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TMI Blog2013 (7) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... issue raised in the present appeal is against the computation of book profit after adjusting the amount of brought forward losses or unabsorbed depreciation, whichever is lower, as per clause (iii) of the Explanation to sub-section 115JB(2) of the Act. 4. The brief facts of the case are that the assessee had filed return of income declaring 'nil' income on 31.10.2002. The original assessment was completed u/s 143(3) of the Act on 28.03.2005 after making adjustments and the book-profits u/s 115JB of the Act were determined at Rs.2,19,78,866/-. The Assessing Officer had restricted the claim of the assessee of brought forward losses/depreciation to the tune of Rs.4,83,20,000/- as against the claim of assessee at Rs.14,43,12,155/-. The CIT(Appeals) allowed the claim of the assessee vide order dated 24.02.2006. In the appeal filed by the revenue, the Tribunal in ITA No. 402/Chd/2006 vide order dated 27.11.2007 set aside the order of CIT(Appeals) and remitted the matter back to the Assessing Officer with directions. In the proceedings, giving effect to the order of the Tribunal, show cause notice was issued to the assessee. The contention of the assessee before the Assessing Officer wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the profit for the financial year 2000-01 at Rs.1.62 crores has not been adjusted. The second plea of the ld. AR was that in view of the ratio laid down in Amline Textile P.Ltd. Vs ITO (supra), the conclusion drawn by the Assessing Officer was not correct and cumulative effect of the unabsorbed depreciation and/or business loss from year to year had to be considered and whichever is lower in the year of set-off is to be adopted for computing the deduction available under clause (iii) to Explanation to sub-section 2 of section 115JB of the Act. 9. We have heard the rival contentions and perused the record. The issue of computation of the deduction available to the assessee on account of brought forward depreciation/business loss, while computing the book profits u/s 115JB of the Act, arose in assessee's own case for the relevant year in the assessment order passed u/s 143(3) of the Act. The Tribunal in the first round of appeal elaborately addressed the said issue after taking into consideration the argument of the assessee that cumulative figure of unabsorbed depreciation and/or business loss from year to year is to be aggregated in order to work out the figure of the unabs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a cumulative manner for each of the year and then compute the amount deductible as per clause (iii). The Assessing Officer, on the other hand, has compared the amounts of brought forward loss and depreciation in each of the years to compute the amount deductible as per clause (iii) of Explanation to sub-section 2 of Section 115JB of the Act. According to the Assessing Officer, the amount deductible in terms of clause (iii) of Explanation is Rs.4,83,20,000/-. Now the question arises as to whether the assessee has an option to segregate its total brought forward loss depicted in the Profit & Loss Account for the assessment year under consideration. To answer this question an inter-twined issue is as to whether an assessee, has an option to set off the current year's profit against the loss brought forward or unabsorbed depreciation in any manner other than the manner in which it is so stated in the provisions of Section 115JB dealing with the manner of computing Book profits. The components of the brought forward loss in the instant year are two fold i.e. first, on account of loss brought forward and second, on account of unabsorbed depreciation brought forward. In the past years th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the only indication in this regard is to be deciphered from clause (iii) of the Explanation to subsection 2 of Section 115JB. According to this, the lower of unabsorbed loss or depreciation is to be adjusted to arrive at the Book profits. It is for this reason, in our considered opinion, we are inclined to hold that similar principle should be adopted to ascertain as to what is permissible to be set off against the profits available even in the past years. In this regard we may also refer to the observations of the Authority For Advance Rulings' in the case of Rashtriya Ispat Nigam Ltd. (supra) : "In view of the foregoing discussion, it is not possible to uphold the contention of the applicant that the presentation of accounts in one assessment year under section 115JB will have no relevance to the presentation of accounts in the immediate succeeding year for the same purpose under section 115JB. It, therefore follows that the contention of the applicant that although the reduction to be made from the current year's profits is the lesser of book depreciation or book loss brought forward from earlier years, yet for the purposes of quantification of carry forward of unabsorbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This being the only Ground of appeal, the Revenue's appeal is allowed for statistical purposes." 11. The Tribunal, thus answered the question by holding that for the purpose of calculating the book profits u/s 115JB of the Act, the manner as laid down in clause (iii) of Explanation to sub-section (2) of section 115JB of the Act is to be applied "for each of the past years" meaning thereby that the lower of the unabsorbed depreciation or business loss had to be considered for each of the past years in order to determine the figure of unabsorbed or business loss, whichever is lower and in cases where either of the two figures was at 'nil' then in view of the provisions of clause (iii) of Explanation to sub-section 2 of section 115JB of the Act, only 'nil' amount had to be carried forward for the said year. 12. The matter was set aside by the Tribunal to the file of Assessing Officer to recompute the loss brought forward or unabsorbed depreciation which was deductible in terms of clause (iii) of the said Explanation. The case of the assessee before the Assessing Officer is tabulated at page 6 of the assessment order, which is as under : Financial Year Depreciation Book loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umbai Bench of Tribunal in M/s Amline Textiles (P) Ltd. Vs ITO (supra) were to prevail and the computation of unabsorbed depreciation or business loss had to be recomputed in accordance with law. We find no merit in the said plea raised by the assessee as the present appeal has arisen because of the setting aside of the issue with direction to the Assessing Officer by the Tribunal vide order dated 27.11.2007. This is the second round of appeal where the Tribunal has limited mandate of verifying whether the directions given in the earlier year have been complied by the authorities below in computing the income in the hands of the assessee. In the second round of proceedings, it is not open to the Tribunal to consider the issue on the basis of decisions passed pursuant to the order passed by the Tribunal in assessee's own case under which the said direction had been given to the Assessing Officer to recompute the income of the assessee. The perusal of the order of the Tribunal with special reference to para 6 & 7 reflects that the matter had been set aside to recompute the amount of past brought forward or unabsorbed depreciation with directions. Accordingly, we find no merit in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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