Book profit on sale of assets not taxable separately under block concept after section 43(6) adjustment; reversal of excess provision on Ind AS transition is non-taxable accounting restatement; bad debts remitted for verification of write-off.

आदेश/ORDER

PER MAKARAND VASANT MAHADEOKAR, AM:

This appeal by the assessee is directed against the order dated 25.09.2025 passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”], under section 250 of the Income-tax Act, 1961[hereinafter referred to as “the Act”], arising from the assessment order dated 09.06.2021 passed under section 143(3) read with section 144B of the Act for Assessment Year 2018–19.

Facts of the Case

2. The assessee filed its return of income on 25.10.2018 declaring total income at Rs. NIL and reporting current year losses to be carried forward amounting to Rs. 10,68,34,325/-. The case was selected for limited scrutiny under the E- Assessment Scheme, 2019. The Assessing Officer completed assessment by making addition of Rs. 35,79,78,081/-.

3. Before the CIT(A), the assessee challenged the additions and also raised issues relating to MAT credit and set-off of brought forward unabsorbed depreciation. The CIT(A) partly allowed the appeal by directing re-computation of income on certain computational aspects, while confirming the substantive additions.

4. Aggrieved by the order of CIT(A) the assessee is in appeal before us raising following grounds of appeal:

1. The CIT(A) has erred in upholding the addition of Rs. 71,85,261/- made by the Assessing Officer on account of profit on sale of asset as per books of accounts.

2. The CIT(A) has erred in upholding the addition of Rs. 35,07,92,820/- (consisting of Rs. 19,13,61,566/- being reversal of provision for bad debts and Rs. 15,94,31,254/- being bad debts written off) made by the Assessing Officer.

3. The CIT(A) has erred in upholding the assessment order passed u/s. 143(3) of the Act which is illegal, bad in law and in violation of principles of natural justice.

The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal.

The assessee also filed following additional grounds of appeal:

1. The CIT(A) has erred in not adjudicating the additional grounds of appeal raised by the assessee vide its letter dated 23.05.2024 in respect of non-grant of MAT credit of Rs. 16,57,03,298/- to be set off against Income tax liability determined by Assessing Officer.

5. Since the learned Authorised Representative (AR) did not press the aforesaid additional ground during the course of hearing, the same is not being considered for adjudication.

6. The effective grounds before us relate to:

1. Addition of Rs. 71,85,261/- on account of profit on sale of fixed assets.

2. Addition of Rs. 35,07,92,820/- comprising:

a. Rs. 19,13,61,566/- being reversal of provision for bad debts; and

b. Rs. 15,94,31,254/- being bad debts written off.

7. During assessment proceedings, the Assessing Officer observed that the assessee had claimed deduction of Rs. 35,79,78,081/- under the head “Any other amount allowable as deduction”. On further examination, it was noted that the amount included:

i. Rs. 19,13,61,566/- being reversal of provision for bad debts,

ii. Rs. 15,94,31,254/- being bad debts written off, and

iii. Rs. 71,85,261/- being profit on sale of fixed assets.

8. The Assessing Officer requ