ITAT allows Deduction of Rs. 1.72 crore for Reversal of Obsolete Inventory provision due to Double Taxation Concerns

The ITAT allowed a deduction of ₹1.72 crore for the reversal of an obsolete inventory provision due to double taxation concerns. The case involved a taxpayer who had made a provision for obsolete inventory, which was later reversed. The Assessing Officer (AO) added the reversal amount to the taxpayer’s income, leading to double taxation. The taxpayer argued that the reversal should not be taxed as it was already accounted for in the previous year’s income. The ITAT agreed, allowing the deduction and emphasizing the importance of avoiding double taxation. This decision highlights the need for careful consideration of provisions and reversals in tax assessments to ensure that taxpayers are not unfairly taxed on the same income twice.