TaxTMI 
TaxTMI 
2022 (6) TMI 1012
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....erred in confirming the action of the Assessing officer in setting off of the profits of the company, for the years during which it was sick, notionally against the brought forward losses, as it would tantamount to reducing the loss twice. 4. The Ld. CIT(A) ought to have appreciated that setting off of the profit of those years, in which the company was sick, against brought forward book loss on notional basis is not legally tenable. 5. The Ld. CIT(A) had grossly misinterpreted the judgment in the case of CIT vs Biomed Hitec Industries Limited (ITA No. 2001/Mds/2011) and failed to consider the view of your appellant that though the net worth has turned positive, your appellant has brought forward book loss and the appellant is entitled to a deduction of lower of brought forward book loss or unabsorbed depreciation for the said assessment year. 6. The CIT(A) ought to have appreciated the statement of brought forward business loss and depreciation loss as per books, wherein it has been clearly established that the appellant has only claimed the lower of business loss or depreciation, loss as per the provisions of section 115JB(2)(iii) which reads as ....
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....62,35,337 31.03.2000 Under BIFR (75,76,337) 62,81,240 (1,38,57,577) 62,81,240 31.03.2001 Under BIFR 20,73,173 62,55,485 (41,82,312) - 31.03.2002 Under BIFR (1,27,03,246) 62,75,000 (1,89,78,246) 62,75,000 31.03.2003 31.03.2004 31.03.2005 31.03.2006 31.03.2007 Under BIFR Under BIFR Under BIFR Under BIFR MAT Applicable (66,79,797) 2,07,43,254 15,69,483 92,87,604 (3,90,173) 62,75,000 11,84,135 26,88,816 (1,77,67,664) 19,67,828 (1,29,57,797) 1,95,59,119 (11,19,333) 2,70,55,268 (23,58,001) 62,75,000 - - - 3,90,173 31.03.2008 MAT Applicable 8,75,063 29,51,743 (20,76,680) - 31.03.2009 MAT Applicable (50,60,833) 91,91,713 1,42,52,546 50,60,833 31.03.2010 MAT Applicable 1,11,04,089 93,32,850 17,71,239 - 31.03.2011 MAT Applicable 1,61,90,211 98,70,801 63,19,410 - 31.03.2012 31.03.2013 31.03.2014 MAT Applicable MAT Applicable MAT Applicable 42,66,638 1,41,20,173 1,96,34,476 99,85,238 99,35,317 1,04,58,192 (57,18,600) 41,84,856 91,76,284 - - - &nb....
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.... said assessment years. Moreover, as per Section 115JB, the amounts of profits of sick industrial units can be deducted from the book profits for the computation of tax for the respective assessment years and it has not been mentioned that it is not to be considered for arriving cumulative book loss. Hence the assessee statement that the profits of the sick company would not at all come under MAT is not acceptable since only the profits of sick unit can be deducted for MAT purposes for arriving at tax for the particular year but not for arriving at cumulative book loss. If this is adopted the assessee would be having no loss to be set-off for Current AY 2014-15. 4.4 Alternatively, if assessee's argument that the sick company's book profits will not come under MAT provision is accepted, then the bookloss for that sick company should also not come under MAT and cannot be carry forward but it was carry forward by the assessee which is not at all an acceptable argument. Finally, the Book Profit of the assessee company was determined at Rs.81,67,886/- u/s 115JB of the Act. Appellate Proceedings 5.1 During appellate proceedings, the assessee submitted that it has deducted an....
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....er Clause (vii) of Explanation-1 to Section 115JB, the amount of profits of Sick Industrial Company for the assessment year commencing on and from the assessment year relevant to previous year on which the company has been Sick Industrial Company and ending with assessment year during which the entire net worth become equal or exceeds the accumulated losses has to be reduced from the net profit for calculating the book profit the assessment year. The section does not mention that the amount of profit of a Sick Industrial Company should not be considered for arriving at cumulative book loss.Therefore, the appellant's contention cannot be accepted as there is no specific provision in the Income Tax Act for excluding profits of the Sick Company for arriving at the cumulative book loss. Therefore, the adjustment was confirmed against which the assessee is in further appeal before us. Our findings and Adjudication 6. We find the As per Explanation-1 to Sec.115JB(2), 'Book Profits' means the profits as shown in the statement of Profit & Loss Account. This amount is to be increased and reduced by specified items. One of the items that is to be reduced, as per clause-(iii), is th....