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TMI Blog2001 (11) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... amend the ground of appeal before the appeal is heard and disposed of." 2. As the issue involved in both these appeals is common and the appeals were heard together, so these are being disposed of by this consolidated order for the sake of convenience. 3. The only grievance of the Department in these appeals relates to the direction of the learned CIT(A) to allow depreciation while computing book profit under s. 115J. 3.1. The relevant facts relating to this issue in brief are that the AO determined the book profit at Rs. 5,46,143 and 4,73,146 for the asst. yrs. 1989-90 and 1990-91 respectively, before considering the claim of the brought forward unabsorbed depreciation. The AO treated that amount as book profit and did not adjust bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht forward, unabsorbed depreciation. No adjustment on account of brought forward unabsorbed depreciation would be admissible. A reference to sub-cl. (iv) of sub-s. (1) of s. 115J shows that the amount of the loss or the amount of depreciation which would be required to be set off against the profit of the relevant previous year would be as per the provisions of cl. (b) of the first proviso to sub-s. (1) of s. 205 of the Companies Act provides that in case there is carried forward business loss and also unabsorbed depreciation then lesser of the two amounts is to be taken into account. It does not lead to the interpretation that if there is no carried forward business loss it would be taken at nil for computing book profit. In the case of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said that there was nil brought forward loss because the depreciation is also a part of the loss. In that case, the unabsorbed depreciation should be considered as unabsorbed loss. He also relied on the judgment of the Hon'ble Supreme Court in the case of Surana Steels (P) Ltd. vs. Dy. CIT & Ors. (1999) 153 CTR (SC) 193 : (1999) 237 ITR 777 (SC). The reliance was also placed on the judgment of this Bench of the Tribunal in the case of Punjab Iron & Steel Co., Jalandhar Cantt. vs. Dy. CIT Spl. Range, in ITA No. 434/Asr/1992 for the asst. yr. 1989-90 and the decision of the Tribunal, Chandigarh Bench (SMC), in the case of Sirhind Khanna Transport (P) Ltd. vs. Asstt. CIT, CC-I, Patiala, in ITA No. 1216/Chd/1994 for the asst. yr. 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee be a company and its total income determined under the IT Act in respect of a previous year be less than thirty per cent of its book profit, fictionally it will be deemed that its total income chargeable to tax for the relevant previous year was an amount equal to thirty per cent of such book profit. The total income of the assessee shall first be computed in accordance with the provisions of IT Act and if the total income so computed be less than thirty per cent of the book profit, than the P&L a/c of the company for the relevant previous year shall have to be prepared under sub-s. (1A) of s. 115J in accordance with Parts II and III or Sch. VI to the Companies Act. The book profit so arrived at under the Companies Act shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sec. 205(1), proviso cl. (b), of the Companies Act, brings out the unabsorbed portion of the amount of depreciation already provided for computing the loss for the year. The words 'the amount provided for depreciation' and 'arrived at in both cases after providing for depreciation' made it abundantly clear that in this clause 'loss' refers to the amount of loss arrived at after taking into account the amount of depreciation provided in the P&L a/c. This interpretation would be consistent with the object sought to be achieved by enacting s. 115J of the IT Act, 1961. If 'loss' were to be taken as pre-depreciation loss then the resultant computation will not in conformity with the tenor of the provisions of s. 205. The language of cl. (b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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