9911796707
TMI Blog2012 (1) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in manufacturing of pig iron and grey iron castings. The solitary issue raised by the assessee in this appeal pertains to the disallowance of method of adjustment of carried forward book losses and depreciation for MAT purpose. At the time of hearing, it was submitted by the learned Counsel for the assessee that an identical issue arose in assessee's case for assessment year 2005-06 and the Tribunal vide ITA No.519/PN/09 has decided the issue by setting aside the order of the Commissioner of Income-tax (Appeals) and restoring the issue to the file of the Assessing Officer with certain directions. The learned Departmental Representative did not dispute this factsituation. 3. After considering the submissions of rival parties, we find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther explained that the term loss shall not include depreciation and that this clause is not applicable where the amount of loss brought forward or unabsorbed depreciation is nil. In the background of the aforesaid, now we may first examine the computation of book profit made by the assessee in the return of income. The net profit as per Profit & Loss Account adopted by the assessee was ₹ 20,76,31,798/-. While computing the liability under section 115JB, assessee, inter alia, claimed an adjustment of ₹ 35,72,28,867/- in terms of aforesaid clause (iii) of Explanation below 115JB of the Act. In this manner, the book profit for the purposes of 115JB(2) was determined at 'Nil'. The claim of the assessee was based on the hereinafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis the break up of the consolidated deficit of ₹ 83,03,45,077/- as on 1.4.2004 claimed was as under: Financial Year Business Loss Unabsorbed Depreciation Total losses 1996-97 8,44,03,032 8,97,39,166 17,41,42,198 1997-98 9,11,09,266 10,58,61,822 19,69,71,088 1998-99 16,57,42,307 11,57,42,667 28,14,84,974 34,12,54,605 31,13,43,655 65,25,98,260 Break up of carried forward losses as on 31.3.2004 Financial year Business Loss Unabsorbed Depreciation Total Losses 1998-99 11,47,97,107 - 11,47,97,107 1999-00 8,08,79,470 11,94,25,261 20,03,04,731 2000-01 21,99,52,999 11,93,65,159 33,93,18,158 2001-02 5,74,86,634 11,84,38,447 17,59,25,081 47,31,16,210 35,72,28,867 83,03,45,07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et Profits to the audited Profit & Loss A/c. ₹ 31,71,55,566/- Less: i) B/f. business loss of ₹ 81,43,70,815/- (ii) unabsorbed depreciation ₹ 33,31,29,828/- whichever is less ₹ 33,31,29,828/- Book Profits/Loss (-) ₹ 1,59,74,262/- Amounts to be carried forward to AY 2005-06 Business loss ₹ 81,43,70,815/- Unabsorbed depreciation (Rs 33,31,29,828 - 31,71,55,566) ₹ 1,59,74,262/- A.Y. 2005-06 Net Profits to the audited Profit & Loss A/c. (as per para 3.10 above) ₹ 21,84,09,500/- Less: i) B/f. business loss of ₹ 81,43,70,815/- (ii) unabsorbed depreciation ₹ 1,59,74,262 whichever is less ₹ 1,59,74,262/- Book Profits ₹ 20,24,35,238/- Amounts to be carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the absence of any specific provision in the Statute. Even in the past years, the losses and depreciation to be carried forward be determined on the similar principles, i.e. after setting off of the lower of depreciation or losses. Apart from the fact that there is no specific provision in the Statute, we are also guided by the spirit of section 205(1)(b) of the Companies Act, 1956. In terms of section 205(1)(b) also, the surplus is to be determined after reducing lower of the loss or depreciation. Though strictly speaking the rule of section 205(1)(b) of the Companies Act is not applicable, inasmuch as for the purposes of the said section the expression "loss" includes depreciation, whereas for the purposes of section 115JB it is spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Commissioner of Income-tax (Appeals) and to remit the matter back to the file of the Assessing Officer, who shall revisit the working of book profit for the purposes of section 115JB in so far as it relates to clause (iii) of Explanation 1 to section 115JB(2) of the Act. The Assessing Officer shall carry out the aforesaid limited exercise in accordance with our aforesaid discussion and after allowing the assessee areasonable opportunity of being heard as per law." Following the parity of reasoning, we set aside the order of the Commissioner of Income-tax (Appeals) and restore the issue to the file of the Assessing Officer with similar directions as extracted above. 4. In the result, appeal of the assessee is partly allowed. Decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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