TaxTMI 
TaxTMI 
TaxTMI 
2012 (9) TMI 390
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....1,14,42,000/- and after making adjustments for inadmissible as well as admissible deductions and also setting off brought forward loss relating to earlier years declared to Rs. 3,26,76,628/- to be the taxable income of the assessee. He also observed that while computing income u/s 115JB of the Act, a note was attached to audit report explaining that lower of business loss brought forward or unabsorbed depreciation has been reduced after giving effect to the exemption u/s 10A of the Income-tax Act. A letter was also filed giving justification for not applying the provisions of sec. 115JB of the Act. In the said letter, it was explained that brought forward loss in the profit and loss account should not be taken as it is, but the same has to be reworked from the earlier years. The Assessing Officer however was not convinced with the assessee's arguments. He placed reliance upon the decision of the Apex court in the cases of Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273 and Malayala Manorama Co. Ltd. v. CIT [2008] 300 ITR 251, wherein mode of computation of income u/s 115JB is stated and it has been held that Assessing Officer has no leeway in making any adjustment to the 'net profit' d....
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....e articles or thing or computer software and Assessment Year 2004-05 was the 10th year of operation. Till asst. year 2004-05 the deduction was claimed and no deduction was claimed u/s 10A for assessment year 2005-06. The learned counsel for the assessee submitted that for the assessment year under consideration as per the computation made, the tax payable under regular provisions of Act was higher than the tax determined on book profits u/s 115JB of the Act and, therefore, income determined under regular provisions of the Act was declared in the return of income. He submitted that in the process of computation of book profits u/s 115JB of the Act, the assessee reduced a sum of Rs. 8,44,51,767/- as representing the amount of 'loss brought forward or unabsorbed depreciation,' whichever is less as per the books of account. He submitted that the assessee has incurred losses as per the books of account in non-STPI units for the preceding three financial year i.e 2001-01, 2002-03 and 2003-04 and, therefore, the sum total of the losses or depreciation, whichever is less, of non-10A units for previous 3 years amounted to Rs. 8,44,51,767/-. Thus, according to him, this amount is to be reduc....
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....im, the reduction of brought forward losses or unabsorbed deprecation in Clause (iii) to Explanation 1 would refer to non-10A units only. 8. The learned counsel for the assessee also argued that the profits or losses of 10A units are exempt from MAT and, therefore, the brought forward losses or unabsorbed depreciation relating to 10A units would also take the same character i.e losses from exempt source and it is a settled principle that if profits from a particular source are exempt, the losses from such source cannot be set off against other income. For this proposition, he placed reliance upon the decision of Apex Court in the case of CIT v. Harprasad & Co. (P.) Ltd. [1975] 99 ITR 118, wherein it was held that loss under the head 'capital gains' during the period when capital gains were not taxable cannot be carried forward and set off. He also placed reliance upon the decision of the Mumbai Tribunal in the case of G.K Ramamurthy v. Jt. CIT [2010] 37 SOT 345 wherein it was observed that long term capital gains from sale of shares suffering STT cannot be set off against any other income since long term capital loss on sale of shares suffering STT is exempt u/s 10(38). Thus, acco....
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....-10A was shown. But for the purposes of computing book profits, this figure has to be segregated and only the brought forward losses or unabsorbed depreciation of non 10A units should be considered. It is also the contention of the learned counsel for the assessee that Tribunal has the power to interpret the provisions if there is any ambiguity in the same and if two interpretations are possible, interpretation which is favourable to the assessee is to be adopted. He has drawn our attention to the various examples to show that if the adjustments are also to be made as per the figures available in the books of account of the assessee as computed under the Companies Act, absurdity would occur and under such circumstances, the Tribunal has the power to interpret the law by taking the interpretation which is favourable to the assessee. He thus prayed that the orders of the AO as well as the CIT(A) should be set aside and the addition deleted. 10. The learned DR on the other hand placed reliance upon the orders of the authorities below. She submitted that the sec. 115JB is a self contained sec. and a code by itself. She submitted that the book profit is defined under the Explanation to....