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TMI Blog2006 (1) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... ter deducting unabsorbed depreciation at Rs. 2,59,458. Later on, the audit party checked this case and raised objection that the assessee-company has brought forward unabsorbed depreciation only but as per provisions of section 115JB of the Income-tax Act provides that if out of brought forward business loss or unabsorbed depreciation one is nil, nothing is deductible (substituted by the Finance Act, 2002 with effect from 1-4-1997). The Assessing Officer accordingly issued notice under section 154 of the Income-tax Act and considering the reply of the assessee made necessary rectification vide order under section 154 of the Income-tax Act. The same was challenged before the CIT(A) on the ground that notice under section 154 is illegal and time-barred and the matter under section 115JB should not have been considered in the provisions of section 154 and that the provisions of section 115JB were not applicable in this case. The Assessing Officer should have passed a speaking order. The CIT(A) considering the above grounds of appeal was of the view that the grievance of the assessee is against the action of the Assessing Officer for working out the book profits wherein the claim of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that year. It was further submitted that the legislative intent cannot be assumed to require adoption of nil in section 115JA or 115JB as there is no similar language as in section 55(2)(a). It was, therefore, prayed that section 115JB is not applicable since it becomes case of loss. It was further submitted that since business loss was not available when the depreciation carried forward should be taken into consideration as it was part of the old depreciation. The controversy of "whichever is less", was existing where both the elements of unabsorbed business loss and unabsorbed depreciation were available, whichever is less should be taken into consideration. It was further submitted that in computation of income filed with the return, it was submitted that if proper depreciation due for this year is deducted from the profit as per Income-tax Rules, there would be net profit of Rs. 4,734 which would only be subject to provision of section 115JB. It was further submitted that unabsorbed depreciation of Rs. 2,59,458 if considered it would be a case of loss and provisions of section 115JB were not attracted. The CIT(A) considering the above submissions rejected the appeal of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther submitted that the CIT(A) has not given his reasoned findings on the issue raised by the assessee before him and, therefore, the CIT(A) has not considered the case of the assessee in proper-perspective. He has submitted that the depreciation is allowable to the assessee as per the Companies Act. He has submitted that the CIT(A) did not look into the written submissions of the assessee at all. 5. On the other hand, the learned D.R. relied upon the orders of the authorities below and submitted that the Assessing Officer has rightly invoked the provisions of section 115JB in the aforesaid case and that the Assessing Officer has rightly passed the rectification order under section 154 of the Income-tax Act. The learned D.R. submitted that since there was no unabsorbed loss, therefore, depreciation was not rightly allowed deduction by the Assessing Officer. The learned D.R. while relying upon the orders of the authorities below submitted that the appeal of the assessee is to be dismissed. 6. I have considered the rival submissions and material available on record. It is not in dispute that the status of the assessee is of Company. The assessment year involved in this appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation (b) is not considered. This section was inserted by the Finance Act, 2000 with effect from assessment year 2001-02 in order to simplify the application of the provisions for Minimum Alternate Tax. This section provides that the tax on the total income of the Company in respect of any previous year commencing on or after 1-4-2001 (assessment year 2001-02) is less than 7 1/2 per cent of its profits (as defines in the explanation), the book profit shall be deemed to be the total income of the assessee on which tax @ 7 1/2 per cent would be applicable. Prior to it the provisions of section 115JA were applicable in which also similarly Explanation (iii) was amended as reproduced above. In the appeal before me, sub-clause (b) of Explanation of clause (iii) is, therefore, clearly applicable. The CIT(A), therefore, rightly held that the decision in the case of Kartar Bus Service (P.) Ltd. and the decision in the case of Surana Steels (P.) Ltd. are not applicable because in these cases the amended provision of Explanation (iii)(b) to section 115 JB have not been considered. It, therefore, appears that sub-clause (b) to Explanation (iii) was inserted in the Act in order to nullif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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