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TMI Blog1992 (5) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn declaring income of Rs. 74,450 on July 29, 1988. The Assistant Commissioner of Income-tax (A.O. in short) on consideration of the relevant material computed the assessee's income at Rs. 2,55,866 which was set off against brought forward losses of Rs. 4,87,417 of the assessment year 1987-88. The net result of above was that carry forward loss to be adjusted in the following assessment year worked out at Rs. 2,31,551. This figure is subject-matter of controversy before me. 3. The A. O. after computing the total income found that "special provisions relating to Companies" contained in section 115J of the Income-tax Act (hereinafter referred to as 'the Act') were applicable in this case as total income computed was less than 30% (thirty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gauhati Bench, Gauahati dated January 17, 1992, in the case of Universal Pipes (P.) Ltd. v. Dy. CIT, Gauahati. 6. Shri R.C. Verma, the learned counsel for the assessee, strongly supported the impugned order. He emphasised that amount which has been charged to tax cannot be treated as adjusted against losses. In this connection he drew my attention to Commentary of Sampath Iyengar's Law of Income-tax, 8th edition. He further referred to pages 2320 to 2322 of Commentary by Chaturvedi and Pithisaria referred to earlier and to the decision cited at above pages. It was submitted that legal fiction of section 115J of the Act should not be extended beyond its legitimate field. After hearing and before disposal of appeal certain further submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim of the assessee that the above amount which has been charged to tax cannot be said to have been "set off" and adjusted against losses (brought forward) in the assessment year. The above amount has been treated as total income. If sub-section (1) of section 115J of the Act alone is to be considered, the assessee's contention is to be accepted. After all, an amount which is charged to tax cannot simultaneously be taken as adjusted against losses. It is contradictory to demand tax on an amount which is adjusted. The other proposition that in case of two reasonable views of a statutory provision, the court has to adopt a view which favours the assessee is well settled and unexceptional. I have, therefore, no hesitation in holding that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... islative intent is clear and therefore the object of the provisions is to be effectuated and not defeated on equitable consideration. There is no equity about a tax. Now, the legal fiction under which 30% (thirty percent) of book profit is treated as "deemed total income" is created for a definite purpose mentioned in sub-section (1) and has a limited scope. The legal fiction does not affect other provisions particularly saved under sub-section (2). Thus, computation of set off and brought forward losses made under section 72(1) is not disturbed by section 115J of the Act. 10. In view of above discussion and clear language of sub-section (2) of section 115J of the Act, the brought forward loss has to be carried after adjustment and set of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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