TaxTMI 
TaxTMI 
2007 (4) TMI 238
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.... law for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that 'loss' mentioned in clause (b) of the first proviso to sub-section (1) of section 205 of the Companies Act, 1956, read with section 115J of the Income-tax Act, 1961, does not include 'unabsorbed depreciation' ?" 2. It is appropriate to mention that the assessee had filed its return declaring a loss of Rs. 13,31,873 including brought forward losses and allowances of Rs. 10,79,986. The Assessing Officer disallowed the deduction of earlier years' allowances by observing that there was no loss and placed reliance on the CBDT Circular No. 495, dated September 22, 1987 (see [1987] 168 ITR (St.) 87). How....
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....r unabsorbed depreciation, whichever is less, would be reduced in arriving at the book profits. Sub-section (2), however, provides that the application of this provision would not affect the carry forward or unabsorbed depreciation, unabsorbed investment allowance, business losses to the extent not set off and the deduction under section 80J to the extent not set off as computed under the Income-tax Act. 7.3 It would be obvious from the above that while working out the book profit, brought forward loss(es) or unabsorbed depreciation, whichever is less, would be reduced. It is admitted by the appellant that its brought forward loss was only after taking into account the depreciation. It means that the appellant did not have any actual bro....
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.... of the amounts of brought forwarded loss(es) or depreciation. It would be evident that the Companies Act differentiates the actual loss and the loss after depreciation. In view of this, the appellant's contention that the loss in its case should be taken into consideration after providing for depreciation is not justified. In view of this, the action of the Deputy Commissioner of Income-tax is confirmed. In the result, the appeal is partly allowed." 3. Mr. Akshay Bhan, learned counsel for the assessee has argued that the controversy now stands concluded in favour of the petitioner by the judgment of the hon'ble Supreme Court in the case of Surana Steels P. Ltd. v. Deputy CIT [1999] 237 ITR 777. According to learned counsel, the langu....
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....bject behind the legislation and held that the provisions of section 205 quoted hereinabove stand bodily lifted and incorporated into the body of section 115J of the Income-tax Act, all that we have to do is to read the provisions plainly and apply the rules of interpretation if any ambiguity survives. Section 205(1), proviso, clause (b) of the Companies Act brings out the unabsorbed portion of the amount of depreciation already provided for computing the loss for the year. The words 'the amount provided for depreciation' and 'arrived at in both cases after providing for depreciation' make it abundantly clear that in this clause 'loss' refers to the amount of loss arrived at after taking into account the amount of depreciation provided i....
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....1. If "loss" were to be taken as pre-depreciation loss then the resultant computation will not be in conformity with the tenor of the provisions of section 205. The language of clause (b) of the proviso to section 205(1) is clear. It applies to those cases where the depreciation has been provided in accordance with the provisions of sub-section (1) of section 205. The depreciation is provided for in the profit and loss account. The loss is arrived at after taking into account the depreciation provided. It is therefore clear that the word "loss" as used in the proviso to clause (b) to section 205(1) signifies the amount arrived at after taking into account the amount of depreciation and it has to be so read and understood in the context of s....