TaxTMI 
TaxTMI 
2015 (5) TMI 1032
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.... the record. The assessing officer passed the impugned assessment order u/s 143(3) r.w.s. 147 of the Act on 09-05-2011 determining the total income at NIL under normal provisions of the Act and the Book profit at NIL under sec. 115JB of the Act. While computing the "Book profit" u/s 115JB of the Act, the AO allowed deduction as per Clause (vii) of Explanation 1 to Sec. 115JB(2) of the Act. The said clause (vii) reads as under:- "(vii) the amount of Profits of Sick Industrial Company for the assessment year commencing on and from the asst year relevant to the previous year in which the said Company has become a Sick Industrial Company and ending with the asst year during which the entire net worth of such company becomes equal to or excee....
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....eved, the assessee has filed this appeal before us. 4. The main contention of the Ld A.R was that the assessing officer, during the course of assessment proceedings, called for working of Book Profit u/s 115JB of the Act and after satisfying himself, the AO has computed the book profit accordingly. The Ld A.R, accordingly, contended that there was application of mind by the AO and he has adopted one of the plausible views and hence the impugned revision order lacks jurisdiction. On the other hand, the Ld D.R placed strong reliance on the order of Ld CIT. 5. With regard to the principles governing the revision proceeding u/s 263 of the Act, a gainful reference may be made to the decision of Hon'ble Supreme Court in the case of Malabar ....
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....l satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression "prejudicial to the interests of the Revenue", the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (head note) : "The phrase 'prejudicial to the interests of the Revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, f....
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....ribed in the above said provision shall be available only for the assessment years falling between the years mentioned in clause (vii), i.e., the assessment year in which the company has become a Sick Industrial Company and the year in which the net worth of such company becomes equal to or exceeds the accumulated losses. 7. However, according to Ld A.R, the provisions of sec. 115JB of the Company is intended to collect income tax from the so called Zero tax companies. Obviously, in order to exempt Sick industrial companies from the provisions of sec. 115JB of the Act, the above said clause (vii) was inserted. A company would become a "sick company" due to continuous losses incurred by it. When the sick company starts making profits, it ....
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....uction prescribed in clause (iii) was not with reference to the items debited/credited in the Profit and Loss account of the Company. Accordingly it was submitted that the legislature has intended to exclude the profits of sick industrial company earned during a particular period and since it is a beneficial provision intended to give relief to companies which are in the process of revival, the same should be construed in the back ground of intention of the legislature. 9. Whereas, according to Ld CIT, the provisions of clause (vii) provides for deduction of the profit earned in a specific year falling within the periods mentioned in clause (vii), referred above. Accordingly, the Ld CIT held that the assessment year under consideration, ....