2016 (6) TMI 973 - HC - Income Tax

MAT computation - loss which can be deducted under Section 115 JB(2) - Held that - There is no specific mention in the impugned order the manner of calculation of the amounts in terms of the explanation to Section 115 JB(2) of the Income Tax Act. Without going into the merits of the rival contentions, we find it appropriate to quash and set aside the impugned order of the ITAT and remand the matter to the learned Tribunal to re-examine the matter only on this limited aspect, after hearing the parties in accordance with law. It is, however, clarified that the matter is remanded only for the restricted purpose to examine whether the appellants are entitled to get the deduction on account of losses incurred as provided in Section 115 JB(2) of the Income Tax Act.

Summary

Issues:
1. Interpretation of Section 115 JB(2) of the Income Tax Act.
2. Calculation method for deduction of losses under Section 115 JB(2).
3. Judicial review of the impugned order by the Income Tax Appellate Tribunal.
4. Remand of the matter for re-examination by the Tribunal.

Analysis:
1. The main issue in this case revolves around the interpretation of Section 115 JB(2) of the Income Tax Act. The appellant argued that they were entitled to a deduction of a specific amount as a loss, while the Revenue Authorities allowed deductions for a lesser sum. The appellant claimed that the deducted amount was accumulated loss eligible for deduction in computing income.

2. The respondent contended that the appellant failed to provide sufficient evidence to prove that the claimed amount was a deductible loss under Section 115 JB(2). It was argued that accumulated depreciation cannot be included in the calculation of such losses. The court noted the absence of specific mention in the impugned order regarding the calculation method as per the explanation to Section 115 JB(2).

3. After hearing arguments from both parties, the court decided to quash and set aside the impugned order of the Income Tax Appellate Tribunal. The matter was remanded to the Tribunal for re-examination solely on the limited aspect of whether the appellants were entitled to deduction for losses incurred under Section 115 JB(2). The court clarified that the remand was only for this specific purpose and allowed the appellants to produce further material for consideration.

4. Consequently, the court partly allowed the appeal, quashed the impugned order, and restored the case to the Tribunal for re-examination based on the court's observations. The Tribunal was instructed to hear both parties in accordance with the law before making a decision. The appeal was disposed of accordingly, emphasizing the need for a thorough re-examination of the deduction eligibility under Section 115 JB(2) of the Income Tax Act.