TMI Blog1993 (11) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... ss or brought forward depreciation, whichever is less, is to be deducted and since the brought forward business loss was nil, no deduction was to be made therefor. He accordingly determined the total income at 30 per cent of the adjusted book profit, i.e., Rs. 99,67,013. The assessee appealed and pointed out that the adjustments made to the book profits were not justified as both the provisions added back were accrued liabilities. It was also contended that the unabsorbed depreciation of the earlier years must be set off under the provisions of section 115J. The CIT (Appeals) accepted the first contention that the two provisions added back by the Assessing Officer were to be excluded. However, he rejected the second contention on the ground that the word 'loss' in the expression 'loss or depreciation whichever is less' refer only to 'loss exclusive of depreciation', following the decision of the Hyderabad Bench of the Tribunal in V.V. Trans-Investments (P.) Ltd. v. ITO [1992] 42 ITD 242. 3. In the further appeal before us, it was pointed out on behalf of the assessee that the decision of the Hyderabad Bench of the Tribunal has been overruled by the Special Bench of the Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic interest. It was also submitted that such noting cannot be regarded as an aid to the interpretation of the statute and the issue should be decided on the basis of published material. The assessee has also filed a written reply stating that this plea of the Revenue is misconceived and that the Departmental note would be a relevant material for understanding the scope of section 115J. 4. We have considered the submissions on both sides and in terms of our order dated 3-8-1993, we have to hold that in the absence of any material produced by the Revenue to show that the intention in introducing the Explanation to section 115J was not different from that as understood by the Tribunal in the Special Bench decision cited above, it has to be presumed that the claim of the assessee is correct and is allowable. 5. Section 1 15J provides that where the total income as computed under the provisions of the Income-tax Act is less than 30 per cent of the book profit, the total income chargeable to tax shall be deemed to be the amount equal to 30 per cent of that book profit. The Explanation to that section defines "book profit" to mean the profit shown in the profit and loss account of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unabsorbed depreciation and not with reference to the entire loss including depreciation. It is because of this stated intention of the Hon'ble Finance Minister that we required the Revenue to produce before us the note prepared for him before he made the speech to understand whether he could have meant anything else. Obviously, such a note exists and it supports the case of the assessee. Otherwise, there is no reason why the Revenue should be reluctant to produce the same before us. It is well-settled that the claim of privilege is not meant for withholding evidence which will hinder the Government in the litigation. The Revenue has also not produced any material to show that the meaning of this expression was any different under the Companies Act. Moreover, it is a well-settled principle of interpretation that where a particular section of an Act is introduced into another statute, it has to be read in the sense which it bore in the original Act from which it is taken. Since the revenue is not able to demonstrate that this expression meant something different in the Companies Act and since the Hon'ble Finance Minister himself has stated in his speech that he intended to allow the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, had such a procedure been followed, the Department would have been forced to bring this matter to the notice of the Hon'ble Finance Minister, and the latter would have certainly clarified what he meant while incorporating a provision of the Companies Act into the Income-tax Act, and particularly whether he intended to have that expression in the Companies Act to have quite a different meaning for the purpose of income-tax, even though he had stated that he wanted to give the same adjustment. This procedure was not followed and consequently the matter remained unreported to the Hon'ble Finance Minister. 8. In the circumstances, we are convinced that the note prepared for the Hon'ble Finance Minister for making the assurance in the Parliament was a relevant material for understanding the scope of section 115J and since the Revenue has failed to produce the same in spite of specific opportunity, we hold that the interpretation placed by the assessee on the provisions of item (iv) of the Explanation to section 115J is correct and has to be accepted. 9. Coming to the facts of the present case, the data in the Annexure 'A' hereto shows that for all the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sly, on the facts here, the total amount of deduction in either case exceeds the current profit of Rs. 2 crores 95 lakhs. This itself indicates that the Income-tax Officer had not applied his mind even to the comparison put forward by the revenue. 11. We, therefore, set aside the orders of the authorities below and direct the Assessing Officer to refrain from applying the provisions of section 115J while recomputing the income of the assessee. 12. In the result, the appeal is allowed. ANNEXURE -A TAMIL NADU CEMENTS CORPORATION LIMITED, ITA NO. 3159/1992 Total loss or depreciation (Whichever is lower in respect of years in which there was a loss) ------------------------------------------------------------------------------------------------- Previous Assessment Loss Cash Depreciation Loss or Cash Loss year year Profit/ Depreciation or Deprecia- Loss tion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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