TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 703
X X X X Extracts X X X X
X X X X Extracts X X X X
.....counsel for the assessee, at the very ought submitted that the issue in dispute is squarely covered in favour of the assessee by the order of the ITAT, Mumbai Bench in the case of Amline Textiles P.Ltd. Vs. ITO, 27 SOT 152. On the other hand, the ld.DR relied upon the order of the AO. 4. The facts on all vital points are common in both the years, therefore, for the sake of reference, we take up the facts from the Asstt.Year 2006-07. Brief facts of the case are that the assesseecompany at the relevant time was engaged in crushing and processing castor seeds and edible oil. It has filed its return of income on 30.12.2006 declaring NIL income after setting off of unabsorbed depreciation of Rs. 1,40,49,297/- against the current year profit under normal provisions and loss of Rs. 21,12,16,663/- against the book profit of Rs. 13,07,83,251/- under section 115JB of the Act. The case of the assessee was selected for scrutiny assessment, and notice under section 143(2) was issued and served upon the assessee. The ld.AO took note of loss suffered by the assessee starting from the Asstt.Year 1997-98 upto the Asstt.Year 2005-06. Similarly, he took note of depreciation starting from the Asstt.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessee on such total income shall be the amount of income-tax @ 10 per cent Expln. 1 provides the mode of computing "book profit" by taking net profit as shown in the P&L a/c as its starting point to be increased by the items mentioned in cls. (a) to (h) debited to the P&L a/c and as reduced by the items specified in cls. (i) to (vii). At this stage it will be apt to consider the relevant part of this section as under : "Explanation 1 : For the purposes of this section, 'book profit' means the net profit as shown in the P&L a/c for the relevant previous year prepared under sub-s. (2), as increased by- (a) to (g) .................. ................. .................... (h) if any amount referred to in cls. (a) to (h) is debited to the P&L a/c, and as reduced by- (i) and (ii) ................. ................... ................. (iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account. Explanation : For the purposes of this clause,- (a) the loss shall not include depreciation; (b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil, or" 9....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at is, follow what has been expressly stated in the provision and go by the plain language of the section. It is not permissible to import any thing into statutory provision and read what is not explicitly provided. The need for unearthing the real intention arises only when the language of the section is ambiguous, vague or uncertain. With this basic principle of interpretation on hand, we move on to examine the rival contentions made by the parties as to whether cl. (iii) it refers to consideration of year-wise separate figures of unabsorbed depreciation and loss brought forward or the composite figures. 12. Clause (iii) states that 'the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account' is to be reduced from the net profit. As per the plain language of this provision, it is noted that the word employed in the provision is the "amount" and not the "amounts" of loss brought forward or unabsorbed depreciation, whichever is less. The reference to the "amount of" brought forward loss or unabsorbed depreciation whichever is less shows the intention of the legislature for considering one consolidated figure of brought forward loss or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ken from the opening words of sub-s. (1) of s. 115JB as well as sub-s. (5) of this section. Sub-s. (1) starts with a non obstante clause : "Notwithstanding anything contained in any other provisions of this Act,........" and sub-s. (5) states that : "Save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being a company, mentioned in this section". It is on the strength of these two sub-sections that the learned CIT(A) has decided that all other provisions of the Act merit consideration in the determination of the book profit under s. 115JB and hence the provisions of ss. 71 to 73 will also apply and when so applied s. 72 serves as guiding light as per which the benefit of carry forward of business loss is limited to eight years. The case is made out that since the business loss can be carried forward only for eight years, and in the ninth year, the unabsorbed loss of the first year will cease to be available for set off, albeit for second to seventh years, it can still be carried forward, it automatically implies that the amount of loss has to be carried forward on year to year basis for the purposes of s. 115JB also and hence i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y there is no prohibition in s. 115JB as per which the amount of unabsorbed loss is to be discarded after the expiry of eight years from the year in which it was first computed. Even if loss is brought forward from 50 years back, that has also to be reckoned. To put it simply the amount of loss brought forward or unabsorbed depreciation has to be considered for as many years as corning in the books of account irrespective of any rider for a particular number of years. We, therefore, hold that reference to the provisions of ss. 71 to 73 for arriving at the conclusion that s. 115JB refers to year-wise consideration of the loss brought forward or unabsorbed depreciation, is erroneous. 17. Now we turn to examine cl. (b) of Explanation to cl. (iii) of Expln. 1 to s. 115JB(2), which provides that 'the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil'. The learned CIT(A) has relied on this provision for upholding the action of the AO that since the loss before depreciation for asst. yr. 2001-02 is nil, hence no deduction is permissible for this year. A bare perusal of this provision brings out the intention of the legislat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rving as under: "3.7 Perusal of the working of unabsorbed depreciation as computed by the appellant and reproduced in para no.3.3 of this order, the appellant had computed the eligible unabsorbed depreciation at Rs. 32,65,78,659/- to be set off against book profits for the purposes of 115JB computation. This is nothing but the aggregate of book depreciation for the A.Yrs 97-98 to 2005-06. In my considered view, this working is also erroneous. Provisions of clause-(iii) of explanation 1 to sec.115JB(2) does not provide benefit of aggregate of book depreciation. On the contrary it provides for the amounts of loss brought forward or unabsorbed depreciation, whichever is less as per books of account. In the instant case it is noticed that in the A.Yrs 2002-03, 2004-05 and 2005-06 the appellant has earned a business profit after making provisions of book depreciation. This clearly means that in these years the appellant does not have any unabsorbed depreciation as the same has already been adjusted against the business profit of that year. In this regard it will be pertinent to mention that the Hon'ble ITAT in the case of Amline Textiles Pvt. Ltd. (supra) has not discussed such sit....