TaxTMI 
TaxTMI 
1998 (6) TMI 125
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion for those years, which are as under: Asst. yr. Loss after depreciation Depreciation . Rs. Rs. 1984-85 2,66,335 2,51,858 1985-86 4,40,720 1,37,054 1986-87 2,74,415 1,17,517 1988-89 48,530 1,76,866 . 10,30,000 . 6,83,295 The AO did not agree with the assessee and he has worked out the deduction lower of the business loss excluding the depreciation and depreciation year-wise at Rs. 2,69,048 as under: Asst. yr. Business loss Depreciation loss Whichever is less . Rs. Rs. Rs. 1984-85 14,477 2,51,858 14,477 1985-86 3,03,666 1,37,054 1,37,054 1986-87 1,56,858 1,17,517 1,17,517 1987-88 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(1994) 119 CTR (AP) 184 : (1994) 207 ITR 508 (AP). 4. We have considered the rival submissions and perused the records. We would like to refer to s. 115J(IA), Expln. (iv), which is reproduced as under: "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 as if the provisions of cl. (b) of the first proviso to sub-s. (1) of s. 205 of the Companies Act, 1956 (1 of 1956) are applicable." Sec. 205(1), cl. (b) of the first proviso to the Companies Act lays down as under: "If the company has incurred any loss in any previous financial year or years, which falls or fall after the commencement of the Companies (Amendment) Act, 1960, then the amount o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... both the cases after providing for depreciation in accordance with the provisions of sub-s. (2) or against both. Sub-s. (2) of s. 205 of the Companies Act states how depreciation has to be worked out. 5. Sec. 115J, Expln. (iv) has incorporated the provisions of s. 205(1) of the Companies Act, 1956. Therefore, the meaning given to the terms 'loss' or 'depreciation' under the Companies Act shall be applied to the IT Act, 1961. The word 'loss' in proviso (b) to s. 205(1) would include depreciation. If the depreciation is to be excluded the legislature would have used the term 'cash loss'. In this regard reference is invited to s. 3(o) of the Sick Industrial Companies (Special) Provisions Act, 1985, wherein a distinction is made between 'ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iew that the loss and depreciation have to be worked out in terms of the Companies Act and then set off has to be given to either of the two, whichever is less. Therefore, depreciation and loss have to be worked out in terms of the Companies Act under s. 205(1)(b) of first proviso of the Companies Act and not in accordance with the IT Act, 1961. The Hon'ble Madhya Pradesh High Court has dissented in this judgment with the judgment of the Andhra Pradesh High Court in the case of V.V. Trans.-Investments (P) Ltd. cited supra. This Bench of the Tribunal (SMC) in the case of Buttwelded Tools (P) Ltd. has also taken the view that the loss under this section was to be interpreted as loss including depreciation and it has to be considered vis-a-vis....