Tribunal upholds CIT(A)'s decision on depreciation treatment under IT Act 115JB

The Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision that the treatment of year-wise unabsorbed depreciation or business loss for calculating book profit u/s 115JB was debatable and did not warrant rectification u/s 154 of the IT Act. The Tribunal held that the AO's year-wise calculation approach was incorrect, emphasizing that the lower of the solitary figures of unabsorbed depreciation or losses brought forward for all earlier years should be reduced for computing book profit u/s 115JB.

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Issues Involved:
The issue involved in this case is the calculation of book profit u/s 115JB of the IT Act, specifically regarding the treatment of year-wise unabsorbed depreciation or business loss.

Summary of Judgment:

Issue 1: Calculation of Book Profit u/s 115JB of the IT Act

The Assessing Officer (AO) passed a rectification order u/s 154 of the IT Act, contending that the assessee incorrectly aggregated the amount of brought forward loss and unabsorbed depreciation for set-off purposes. The AO insisted on considering the lower of brought forward loss or unabsorbed depreciation for each year without aggregation. The AO's interpretation was based on Explanation (iii) below section 115JB (2) of the IT Act. However, the CIT(A) held that the issue was debatable and the AO lacked jurisdiction to pass the rectification order. The CIT(A) referred to the decision of ITAT Mumbai Bench in a similar case and concluded that the lower of the solitary figures of unabsorbed depreciation or losses brought forward for all earlier years should be reduced for computing book profit u/s 115JB. The CIT(A) emphasized that the AO's year-wise calculation approach was incorrect, and directed the AO to consider unabsorbed depreciation and business losses together for all years. The Tribunal upheld the CIT(A)'s decision, stating that the issue was debatable and not a clear mistake apparent on record, hence dismissing the revenue's appeal.

In conclusion, the Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision that the treatment of year-wise unabsorbed depreciation or business loss for calculating book profit u/s 115JB was debatable and did not warrant rectification u/s 154 of the IT Act.

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