TaxTMI 
TaxTMI 
2012 (1) TMI 228
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.... 2. The assessee company is engaged in manufacturing of pig iron and grey iron castings. The solitary issue raised by the assessee in this appeal pertains to the disallowance of method of adjustment of carried forward book losses and depreciation for MAT purpose. At the time of hearing, it was submitted by the learned Counsel for the assessee that an identical issue arose in assessee's case for assessment year 2005-06 and the Tribunal vide ITA No.519/PN/09 has decided 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. The learned Departmental Representative did not dispute this factsituation. 3. After considering the subm....
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....mputing the book profits. For the purposes of aforesaid clause, it is further explained that the term loss shall not include depreciation and that this clause is not applicable where the amount of loss brought forward or unabsorbed depreciation is nil. In the background of the aforesaid, now we may first examine the computation of book profit made by the assessee in the return of income. The net profit as per Profit & Loss Account adopted by the assessee was Rs. 20,76,31,798/-. While computing the liability under section 115JB, assessee, inter alia, claimed an adjustment of Rs. 35,72,28,867/- in terms of aforesaid clause (iii) of Explanation below 115JB of the Act. In this manner, the book profit for the purposes of 115JB(2) was determined ....
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.... 10,58,61,822 19,69,71,088 1998-99 28,05,39,414 11,57,42,667 39,62,82,081 1999-00 8,08,79,470 11,94,25,261 20,03,04,731 2000-01 21,99,52,999 11,93,65,159 33,93,18,158 2001-02 5,74,86,634 11,84,38,447 17,59,25,081 81,43,70,815 66,85,72,522 148,29,48,337 Thus, on the aforesaid basis the break up of the consolidated deficit of Rs. 83,03,45,077/- as on 1.4.2004 claimed was as under: Financial Year Business Loss Unabsorbed Depreciation Total losses 1996-97 8,44,03,032 8,97,39,166 17,41,42,198 1997-98 9,11,09,266 10,58,61,822 19,69,71,088 1998-99 16,57,42,307 11,57,42,667 28,14,84,974 34,12,54,605 ....
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....d Profit & Loss A/c. (as per para 3.9 above) Rs. 23,35,25,147/- Less: i) B/f. business loss of Rs. 81,43,70,815/- (ii) unabsorbed depreciation Rs. 56,66,54,975/- (as per para 3.8 above) whichever is less Rs. 56,66,54,975/- Book Profits/Loss (-) Rs. 33,31,29,828/- Amounts to be carried forward to AY 2004-05 Business loss Rs. 81,43,70,815/- Unabsorbed depreciation (Rs 56,66,54,975 - 23,35,25,147) Rs. 33,31,29,828/- For A.Y 2004-05 Net Profits to the audited Profit & Loss A/c. Rs. 31,71,55,566/- Less: i) B/f. business loss of Rs. 81,43,70,815/- (ii) unabsorbed depreciation Rs. 33,31,29,828/- whichever is less Rs. 33,31,29,828/- Book Profits/Loss (-) Rs. 1,59,74,262/- ....
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....n spelt out. However, an indication which is manifested in section 115JB itself is a safe premise to follow in such a situation. Clause (iii) speaks of adjustment for the lower of brought forward loss or unabsorbed depreciation. Therefore, the Legislature envisaged that while computing book profits for 115JB, reduction be allowed for the lower of carried forward losses or unabsorbed depreciation of the past years. Therefore, the determination of such losses or depreciation in the past years be also made on similar proposition, in the absence of any specific provision in the Statute. Even in the past years, the losses and depreciation to be carried forward be determined on the similar principles, i.e. after setting off of the lower of deprec....