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TMI Blog2022 (6) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... in setting off of the profits of the company, for the years during which it was sick, notionally against the brought forward losses, as it would tantamount to reducing the loss twice. 4. The Ld. CIT(A) ought to have appreciated that setting off of the profit of those years, in which the company was sick, against brought forward book loss on notional basis is not legally tenable. 5. The Ld. CIT(A) had grossly misinterpreted the judgment in the case of CIT vs Biomed Hitec Industries Limited (ITA No. 2001/Mds/2011) and failed to consider the view of your appellant that though the net worth has turned positive, your appellant has brought forward book loss and the appellant is entitled to a deduction of lower of brought forward book loss or unabsorbed depreciation for the said assessment year. 6. The CIT(A) ought to have appreciated the statement of brought forward business loss and depreciation loss as per books, wherein it has been clearly established that the appellant has only claimed the lower of business loss or depreciation, loss as per the provisions of section 115JB(2)(iii) which reads as (iii) the amount of loss brought forward or unabsorbed depreciation, whichever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1,27,03,246) 62,75,000 (1,89,78,246) 62,75,000 31.03.2003 31.03.2004 31.03.2005 31.03.2006 31.03.2007 Under BIFR Under BIFR Under BIFR Under BIFR MAT Applicable (66,79,797) 2,07,43,254 15,69,483 92,87,604 (3,90,173) 62,75,000 11,84,135 26,88,816 (1,77,67,664) 19,67,828 (1,29,57,797) 1,95,59,119 (11,19,333) 2,70,55,268 (23,58,001) 62,75,000 - - - 3,90,173 31.03.2008 MAT Applicable 8,75,063 29,51,743 (20,76,680) - 31.03.2009 MAT Applicable (50,60,833) 91,91,713 1,42,52,546 50,60,833 31.03.2010 MAT Applicable 1,11,04,089 93,32,850 17,71,239 - 31.03.2011 MAT Applicable 1,61,90,211 98,70,801 63,19,410 - 31.03.2012 31.03.2013 31.03.2014 MAT Applicable MAT Applicable MAT Applicable 42,66,638 1,41,20,173 1,96,34,476 99,85,238 99,35,317 1,04,58,192 (57,18,600) 41,84,856 91,76,284 - - - Total 3,66,08,620 Adjustment against Book Profit 31.03.2010 25,37,856 31.03.2011 1,03,97,281 31.03.2013 57,34,954 31.03.2014 81,67,886 2,68,37,977 Thus, the eligible loss was arrived at Rs.3,66,08,620/-. This loss pertains to years ending 31.03.1998, 31.03.1999, 31.03.2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r MAT is not acceptable since only the profits of sick unit can be deducted for MAT purposes for arriving at tax for the particular year but not for arriving at cumulative book loss. If this is adopted the assessee would be having no loss to be set-off for Current AY 2014-15. 4.4 Alternatively, if assessee's argument that the sick company's book profits will not come under MAT provision is accepted, then the bookloss for that sick company should also not come under MAT and cannot be carry forward but it was carry forward by the assessee which is not at all an acceptable argument. Finally, the Book Profit of the assessee company was determined at Rs.81,67,886/- u/s 115JB of the Act. Appellate Proceedings 5.1 During appellate proceedings, the assessee submitted that it has deducted an amount of Rs.81,67,886/- under clause (iii) of Explanation 1 to section 115JB(2) of the Act towards the amount of loss brought forward or unabsorbed depreciation loss, whichever is less as per books of accounts. The assessee drew attention to the statement showing cumulative losses of Rs.4,12,00,040/- as submitted to Ld. AO. In the said statement, the accumulated losses as per books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alculating the book profit the assessment year. The section does not mention that the amount of profit of a Sick Industrial Company should not be considered for arriving at cumulative book loss.Therefore, the appellant's contention cannot be accepted as there is no specific provision in the Income Tax Act for excluding profits of the Sick Company for arriving at the cumulative book loss. Therefore, the adjustment was confirmed against which the assessee is in further appeal before us. Our findings and Adjudication 6. We find the As per Explanation-1 to Sec.115JB(2), 'Book Profits' means the profits as shown in the statement of Profit & Loss Account. This amount is to be increased and reduced by specified items. One of the items that is to be reduced, as per clause-(iii), is the amount of loss brought forward or deprecation whichever is less as per Books of Accounts. For the purpose of this clause, loss does not include depreciation. Further, the provision of this clause shall not apply in case the amount of brought forward loss or depreciation is 'nil'. 7. Another reduction as provided by Clause (vii) is the amount of profits of sick industrial company for the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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