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2014 (12) TMI 1407 - BOMBAY HIGH COURTSet off of Brought forward losses - applicability of section 79 - Tribunal allowing the set off of brought forward losses and by holding that the Assessee Company was deemed to be a company in which public is substantially interested - HELD THAT:- In the present case, item (B) was invoked because in the Assessee company the voting power has been unconditionally acquired and to the extent indicated in item (B) by a company to which the clause applies or any subsidiary of such company if the whole of the share capital of such subsidiary company has been held by the parent company or by its nominees throughout the previous year. After perusal of the share holding pattern, the Tribunal concluded that the shares of Tata Industries Limited have been transferred to Tata Power Co. Ltd. It may be that, now, the voting power under section 2(18)(b) is acquired by the Tata Power Co. Ltd. but once that company falls within the definition of the term “a company in which public are substantially interested”, then, the Tribunal's conclusion cannot be faulted. There is material on record to indicate that as to how Tata Industries Limited and Tata Power Co. Ltd. have been treated by the Department/Revenue as companies in which public are substantially interested. Section 79 provides for carry forward and set off losses in case of certain companies. That refers to a change in the share holding pattern taking place in a previous year in the case of a company, not being a company in which the public are substantially interested. Therefore, the prohibition which is carved out by this section becomes applicable. Obviously, therefore, if it is a company in which public are substantially interested, applicability of section 79 is ruled out. In the present case, we are not concerned with the section 43A of the Indian Companies Act. So long as the record indicated, the share holding pattern and the details which are set out at para 20 of the Tribunal's order which was undisputed, then, the Tribunal was justified in directing the Assessing Officer to allow the claim of brought forward losses. We do not see any substantial question of law arising for determination and consideration in this Appeal. Once the factual position and emerging from the record is noticed, then, the Assessee satisfies the condition stipulated and specified in section 2(18). The first question, therefore, cannot be termed as a substantial question of law. Computation of book profit u/s 115JB - inclusion of claim of depletion in producing properties as claimed - HELD THAT:- Assessee had to prepare a Profit and Loss Account for the relevant previous year in accordance with PartII and PartIII of Schedule VI to the Indian Companies Act, 1956. Since, the Tribunal found that the guidance can be taken from the Notes of accounting standards issued by the ICAI on depreciation accounting and we have held that such a course was permissible, then, the Tribunal was justified in referring to para 4 of this guidance Note and thereafter relying upon it. Once the guidance Note indicates that depreciation also includes the depletion of natural resources through the process of extraction or use, then, the Tribunal was justified in eventually directing that the Assessing Officer must recompute the book profit under section 115JB after allowing the claim of depletion in producing properties as claimed by the Assessee. We have referred to the relevant provisions in the Indian Companies Act, 1956. Section 211(3C) of that Act specifically refers to the standards of accounting and which have been laid down by the ICAI. In these circumstances, the view taken by the Tribunal on this count cannot be termed as perverse. We do not see how a substantial question of law would arise for our determination and consideration. In such circumstances, the question No.4 is also not a substantial question of law.
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