which type or kind of investment such diminution is related out of the total provisions. He has further recorded that the assessee's annual report and audited accounts do not reveal of such write off because, the diminution of asset in the balance sheet at Schedule IV for investment reflect "Provision in Diminution in value of investment of Rs. 83,96,21,779/- without specifying the details of type of investment of long term investments and current investments in shares, debentures, mutual funds, Government securities etc. to which such value apply. Further out of this only Rs. 13,85,00,000/- was debited in audited profit and loss account as "provision for diminution in value of investments." There are no details which type of shares, securities, debentures etc. are written off and why out of Rs. 83,96,21,779/- only Rs. 13,85,00,000/- is considered. The learned counsel for the appellant has reiterated the above reasoning adopted by the Commissioner (Appeals). 23. In the opinion of this court, the above findings recorded by the Commissioner (Appeals) that no details have been produced, is contrary to the record of the case, inasmuch as, in the balance sheet which forms part of the paper book, the details of diminution in the value of investment are clearly set out in the statement at page 57 of the paper book. The Tribunal, in the impugned order, has after perusing the statement referred to hereinabove which formed part of the paper book, has found that the assessee has duly followed the netting principle in terms of the decision of this court in the case of Commissioner of Income Tax v. Vodafone Essar Gujarat Limited (supra). Thus, the Commissioner (Appeals) has proceeded on incorrect factual findings, whereas the Tribunal has properly appreciated the material on record while holding that the assessee has duly followed the netting principle propounded in the full bench decision of this court in Vodafone Essar Gujarat Ltd. (supra). 24. In the light of the above discussion, no infirmity can be found in the view adopted by the Tribunal so as to warrant interference. The question, therefore, is answered in the affirmative, that is, in favour of the assessee and against the revenue. It is hereby held that the Income Tax Appellate Tribunal was justified in deleting the disallowance of provision for diminution in value of investment of Rs. 13,85,00,000/- while computing book profit under section 115JB of the Income-tax Act, 1961. The appeal, therefore, fails and is, accordingly, dismissed.