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TMI Blog2014 (5) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Assessee. - I.T.A. No. 3211 /AHD/2010 - - - Dated:- 2-5-2014 - Shri D. K. Tyagi, J. M. And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Shri Hardik Vora A. R. For the Respondent : Shri K. C. Mathews, Sr. D. R. ORDER Per Shri Anil Chaturvedi,A.M. 1. This appeal is filed by the Assessee against the order of CIT(A), Valsad dated 27.09.2010 for A.Y. 2006-07. 2. The relevant facts as culled out from the material on record are as under. 3. Assessee is a company stated to be engaged in the business of manufacturing and selling of polypropylene compounds and other allied products. Assessee filed its return of income for A.Y. 06-07 on 29.12.2006 declaring total loss of Rs. 95,40,985/-. The assessment wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y considered the finding of the AO and the submissions made by the ld. AR. The AO while completing the assessment observed that in the A.Y.2005-06 the appellant had shown net profits of Rs. 3,76,84,545/- after setting off of unabsorbed depreciation of Rs. 1,67,16,794/-. Further the appellant for the said year shown book profit u/s 115JB of the Act at Rs.2,08,67,751/- and accordingly paid taxes of Rs.15,65,081/-. Thus the AO concluded that the appellant had already made claim of unabsorbed depreciation in the A.Y. 2005-06 and therefore, no balance is left with the assessee to adjust further in the A.Y.2006-07. In this circumstances the AO disallowed the adjustment of unabsorbed depreciation for computing the Book Profits u/s. 115JB for the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble on facts and laws. In that case the Hon'ble Tribunal had held that In arriving at the book profit under sec. 115JB, the lower of the amount of brought forward loss or unabsorbed depreciation as appearing in the books of a/c. of the assessee has to be reduced, irrespective of the fact whether the same is allowable u/s. 79 of the Act or not. 8.10 Proviso to sub-s.(i) of s, 205 of the Companies Act is for the purpose of distribution of dividend by a company which had earlier incurred losses, the company is required to reduce the current year's profit by the amount of loss or an amount which is equal to the amount provided for depreciation for that year or those years whichever is less: It is this very concept, which was incorpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of loss brought forward or unabsorbed depreciation is nil . Under both ss. 115JA and 115JB, the relevant sub-cl. (iii) pertaining to the amount of loss brought forward or unabsorbed depreciation includes an Explanation, which states that the loss shown shall not include depreciation. The Explanation to sub-cl. (iii) therefore leaves no room for doubt that the expression 'loss brought forward' does not include depreciation and the net profit of the current year is to be reduced by the lesser of the two and the provisions of sub-cl. (iii) shall not apply if the amount of loss brought forward or unabsorbed depreciation is reduced to nil. This view was affirmed by the Hon'ble AAR in the case of Rastriya Ispat Nigam Ltd. IN RE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning under the Companies Act and the normal provisions of the IT Act. Reduction made to book loss or book depreciation in any particular year under the MAT provisions must form a necessary basis for computation of 'MAT' liability for the subsequent year, irrespective of the treatment given under the Companies Act, or, for the matter, under the normal provisions of the IT Act. The above interpretation is strongly supported by Circular No. 495 dt. 22nd Sept., 1987 as held in the case of Suryalatha Spinning Mills Ltd. vs. Union of India (1997) 223 ITR 713 (AP) 8.11 In the case of S.I.J. Chains (P) Ltd vs. ACIT 100 ITD 379 (Asr.), the Hon'ble ITAT, Amritsar, held that assessee's business loss being nil, unabsorbed depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total depreciation after setting off of profit was Rs. 1,06,17,666/- and the amount of loss was Rs. 53,24,172/-. He therefore submitted that the Assessee is eligible for lower of the two and therefore it was eligible for setting off Rs. 53,24,172/- and therefore submitted that the same be allowed. The ld. D.R. on the other hand submitted that the chart submitted by the Assessee contains figures of depreciation/brought forward losses of earlier years and the same needs to be examined from the records at the end of A.O. He therefore submitted that the matter be remitted to the file of A.O. for his examination. 8. We have heard the rival submissions and perused the material on record. Before us, the ld. A.R. has furnished a statement showi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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