TMI Blog1995 (11) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... for carrying out rectification to the assessment order and applied the provisions of section 115J of the Act for which he observed that section 205 of the Companies Act have been made applicable to the section and that the assessee having suffered losses in an earlier year, for arriving at the book profits figure, earlier years losses or depreciation whichever is less must be deducted and if there is no depreciation, its figure should be taken as nil, which being lesser of the two, the profits of the year is the book profits for section 115J of the Act. This rectification having been upheld by the CIT(A), the assessee-company has challenged the same in the present appeal. 2. The learned senior advocate Mr. Trivedi contended that the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of unabsorbed prior years losses to the current year's profits before any dividend could be declared by the company and for purposes of such adjustment it stated that the prior years losses to the extent it comprises of depreciation provided, shall have to be compared with the figure of unabsorbed loss and whichever amount is lesser, that amount shall be adjusted from the current year's profits. He pleaded that the assessee-company had no assets on which it could provide depreciation and therefore, the unabsorbed loss of prior year's remained only a loss and in such a situation, according to the said section the amount to be deducted from the current year's profit shall be the figure of loss only because there is no figure of depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tmental Representative (DR) Mr. Meher Singh submitted that rectification is possible wherever the Assessing Officer had omitted to apply a particular provision of the Act that is applicable to the case of the assessee. He supported the orders of the authorities below and submitted that section 205 of the Companies Act having been borrowed for the purposes of section 115J of the Act, the Assessing Officer having omitted to apply those provisions initially, was justified to rectify his order for considering the said section. The rival contentions in this regard have been very carefully considered. Since, the controversy in the present appeal revolves around section 205 of the Companies Act, for the sake of facility, the relevant portions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The further restriction states that the loss of the earlier year or years or an amount of depreciation provided in that or those years need to be compared with one another and the amount that is lesser of the two would have to be adjusted against the current years profits. This section presupposes that the company would be owning assets that are depreciable and therefore had insisted upon the provision of depreciation on those assets to arrive at the profit that could be considered for declaration of any dividend. Even where, the company had not provided any depreciation but had merely given an explanatory note on the balance-sheet, even in those cases, the depreciation that would have to be provided for would have to be considered in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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