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TMI Blog2016 (5) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... th the years. This projects grievance of the Revenue as under: ii) The ld.CIT(A) has erred in law and on facts in directing the AO to give benefit of unabsorbed depreciation of ₹ 26,47,30,860/- for the A.Y.2006-07 and 2007-08 and recomputed the book profits as per the provisions of section 115JB of the Income Tax Act. 3. The ld.counsel for the assessee, at the very ought submitted that the issue in dispute is squarely covered in favour of the assessee by the order of the ITAT, Mumbai Bench in the case of Amline Textiles P.Ltd. Vs. ITO, 27 SOT 152. On the other hand, the ld.DR relied upon the order of the AO. 4. The facts on all vital points are common in both the years, therefore, for the sake of reference, we take up the facts from the Asstt.Year 2006-07. Brief facts of the case are that the assesseecompany at the relevant time was engaged in crushing and processing castor seeds and edible oil. It has filed its return of income on 30.12.2006 declaring NIL income after setting off of unabsorbed depreciation of ₹ 1,40,49,297/- against the current year profit under normal provisions and loss of ₹ 21,12,16,663/- against the book profit of ₹ 13,07,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sec. 115JB is a special provision for payment of tax by certain companies. Sub-s. (1) contains the non obstante clause and provides that where the income-tax payable on the total income of a company as computed under this Act is less than 10 per cent of its book profit, then such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income-tax @ 10 per cent Expln. 1 provides the mode of computing book profit by taking net profit as shown in the P L a/c as its starting point to be increased by the items mentioned in cls. (a) to (h) debited to the P L a/c and as reduced by the items specified in cls. (i) to (vii). At this stage it will be apt to consider the relevant part of this section as under : Explanation 1 : For the purposes of this section, book profit means the net profit as shown in the P L a/c for the relevant previous year prepared under sub-s. (2), as increased by- (a) to (g) .................. ................. .................... (h) if any amount referred to in cls. (a) to (h) is debited to the P L a/c, and as reduced by- (i) and (ii) ........... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of s. 115JB, which specifically states that the loss shall not include depreciation. The net effect of the position as it now exists is that while computing the amount of loss brought forward, the amount of depreciation is not to be considered. In other words, the loss for the purposes of s. 115JB has to be computed before depreciation. 11. The basic rule of interpretation of the provisions is the strict rule , that is, follow what has been expressly stated in the provision and go by the plain language of the section. It is not permissible to import any thing into statutory provision and read what is not explicitly provided. The need for unearthing the real intention arises only when the language of the section is ambiguous, vague or uncertain. With this basic principle of interpretation on hand, we move on to examine the rival contentions made by the parties as to whether cl. (iii) it refers to consideration of year-wise separate figures of unabsorbed depreciation and loss brought forward or the composite figures. 12. Clause (iii) states that the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account is to be red ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the learned Departmental Representative impresses upon us to do. 14. The authorities below have concluded that year-wise determination of the amount of loss brought forward or unabsorbed depreciation is to be considered and if in a particular year-as in asst. yr. 2001-02 under consideration-there is no loss before depreciation, then the benefit of unabsorbed depreciation cannot be granted. In forming this opinion, assistance has been taken from the opening words of sub-s. (1) of s. 115JB as well as sub-s. (5) of this section. Sub-s. (1) starts with a non obstante clause : Notwithstanding anything contained in any other provisions of this Act,........ and sub-s. (5) states that : Save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being a company, mentioned in this section . It is on the strength of these two sub-sections that the learned CIT(A) has decided that all other provisions of the Act merit consideration in the determination of the book profit under s. 115JB and hence the provisions of ss. 71 to 73 will also apply and when so applied s. 72 serves as guiding light as per which the benefit of carry forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es below. Sec. 72(3) restricts the period to which the loss can be carried forward to not more than eight assessment years immediately succeeding the assessment year for which the loss was first computed. As per this section if there is a brought forward loss which is more than eight years old, that has to be abandoned and only the brought forward loss of less than the prescribed period can be carried forward for set off against the business income. On the contrary there is no prohibition in s. 115JB as per which the amount of unabsorbed loss is to be discarded after the expiry of eight years from the year in which it was first computed. Even if loss is brought forward from 50 years back, that has also to be reckoned. To put it simply the amount of loss brought forward or unabsorbed depreciation has to be considered for as many years as corning in the books of account irrespective of any rider for a particular number of years. We, therefore, hold that reference to the provisions of ss. 71 to 73 for arriving at the conclusion that s. 115JB refers to year-wise consideration of the loss brought forward or unabsorbed depreciation, is erroneous. 17. Now we turn to examine cl. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.51 crores. We, therefore, accept the assessee s contention on this point. 19. In the result, the appeal is allowed. 5. The ld.CIT() has followed this decision of the Tribunal, but, further observed that in the Asstt.Years 2002-03, 2004-05 and 2005-06, the assessee was not having unabsorbed depreciation, which could be accumulated or aggregated for the purpose of exclusion, because, in these years, business loss was lesser than the depreciation. He excluded these three amounts by observing as under: 3.7 Perusal of the working of unabsorbed depreciation as computed by the appellant and reproduced in para no.3.3 of this order, the appellant had computed the eligible unabsorbed depreciation at ₹ 32,65,78,659/- to be set off against book profits for the purposes of 115JB computation. This is nothing but the aggregate of book depreciation for the A.Yrs 97-98 to 2005-06. In my considered view, this working is also erroneous. Provisions of clause-(iii) of explanation 1 to sec.115JB(2) does not provide benefit of aggregate of book depreciation. On the contrary it provides for the amounts of loss brought forward or unabsorbed depreciation, whichever is less as p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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