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TMI Blog2012 (9) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... under the normal provision of the Act the case laws relied upon by the Ld. Departmental Representative are applicable and accordingly,that the for the purpose of normal computation of income, Assessing Officer’s action in this case has to be sustained - partly in favour of Revenue. - ITA No.3676/Del/2010 - - - Dated:- 20-7-2012 - U B S Bedi, Shamim Yahya, JJ. For Appellant: Shri R S Singhvi, CA For Respondent: Shri S Krishna, CIT(DR) ORDER Per: Shamim Yahya: This appeal by the Revenue is directed against the order of the Ld. Commissioner of Income Tax (Appeals)-XIII, New Delhi dated 19.5.2010 pertaining to assessment year 2004-05. 2. The grounds raised read as under:- i) On the facts and circumstances of the case and in law, the order of the Ld. Commissioner of Income Tax (A) is wrong, perverse, illegal and against the provisions of law which is liable to be set aside. ii) On the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (A) has erred in holding that the reassessment has been initiated because of income has not been correctly computed u/s. 115JB, whereas this was not at all reasons for issuing notice u/s. 148. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee company is therefore, rejected and income is recomputed as under:- Business income as computed in the order u/s. 143(3) (before exemption u/s. 10B Rs.2,35,70,785/- Less : Brought forward depreciation For A.Y. 2000-01 Rs.1,96,83,485/- For A.Y. 2001-02 Rs.1,38,87,300/- Set off to the extent of available profits Rs.2,35,70,785/- Nil Unabsorbed depreciation allowed to be carried Forward for A.Y. 2001-02 Rs.10,47,776/- Since there are no business profits, no exemption u/s. 10B is available to the assessee as such, the amount of exemption u/s. 10B which the assessee has reduced from its book profits would also not be available. The tax liability of the assessee u/s. 115JB will also be recomputed accordingly:- Net profit as per profit and loss a/c. Rs.3,04,31,897/- As per col. 9 of the Report u/s. 115JB In form 29B submitted by the assessee Amount to be increased in accordance with The clause (a) to (f) of explanation of sub-section 2 of sec. 115JB. Rs.18,87,76,585/- Rs.21,92,08,482/- Less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , section 32A, section 33, section 35 and clause (ix) of sub section (1) of section 36 shall apply as if every allowance or deduction referred to therein and relating to or allowable for any of the relevant assessment years (ending before the 1st day of April, 2001) in relation to any building, machinery, plant or furniture used for the purpose of the business of the undertaking in the previous year relevant to such assessment year or any expenditure incurred for the purpose of such business in such previous year had been given full effect to for that assessment year itself and accordingly sub-section (2) of section 32, clause (ii) of sub-section (3) of section 32A, clause (ii) of sub-section (2) of section 33, sub-section (4) of section 35 or the second proviso to clause (ix) of subsection (I) of section 36, as the case maybe, shall not apply in relation to any such allowance or deduction. These are special provisions and will override the general provisions of the act and in the section itself it has been specified that notwithstanding anything contained in any other provisions of this act, overriding provisions of subsection 6 of sec. 10(B) will be relevant and operative. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax (A) in this regard has erred in giving direction to the Assessing Officer as the same is beyond his powers. Ld. Departmental Representative further pleaded that order of the Assessing Officer is justified and the same should be sustained. Ld. Departmental Representative further referred the case law of C.I.T. vs. Himatasingike Seide Ltd. [2006] 286 ITR 0255 (Karnataka High Court) and another decision of ITAT, Chennai in the case of Sword Global (I) P Ltd. vs. ITO [2008] 306 ITR (AT) 0286 . 8. Ld. Counsel of the assessee on the other hand submitted that the issue is covered in favour of the assessee by the decision of this Tribunal in assessee s own case in I.T.A. No. 4894/Del/2009 (A.Y. 2003-04) vide order dated 16.12.2011. 9. We have carefully considered the submissions and perused the records. In this case Assessing Officer held that the amount of brought forward depreciation have to be set off alongwith current year depreciation against the allowable business profits before allowing the exemption u/s. 10B of the Act. This the Assessing Officer considered is applicable both for the computation of income under the normal provision of the Act and for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f learned counsel for the assessee is that the respondent being a private company, the preparation of its profit and loss account for the relevant previous year in accordance with the provisions of Part II of Schedule VI to the Companies Act is not applicable. Section 350 of the Companies Act, 1956, states as follows: "The amount of depreciation to be deducted in pursuance of clause (k) of sub-section (4) of section 349 shall be the amount calculated, with reference to the written-down value of the assets as shown by the books of the company at the end of the financial year expiring at the commencement of this Act or immediately thereafter and at the end of each subsequent financial year at the rate specified in Schedule XIV". What is submitted by learned counsel is that under section 355 of the Companies Act, nothing in section 349 shall apply to a private company unless it is applicable to the private company. Hence, learned counsel contends that his client has calculated the depreciation on the basis of the provisions of the Income-tax Act. We are afraid, this explanation cannot be accepted. Section 115J has to be looked into for the following reasons: "It is only fair and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of sec. 115JB of the Act, especially when the ld. CIT(A) merely followed the aforesaid decision in accepting the claim of the assessee while the Revenue have not brought to our notice any contrary decision nor any other material, so as to enable us to take a different view in the matter, we are n70in lined to interfere. Therefore, ground nos. 1 to 3 in the appeal are dismissed. 10. We find that in the aforesaid decision the tribunal has relied upon the Hon ble Kerala High Court referred to above. The tribunal has further noted that even otherwise in view of the decision of the Hon ble Apex Court in the case of Apollo Tyres Ltd. vs. C.I.T. 255 ITR 273 , the Assessing Officer while assessing a company for income tax under section 115J of the Act, cannot question the correctness of the profit and loss account prepared by the assessee company and certified by the statutory auditors of the company as having been prepared in accordance with the requirements of Parts II and III of Schedule VI of the Companies Act. In terms of the extant provisions of sec. 115JB of the Act, every company is required to prepare its profit and loss account for the relevant previous year in accordan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd Global (I) P Ltd. vs. ITO [2008] 306 ITR (AT) 0286 following was held:- Held, dismissing the appeal, that the computation made by the assessee had also to be scrutinized by the Department as otherwise there was every chance of exemption being misused by any one. Even after taking into consideration, the unabsorbed loss the assessee may get exemption but he could not take a portion of the exemption just to suit his income for the purpose of nil liability and adjust the balance. The quantum of deduction under section 10B(1) was required to be computed with reference to the profits derived from the export of articles or things according to section 10B(4) of the Act. The profits were required to be first computed in accordance with the provisions of the Act and only then the net profits were required to be considered for working out the proportion of the eligible amount. According to the settled law, all the brought forward losses and depreciation were first required to be set off against the business profits of the current year before computing any deduction. Considering the facts and circumstances of the case and the provisions of the Act, the Commissioner (Appeals) was ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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