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TMI Blog2023 (3) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... iation. We thus find merit in the plea of the assessee in justification of the computation of adjustment available to it against the book profit. In this view of the matter, the claim of the assessee being lower of unabsorbed depreciation and business loss deserves to be set off against the current year book profit in terms of the provisions of clause (iii) of Explanation-1 of Section 115JB(2) of the Act. Appeal of assessee allowed. - I.T.A. No.3843/DEL/2017 - - - Dated:- 10-3-2023 - Shri Pradip Kumar Kedia, Accountant Member And Shri Yogesh Kumar Us, Judicial Member For the Appellant : Shri V.K. Garg, Adv. Shri Parveen Kumar, CA For the Respondent : Ms. Beenu, Sr.DR ORDER PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed by the assessee against the order of the ld. CIT(A)-VII, New Delhi, dated 29.03.2017 arising from the assessment order dated 28.02.2017 passed by the Assessing Officer u/s.143(3) of the Act, concerning Assessment Year 2012-13. 2. As per the grounds of appeal, the assessee has challenged the computation of adjustment allowable in terms of clause (iii) of Explanation-1 to Section 115JB(2) for computation of book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.03.2010 (93,06,502) 17,19,98,265 (16,49,931) (24,98,577) (39,21,53,296) (40,96,27,278) (22,18,04,962) (24,01,27,590) (22,18,04,962) (24,94,34,092) 5.4. In the above working, book profits has been adjusted by Rs.93,06,502/- being the business loss for the F.Y. 2009-10 on the ground that u/s 115JB under Explanation 1 to clause (iii), the Book Profit can be reduced by the amount of loss brought forward or unabsorbed depreciation whichever is less as per books of accounts. Based on the above said working, the appellant has contended that the amount of loss brought forward or the unabsorbed depreciation whichever is less should be allowed for working of the Book Profit computation. In this manner a sum of Rs.93,06,502/- is reduced from the Book Profit computation for the assessment year under consideration. From the working, it is evident that the appellant has considered for the F.Y. 2009-10 (A.Y. 2010-11), the loss before depreciation and has separately shown depreciation and amortization. The business loss been adjusted agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In view thereof, the appellant's claim for set off of accumulated depreciation or losses whichever is lower is not as per provisions of law and is therefore, rejected. No interference is therefore, called for in the AO's action of computing the Book Profits u/s. 115JB as per the revised computation filed by the appellant during assessment proceedings. These grounds of appeal are ruled against the appellant. 5. Aggrieved by the denial of relief, the assessee preferred appeal before Tribunal. The adjustment of Book profit under by Section 115JB by lower of business loss and unabsorbed depreciation is in issue. In the matter, the assessee contends that the only difference between the working of the assessee and the CIT(A) towards such adjustment is in relation to F.Y. 2010-11. In FY 2010-11, the assessee has claimed total book loss of Rs.22,18,04,962/- which is solely on account of unabsorbed depreciation loss claimed of Rs.39,38,03,227/-. Since, such depreciation exceeds the resultant book loss and thus the total book loss represents the unabsorbed depreciation after part absorption against available profit as shown in the working filed. The CIT(A) on the other hand ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation we may also refer to provisions of section 32(2) of the Act governing the carry forward and set off of unabsorbed depreciation. The same is reproduced below: (2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or the part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years. 7.3 From the aforesaid provision also, it is gathered that the unabsorbed depreciation refers to the depreciation or part thereof which remained to be set off against the existing business profits of any year owing to the fact that either there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total Book loss (including depreciation) Rs.22,18,04,962 (A) Depreciation Rs.393,803,227 (B) Standalone profit (excluding depreciation) (-) Rs.171998265 (A)-(B) Ld. CIT(A) considered the figures of Standalone profit (excluding depreciation) and Depreciation separately without absorbing such profits against depreciation. Total 41,21,25,855 Profit 16,26,91,763 Total b/f loss (excluding depreciation) is Nil. Unabsorbed depreciation is Rs.41,21,25,855/- 10. In the light of law enunciated in paragraph 7 (supra), in our view, the assessee has correctly considered the figure of unabsorbed depreciation for Financial Year 2010-11 at Rs.22,18,04,962/- in its working which portion has remained unabsorbed against the existing book profits of that year. The CIT(A) in our view, has wrongly considered the entire depreciation allowance of Rs.39,38,03,227/- instead of restricting itself to the unabsorbed component. The figure of Rs.39,38,03,227/- considered by the CIT(A) is total depreciation allowance instead of unabsorbed depreciation and thus the position taken by the CIT(A) is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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