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TMI Blog2001 (11) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 72 or section 73 or section 74 or sub-section (3) of section 74A or sub-section (3) of section 80J." The words employed in this provision make it clear that the determination of the amounts in relation to the relevant previous year to be carried forward to the subsequent year or years under the provisions referred to therein is not to be affected by anything contained in sub-section (1). The opening words "nothing contained in sub-section (1)" in effect mean anything and everything contained in sub-section (1) of section 115J. Section 115J is a special provision relating to certain companies. Sub-section (1) thereof, which opens with a non obstante clause, provides that in a case where the assessee is a company other than a company engaged in the business of generation or distribution of electricity, and its total income as computed under the Act in respect of any previous year relevant to the assessment year commencing on or after April 1, 1988, but before April 1, 1991, is less than thirty per cent. of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent. of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant previous year shall be deemed to be an amount equal to thirty per cent. of such book profit. The payment of tax on thirty per cent. of the book profit under section 115J(1), therefore, will not alter the manner in which the computation is required to be done for the purpose of determining the carry forward under the provisions referred to in section 115J(2). Neither the manner of determining the book profits nor the fact of tax having been paid on thirty per cent. of such book profit by deeming the same to be the income even when the result of the normal computation shows an income which is less than thirty per cent. will affect the determination of the carry forward amounts, which is to be done as if section 115J(1) had not been attracted to the case of the assessee. Mr. T. N. Seetharaman, learned counsel for the assessee, whose case has been accepted by the Tribunal, which has held that to the extent of thirty per cent. of the book profit which has suffered tax under section 115J(1), the assessee should be deemed not to have enjoyed the benefit of the set off of the carried forward losses and other adjustments permissible against profits in the years in which section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess of determination of the amounts to be carried forward under the provisions mentioned in sub-section (2) by reason of anything said in sub-section (1) of section 115J. It is, therefore, not possible to agree with counsel that sub-section (2) saves the assessee's right to carry forward the loss to the extent of the profit on which it has suffered tax under section 115J(1), on the ground that the payment of such tax deprives the assessee of the right to set off the carried forward loss and other adjustable amounts against the profits of the year and thereby reduce the liability of the assessee for payment of tax to the extent the carried forward losses and adjustable amounts are set off against the profits. The fact that by reason of the application of section 115J(1) the assessee had paid tax on thirty per cent. of the book profit is not a factor of any relevance, so far as the computation referred to in sub-section (2) is concerned. The reference to "previous year" in sub-section (2), in the context, can only refer to every previous year in which the assessee seeks to carry forward the loss and other adjustable sums. The carry forward is a process which proceeds in a con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (P.) Ltd. v. CIT [1999] 239 ITR 611, wherein this court gave a hypothetical example and held that if the assessee is not entitled to carry forward the loss equal to the thirty per cent. of the book profits on which it had suffered tax under section 115J(1) that would affect the assessee adversely and that sub-section (2) of section 115J did not intend to bring about such a result. Learned counsel for the Revenue invited our attention to the case of Suryalatha Spinning Mills Ltd. v. Union of India [1997] 223 ITR 713, wherein a Division Bench of the Andhra Pradesh High Court, in an elaborate judgment, considered section 115J as also a circular that had been issued by the Central Board of Direct Taxes giving certain illustrations as to the way in which that section is to be applied and took a view similar to the one taken by us in the foregoing paragraphs and held that on the determination of the taxable income under the relevant provisions of the Act whatever amounts remained to be carried forward as per regular computation, either by way of unabsorbed losses or unadjusted allowances, etc., the same has to be carried forward to the next year, ignoring the fact that a notional in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35CCB, 32A, 80G, 80GGA, 80HH, 80HHA, 80HHB, 80HHC, 80-I, 80J, 80M, 80-O and 80QQ. Sub-section (4) of section 80VVA provided that to the extent to which full deduction cannot be allowed in the assessment year in respect of any provision specified in sub-section (2), by virtue only of the restriction under subsection (1) and not by virtue of anything contained in any other section, the amount remaining unallowed shall be added to the amount, if any, to be allowed to the assessee under the said provision for the next following assessment year and be deemed to be part of the deduction admissible to the assessee under the said provision for that year or, if no such deduction is admissible to the assessee for that year, be deemed to be the deduction admissible to the assessee for that year and so on for succeeding assessment years. There are striking differences between what is provided in section 80VVA and that provided for under section 115J. While section 115J(2) refers to sections 32, 32A, 72, 73, 74 74A and 80J, section 80VVA(2) does not refer to sections 32, 72, 73, 74 and 74A. Section 115J(2) does not refer to several other provisions such as sections 35, 35C, 35CC, 35CCA, 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it later, by enacting section 115JAA with effect from April 1, 1997, also cannot have any impact on the interpretation of section 115J(2). Evidently, Parliament has experimented with the manner in which zero tax companies are to be subjected to tax. It had first enacted section 80VVA in Chapter VI-B, and was introduced with effect from April 1, 1984, which was repealed with effect from April 1, 1988, simultaneously with the introduction of section 115J. Section 115J was made applicable only to the assessment years commencing on or after April 1, 1988, but before April 1, 1991. After April 1, 1991, zero tax companies were once again allowed to enjoy the benefits of all the deductions and carry forward provisions without any special limitation. After a gap of seven years, with the introduction of section 115JA, such zero tax companies were again brought to tax by deeming a percentage of the book profit as income available for taxation. That provision was to apply for the assessment years commencing from April 1, 1997, but before April 1, 2001. Provision for giving tax credit on such deemed income was introduced along with section 115JA by enacting section 115JAA. For the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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