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TMI Blog2003 (1) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... be carried forward to the subsequent years. Being aggrieved, assessee went in appeal and ld. CIT(A) has endorsed the view taken by the Assessing Officer. How the assessee is further in appeal before us? 3. On behalf of the assessee ld. A.R. Ms. Aarti Vissanji appeared and stressed that this issue now stand covered by the decision of Gauhati High Court in the case of Lallacherra Tea Co. (P.) Ltd. v. CIT [1999] 239 ITR 611 and Karimtharuvi Tea Estates Ltd. v. Dy. CIT [2001] 24 ITR 221 (Ker.) in favour of the assessee wherein it was held that the amount over which tax paid under section 115J could not be deducted from the carried forward losses. She has further added that the total income computed under the normal provisions of the I.T. Act should be reduced to the level of the income computed under section 115J over which the assessee has paid tax and then the balance of unabsorbed amount of such allowance should be allowed to be carried forward for adjustments in subsequent years. She has further submitted that if intention of the Legislature was to restrict the amount of carried forward of the allowance then it would have been enacted a deeming fiction in express words but as suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crued on actual repayment and it was only a notional increase in assessee's liability which could not be said to be crystallised liability and was only a contingent liability which was subject to fluctuation. He has further added that the depreciation could be allowed only on the increased cost calculated when the loan could be actually repaid and since the liability was not calculated on actual repayment but was only a notional calculation, therefore, no depreciation was held to be allowed on such increased liability for repayment of loan taken in foreign exchange for the purchase of plant and machinery. Being aggrieved, the assessee went in appeal. 7. In first appeal ld. CIT(A) has referred one of its own order in assessee's case for the assessment year 1988-89 dated 27-1-1993 and held that since the facts of the case for this year were identical, therefore, following the finding given in the said appeal order the contention of the assessee was rejected. Being aggrieved, the assessee is further in appeal. 8. On behalf of the assessee ld. D.R. has narrated the facts and argued that the liability was accrued because the liability payable in foreign exchange currency on the last d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the assessee wanted deduction on account of depreciation and investment allowance to be allowed to the extent it was necessary to reduce the income to the level of the income computed under section 115J. This claim in my opinion was against the provisions of section 115J. 15. The Hon'ble Andhra Pradesh High Court in the case of Suryalatha Spg. Mills Ltd. held that notional income taxed under section 115J(1) has to be ignored while carrying forward unabsorbed reliefs. The said decision of the Hon'ble Andhra Pradesh High Court reproduces the Boards Circular and illustrations given therein. The Hon'ble High Court came to the conclusion that sub-section (2) of section 115J cannot be interpreted to permit the assessee company to carry forward unabsorbed losses or unadjusted allowances of an amount equal to the taxed income. An identical ratio has been laid down by Hon'ble Karnataka High Court in the case of Widia India Ltd. A contrary view has been expressed by Hon'ble Guwahati High Court in the case of Lallacherra Tea Co. (P.) Ltd. 16. The Hon'ble Supreme Court in the case of Gurupad Khandappa Magdum v. Hirabai Khandappa Magdum [1981] 129 ITR 440 (SC) observed at page 447 that e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endered in the case of Lallacherra Tea Co. (P.) Ltd., learned JM decided the Issue in favour of the assessee. 4. Learned A.M. did not agree with the learned J.M. He relied on the decision of the Hon'ble Andhra Pradesh High Court rendered in the case of Suryalatha Spg. Mills Ltd. and the decision of the Karnataka High Court in the case of Widia (India) Ltd. 5. It is pertinent to note that now the issue involved in the present appeal stands covered by the decision of the Apex Court rendered in the case of Karnataka Small Scale Industries Development Corpn. Ltd. v. CIT [2002] 258 ITR 770. In this case, Hon'ble Supreme Court overruled the decision of the Gauhati High Court rendered in the case of Lallacherra Tea Co. (P.) Ltd. and approved the decision of Andhra Pradesh High Court in the case of Suryalatha Spg. Mills Ltd. 6. It was held by the Hon'ble Supreme Court that the scheme under section 115J for levying tax by considering 3096 of the book profits to be the deemed total income is an artificial process superimposed on the regular process of determination of the total income of the assessee in the usual manner. This section provides two stages, namely, (a) computation of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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