TaxTMI 
TaxTMI 
2011 (7) TMI 1235
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....no carry forward business loss shown in the balance sheet of Assessment Year 2005-06 warranting a set off against business income of Rs. 1,17,38,472/- for the purposes of levy of minimum alternate tax. 3. The ld. CIT invoked the provisions of section 263 of the Act by observing as under: "The assessee company filed its return of income for the A. Y. 2005-06 on 31.10.2005 admitting a total income of Rs. NIL. The profit as pet Profit & Loss Account (less dividend receipts) was Rs. 1,17,38,472/- against which carried forward business or unabsorbed losses whichever is less of Rs. 1,17,38,472/- was adjusted by the assessee and the total income was struck at Rs. NIL. While completing the assessment the Assessing Officer had set off lo....
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....f income for the Asst. Year 2005-06 on 31.10.2005 declaring total income of Rs. NIL. The case was selected for scrutiny. We submitted the details required by the Assessing Officer from time to time. During the assessment proceedings, the Assessing Officer asked about the applicability of Section 1151B. We had given the details and explanation. After considering the details and explanation, the Assessing Officer completed the assessment without making any addition. You have mentioned in your notice that it is seen from the Balance Sheet as at 31.03.2005 forming part of printed accounts annexed to the return of income that there was no business loss/depreciation as per the books of accounts' and accordingly the company has to pay Minim....
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....a 3 of his order as under: "I have carefully examined the facts of the case and considered the submissions of the assessee on the issues involved in the present proceedings. It is an admitted fact that there are no brought forward depreciation/business loss as per the books of accounts of the assessee for the year under consideration. As held by the Hon'ble Supreme Court in the case of M/s Apollo Tyres Ltd. v. CIT, 255 ITR 273 (SC), book profits are required to be computed on the basis of the books of the accounts prepared by the assessee in accordance with the Companies Act, 1956. In the present case, the assessee has prepared its final accounts in accordance with the Companies Act, 1956 and as per the said accounts there are ....
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....profits. Therefore, the said order of the Assessing Officer is hereby set aside u/s 263 of the Act and the Assessing Officer is hereby directed to adopt the book profits of the assessee for the current year to be Rs. 1,17,38,472/- and compute the tax and interest liability of the assessee and issue necessary demand notice to the assessee accordingly." 6. The ld. A.R. reiterated the submissions made before the ld. CIT(A), whereas the ld. D.R. supported the order of the ld. CIT. 7. We have heard the rival submissions and perused the orders of the lower authorities and the material available on record. We find that in the instant case, the original assessment was completed u/s 143(3) on 28.12.2007 wherein book profit u/s 115JB was comput....
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.... and in the remaining three years, there was also loss more than depreciation, i.e., cash loss. In spite of the above, to say that there was no brought forward loss or unabsorbed depreciation as per books in the current year is, in our considered opinion, an absurdity. It seems that the ld. CIT is of the opinion that unless there is a debit balance in the profit and loss account, the assessee cannot be allowed the benefit of clause (iii) Explanation to Section 115JB(2). In our considered view, the phrase 'loss brought forward' and phrase 'debit balance in profit and loss account' are two different and does not convey the same meaning. The above position becomes evident when one looks into the example given by the CBDT in its Circular No. 49....
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....r the profit and loss account or balance sheet. The said clause (iii) cannot be read to mean that if the loss suffered in a year and unabsorbed depreciation of that year are not kept separately and shown distinctly in the balance sheet, then no deduction for the said loss or depreciation can be allowed in the succeeding years in computing the book profit. There is no such further legal requirement that the loss should appear in the balance sheet of the succeeding year also and hence such requirement cannot be imposed by any authority. In our considered opinion, the loss or unabsorbed depreciation of one year can be set off against the profit of the subsequent year only and till such set off, the amounts are carried forward to the subsequent....