TaxTMI 
TaxTMI 
2015 (1) TMI 923
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....s. 115JB', it has been stated that the book profit for the purpose of section 11 5JB is NIL after deducting absorbed depreciation and carry forward business loss as per clause (iii) of explanation to section 115JB(2), and, therefore, no tax is payable. The then AO. found that there was a book profit of Rs. 331.83 loss for the year under consideration. However, no documents were filed in support of the claim of deduction. The said claim was, therefore, considered as inadmissible and, accordingly, the case was reopened and notice u/s.148 was sent on 30/03/2010. During the reassessment proceedings, Form no. 29B was submitted showing the working of the book profit at Rs. (-) 596.23 lacs. Considering the assessee's submission, the A.O. passed an order u/s.143(3) r.w.s. 147 on 30/11/2010 at a total income of Rs. (-) 82,44,840/-. 3. As per the provisions of explanation (1) (iii) to section 115JB of the I.T. Act 1961, the amount of loss brought forward or unabsorbed depreciation, whichever is less, needs to be reduced from the book profit. As per the decision of ITAT, Pune Bench, in the case of Kirloskar Ferrous Industries Vs. ACIT dated 31" January, 2012, the loss and unabsorbe....
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....s.II5JB of the I T Act, 1961 for computing book profits of the company in Form 29B, issued by the Chartered Accountants, wherein the working of book profit of Rs.(-)5,96,23,000 was given (Form 298 is enclosed as Annexure'2'). After perusing the details on record, the AO duly applying his mind has accepted the working of the assessee and computed the book profits u/s.I15JB of the Income tax Act(-) 5,96,23,000 in his order u/s.143(3) r.w.s.147 of the Income-tax Act dated 30th Nov, 2010. However, your honour have now on the same set of facts proposed to revise the assessment u/s.263 of the Income tax Act, 1961 with regards to computation of book profits u/s.115JB of the Act, relying on ITAT, Pune Bench decision in the case of Kirloskar Ferrous Industries Vs. ACIT. We refer to the provisions of section 263, which entitles the Commissioner of Income tax to pass an order under that section, if he considers that any order passed by the A.O. is erroneous in so far as it is prejudicial to the interest of the revenue. We submit that the order passed by the A0. is not erroneous and is not prejudicial to the interest of the revenue as the same has been passed by him by verifying ....
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....d on 31.01.2012 and have mentioned that the ITAT has directed that the loss and unabsorbed depreciation has to be compared in each of the previous years separately before quantifying the amount of set off. In this connection, we submit that at the outset, the ITAT has not decided the matter of computation of book profit u/s.115JB in the case of Kirloskar Ferrous Industries. What the ITAT has done is to mention that " we find that this issue stands concluded in favour of the assessee by deciding the issue by setting aside the order of the Commissioner of Income tax (Appeals) and restoring the issue to the file of the Assessing Officer with certain directions." In effect, it means that the ITAT has given direction to the A.O. to "set aside the order of the Commissioner of Income tax(Appeals) and restore the issue the file of the Assessing Officer with similar directions as extracted above". "We have perused the aforesaid decision of the Pune ITAT. The gist of the aforesaid decision of ITAT is that while working out book profit u/s.115JB. "whenever there is positive income in any particular year on the basis principle enshrined in section 115JB, the lower of loss or deprecati....
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....5JB have been applied correctly as reflected by the auditor's certificate. We enclose herewith a working of book profit u/s 115JB as given in form No.29B. We also enclose herewith the working of brought forward loss and depreciation which has been reflected in Form No.29B. You will thus appreciate that the brought forward loss and depreciations on 31.3.2002 is as follows: Rs.in lacs Business 928.06 Depreciation 973.20 Total 1901.26 The figure of business loss of Rs. 928.06 lacs being lower of the two has been claimed by way of set off against book profit. We also wish to bring to your notice that reference to working sheet would clearly indicate that there have been substantial losses during F Y 1998-99, 199-2000 and 2000-01. Such losses have been recouped out of transfer from reserves and only balance loss of Rs. 1901.26 lacs is outstanding as on 31.03.2002 which consists of: Rs.in lacs Loss for the year 2001-02 481.76 Loss of earlier years and of the financial year 31.3.2001(after adjustment from reserves) 1419.50 Since the loss of Rs. 1419.50 lacs was mainly consisting of the loss of F Y 31.03.....
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....er passed by the Assessing Officer cannot be considered to be erroneous. In support of the above, we strongly rely upon the various judicial pronouncements which have been referred in our letter dated 15-01-2013 and submit that no action need be taken u/s.263 of the Act. 3. Without prejudice to the above, it is submitted that contrary to the judgement of ITAT Pune in the case of Kirloskar Ferrous Industries Ltd., the Mumbai ITAT has taken a consistent view that while computing book profit u/s.115JB of the Act, the book profit is to be reduced by accumulated brought forward, unabsorbed depreciation or business loss, whichever is less. The Hon'ble Mumbai ITAT has further held that year to year working of unabsorbed depreciation or business loss is not required to be followed for reducing the book profit u/s.115JB of the Act. It is respectfully submitted that this view of Mumbai ITAT has been followed by Ahmedabad ITAT. The copies of the following judgement referred hereinabove are enclosed for your reference: (i) Amline Textiles (P) Ltd V. Income tax Officer, Ward 3(1)-I, Mumbai - 27 SOT 152 (Mum) (ii) Owens Corning India Ltd. V. Income Tax Officer, Range-7(1)(1), Mumbai....
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.... off of unabsorbed depreciation. 7. On the other hand, learned DR relied on the order of CIT(A). 8. We have considered rival contentions and carefully gone through the orders of the authorities below and also deliberated on the judicial pronouncements referred by CIT in his order u/s.263 as well as cited at bar by learned AR and DR, in the factual matrix of instant case before us. From the record we found that assessee is a company engaged in manufacturing and sale of glass fibre products for use in composites. The assessee filed its return of income `declaring total income of Rs.(-)82,44,840 under normal provision and NIL under section 115JB of the Act. Subsequently the case was selected for scrutiny and assessment was completed u/s.143(3) of the Act vide assessment order dated 08.11.2005 determining total income at Rs. 85,90,175 under normal provision whereas nil book profit was accepted u/s.115JB. In appeal, the CIT(A) deleted the additions and restored the returned income and unabsorbed depreciation of Rs. 61,28,12,921 and business loss of Rs. 60,50,59,533/- was allowed to be brought forward. Subsequently, case was reopened u/s.147 of the Income-tax Act vide notice u/s.14....
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....ime barred as it was passed beyond the period stipulated u/s.263 and that order passed u/s.143(3) r.w.s.147 passed by the AO was neither erroneous nor prejudicial to the interest of Revenue. 12. On merits, learned AR contended that while computing book profit u/s.115JB, the qualifying amount for set off of brought forward unabsorbed depreciation and business loss whichever is less is required to be computed by aggregating the same and not on year to year basis. For this purpose he replaced reliance on the decision of the coordinate bench in the cases discussed in subsequent paras. 13. From the record, we found that the first assessment order u/s.143(3) was passed by the AO on 08.11.2014 determining total income at Rs. 85,90,175 under normal provision and NIL book profit returned by the assessee was accepted. Variation in the returned and assessed income was due to various other disallowances which were subsequently deleted by the CIT(A). However, the book profit declared u/s.115JB was accepted to be nil. The assessment was reopened u/s.147 and after considering the submissions of the assessee the computation of book profit was accepted at NIL and the reason for reopening the ....
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....ation with business loss of each year separately following the judgment of Pune Tribunal. On the issue of set off of unabsorbed depreciation or business loss there are three judgments of the Mumbai and Ahmedabad Tribunal which are in favour of the assessee, which supports the assessee's working for computing book profit against one judgment of Pune Tribunal supporting CIT's working. Moreover, Pune Tribunal while passing order has not considered the earlier judgments of Mumbai and Ahmedabad Benches. As there are two views possible in the given case duly supported by different Tribunal orders and the AO has taken one possible view the decision in Malabar Industries applies. The order passed by the AO cannot be considered to be erroneous or prejudicial to the interest of Revenue more particularly when the AO has taken one of the possible view duly supported by three Tribunal Judgments. If the AO takes one of the possible view, the assessment order passed by the AO cannot be treated as erroneous even though the view taken by the AO. may not be the same as that of the CIT's view. Our view is supported by the following judgments of Hon'ble Supreme Court and High Courts : ....
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....absorbed depreciation is nil". 16. It is clear from the above provision, that while computing book profit u/s 115JB for a given year the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account, is required to be reduced. Nowhere it suggests that one has to compare the year wise unabsorbed depreciation or business loss as desired by the CIT. Thus, AO's view is fully supported by the three judgments discussed hereinafter. Thus, no fault can be found in the order of AO, so as to brand it erroneous and prejudicial to the interest of justice. It is worthwhile to refer to Mumbai Tribunal Judgment in the case of Ovens Corning India Ltd wherein the Hon'ble Tribunal after considering the case of Amline Textiles P. Ltd (supra), has held as under: We hold that aggregate amount of unabsorbed depreciation or brought forward losses of the years taken together which losses was to be reduced for the purpose of computing book profit u/s. 115JB. It cannot be considered on a year to year basis. The ground raised by the assesse is accordingly allowed. Same view was also followed by Tribunal in the case of Amline Textiles (P) Ltd, has held a....