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TMI Blog2010 (5) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in law and on facts in confirming the action of AO in adjusting extra-ordinary items of reduction of capital against unabsorbed deprecation and brought forward business loss pursuant to BIFR restricting scheme. These items of credits are not items of revenue nature and therefore required to be ignored while calculating book profits for MAT purposes u/s 115JB of the Act. 3. The learned CIT(A) has erred in law and on facts in confirming the action of ld. AO in not allowing set off of lower of the brought forward book loss and unabsorbed depreciation as per the books of accounts maintained by the appellant against the book profit determined by him. 4. The learned CIT(A) has erred in law and on facts in confirming the action of ld. AO in quantifying the book profit at ₹ 6,00,23,889/- while working out MAT u/s 115JB of the Act. Since all the above grounds are interrelated, they are being disposed of together for the sake of convenience. 4. At the time of hearing before us, it was pointed out by the learned Counsel that as per Section 115JB Explanation 1(vii) the profit of sick industrial company is to be excluded while computing the book profit. He stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year commencing on and from the assessment year relevant to the previous year in which the said company has become a sick industrial company under sub-section (1) of section 17 of the Sick Industrial Companies (Special Provision) Act, 1985 (1 to 1986) and ending with the assessment year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses. 8. From the above it is evident that the amount of profit of the sick industrial undertaking is to be reduced while computing book profit. The reduction is to be allowed from the year in which the said company becomes a sick industrial company and such exemption will end with the Assessment Year in which the net worth of the company exceeds the accumulated losses. It means exemption would be available upto the year in which the net worth exceeds the accumulated losses, but will not be available for subsequent years. Thus, the year in which the net worth exceeds the accumulated losses, will be last year of exemption under clause (vii). 9. In view of above, we hold that for the year under consideration, the amount of profit of sick industrial undertaking is to be excluded from the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bt claimed by assessee is also not shown as income in preceding years. Thus, the main conditions laid down in the Act are not satisfied so far as the claim of the assessee is concerned. The amount claimed as bad debt the amount of advance given for various purpose. The claim of the assessee is therefore not tenable u/s. 36(2) of the Act. There is a specific section for allowing claim of bad debts which is section 36(2). When the specific claimed is not allowable under Act under a specific section dealing with that items the same cannot be allowed under any other section of the Act. Even section 37 says any expenditure not being the expenditure of the nature described u/s. 32 to 36 shall be allowed u/s. 37. Thus, Act is very clear that the bad debts are allowable u/s. 36(2) only and not in any other section including section 37 . Since conditions laid down to allow the claimed u/s. 36(2) are not fulfilled, the deduction claimed by the assessee is not allowed. 13. Before the Ld. Commissioner of Income Tax(Appeals) the assessee claimed that the advance was given as a trade advance and if the advance given was not recovered, the same should not be allowed as a business loss. The L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Similarly, it was contended that the expenditure for the development of the market of the goods which is being manufactured by the assessee cannot be capital loss. However, the complete facts in this regard is not placed before us. We also find that no such claim was made before the Assessing Officer and therefore he has also not examined the facts relating to advance given to Ganpati Capitals Limited as well as Gujarat Nippon Bimetals Pvt. Ltd. 15. In view of the above, we deem it proper to set aside the order of the authorities below on this point and restore the matter back to the file of the Assessing Officer. We direct him to examine the facts of the case and thereafter re-adjudicate the issue in accordance with law. 16. Ground No.8 of the assessee s appeal reads as under: 8. The ld. CIT(A) has erred in law and on facts in confirming the action of AO in disallowing depreciation amounting to ₹ 16,12,886/-. 17. With regard to Ground No.8 it is stated by the learned counsel that this issue is covered in favour of the assessee by the decision of the ITAT in assessee s own case wherein, the ITAT held that on account of waiver of outstanding principle amount of l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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