TaxTMI 
TaxTMI 
2018 (11) TMI 592
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....nst the unabsorbed business loss/unabsorbed depreciation pertaining to earlier years. The case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act were served upon the assessee. Necessary details as required were furnished. Ld.A.O disallowed the selling and administrative expenses at Rs. 5,00,000/- for want of necessary details and proof. Ld.A.O also denied the brought forward business loss and depreciation claimed by the assessee at Rs. 74,53,205/-. Ld.A.O observed that the assessee while calculating the book profit has not included the sundry balance written off at Rs. 2,57,30,466/-. He accordingly calculated the book profit for the purpose of application u/s 115JB of the Act at Rs. 2,24,33,925/-. 3. Aggrieved assessee preferred appeal before Ld.CIT(A) and partly succeeded. The Ld.CIT(A) confirmed the disallowance of expenses at Rs. 5,00,000/- and also confirmed the book profit of addition made by the Ld.A.O and as regards the claim of set off on unabsorbed business loss and unabsorbed depreciation directed the Assessing Officer to verify the claim and allow it as per rules. 4. Now aggrieved both the assessee and Revenue is in appeal before the Tribunal. ....
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....s correct". From the perusal of the audited profit and loss account as on 31.3.2010 certified by the Auditor Shri C.P. Rawka, CA dated 3.9.2010 we find that the net profit after prior period adjustment has been shown at Rs. 74,53,205/- and to this figure brought forward loss have been adjusted and the amount available for appropriation has been shown in negative at Rs. 7,91,91,532/-. In this figure of accumulated loss an amount representing to sundry balance of unsecured loan written off (i.e. income) at Rs. 2,57,30,466/- has been reduced leaving net carry forward loss of Rs. 5,34,61,066/-. 11. For the purpose of the application of the provision u/s 115JB of the Act explanation 1 to this section refers to the book profit which needs to be increased by certain amounts as referred in explanation 1(a) to (k) and similarly the book profit needs to be reduced by certain amounts mentioned in explanation 1(i) to (viii) of the Act. Now these adjustments of increase and decrease are to be made to the "book profit", which is the profit as shown in the statement of Profit & Loss Account for the relevant previous year which is prepared in accordance with the provisions of the Act governing,....
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....adopted for calculating the depreciation, shall correspond to the accounting policies, accounting standards and the method and rates for calculating the depreciation which have been adopted for preparing such accounts including 76e[statement of profit and loss] for such financial year or part of such financial year falling within the relevant previous year. Explanation 1.-For the purposes of this section, "book profit" means the 77[profit] as shown in the 76e[statement of profit and loss] for the relevant previous year prepared under sub-section (2), as increased by- xxxxxxxxx - 12. From perusal of the sub section 2 of the Section 115 JB of the Act we observe that the book profit means the profit as shown in the statement of Profit & Loss account prepared for the previous year in accordance with Schedule-VI of the Companies Act 1956. The bone contention in this case is only with regard to the book profit adopted by Ld.A.O. The adjustment of sundry balance written off i.e. unsecured loans not payable, have been added in the profit and loss account below the amount available for appropriation. Now whether this particular amount of Rs. 2,57,30,466/- being sundry b....
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.... xxx m. Total Revenue (I + II) xxx xxx IV. Expenses: Cost of materials consumed xxx xxx Purchases of Stock-inTrade xxx xxx Changes in inventories of finished goods work-inprogress and Stock-in-Trade xxx xxx Employee benefits expense Finance costs Depreciation and amortization expense Other expenses Total expenses xxx xxx V. Profit before exceptional and extraordinary items and tax (Ill- IV) xxx xxx VI. ....
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....ld also procure certificate from the auditor of the company that whether the adjustment of sundry balance written off is as per Schedule-VI of the Companies Act, 1956 and the book profit in the computation of income is as per Schedule-VI of the Companies Act, 1956. Ld.A.O should also get the audited balance sheet verified from the office of the Registrar of Companies under whose jurisdiction assessee company falls so as to get it confirmed that the audited balance sheet produced before the Tribunal is as per Schedule-VI of the Companies Act, 1956. In case a positive reply is received in favour of the assessee, then Ld.A.O should decide accordingly as per law. Needless to mention that reasonable opportunity of being heard should be provided to the assessee. Ground No.2 of the assessee is allowed for statistical purposes. 17. Appeal of the assessee is allowed for statistical purpose. 18. Now we take up Revenue's appeal I.T.A. No.529/Ind/2016 raising following ground; "Whether in the facts and in the circumstances of the case, the Ld. CIT(A) (i) erred in allowing the carry forward losses & unabsorbed depreciation claimed by the assessee for the A.Y 2008-09 alth....