TMI Blog1996 (6) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------ The entire dispute in this appeal is with regard to the adjustment of the book profit of Rs. 18,43,065. The assessee's claim is that this book profit of Rs. 18,43,065 has been deemed as total income, on which it had paid tax, and, therefore, it should be reduced from its income and against the balance alone depreciation should be set off. 3. The learned counsel of the assessee submitted before us that the amount of depreciation in accordance with the provisions of section 32(2) of the Income-tax Act is deductible from profits or gains chargeable for the year and since the amount of Rs. 18,43,065 was subjected to tax under section 115J, the 'amount chargeable to tax' referred to in section 32(2) shall not include the said amount. Therefore, depreciation should have been allowed out of the balance of Rs. 1,29,04,771. He placed reliance in this regard on the decision of the Income-tax Appellate Tribunal, Madras Bench, in the case of Fab Exports (P.) Ltd v. ACIT [1996] 56 ITD 132. 4. The learned counsel further submitted that the provisions of section 115J, which according to him replace those of section 80VVA, were intended to tax at least 30 per cent of the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim. He further submitted that sections 32(2) and 72(2) are not subject to the provisions of section 115J(1) and that section 80VVA is not in pari materia with section 115J which has a wider net. He referred to the commentary of Chaturvedi Pithisaria, Vol. 3, page 2981. 6. We have heard the parties and considered their rival submissions. Section 115J of the Income-tax Act reads as under : " 115J. (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee being a company other than a company engaged in the business of generation or distribution of electricity, the total income, as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1988, but before the 1st day of April, 1991 (hereafter in this section referred to as the relevant previous year), is less than thirty per cent of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent of such book profit. (1A) Every assessee, being a company, shall, for the purposes of this section, prepare its profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the amounts referred to in clauses (a) to (f) and reducing the net profit by the amounts referred to in clauses (i) and (ii)] attributable to the business, the profits from which are eligible for deduction under section 80HHC or section 80HHD; so, however, that such amounts are computed in the manner specified in sub-section (3) or sub-section (3A) of section 80HHC or sub-section (3) of section 80HHD, as the case may be; or (iv) the amount of the loss or the amount of depreciation which would be required to be set off against the profit of the relevant previous year as if the provisions of clause (b) of the first proviso to sub-section (1) of section 205 of the Companies Act, 1956 (1 of 1956), are applicable. (2) Nothing contained in sub-section (1) shall affect the determination of the amounts in relation to the relevant previous year to be carried forward to the subsequent year or years under the provisions of sub-section (2) of section 32 or sub-section (3) of section 32A or clause (ii) of sub-section (1) of section 72 or section 73 or section 74 or sub-section (3) of section 74A or sub-section (3) of section 80J. " On a bare reading of this section, it is evident that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f and should be allowed to be carried forward. Here also, we do not find any force in the contention of the assessee. Firstly, the 30 per cent of book profit is a deemed income and can exist even in cases where total income under other provisions of the Act is a loss. Secondly, it only comes into existence when the total income of an assessee is less than that figure. In support of its contention, the assessee relied upon the decision of the Tribunal in the case of Fab Export (P.) Ltd. in that case, the assessment year involved was 1991-92 when the provisions of section 115J were not in vogue. The Assessing Officer determined the assessee's income at Rs. 1,94,963 after allowing set-off of brought-forward business loss of assessment year 1985-86 and unabsorbed depreciation of earlier years, i.e., 1976-77, 1977-78, 1981-82, 1982-83, 1985-86 and 1986-87. In the in-between year, i.e., assessment year 1990-91, the assessee's income was computed under section 115J to the extent of Rs. 1,73,804, there being a loss computed under the normal provisions of the Act. As per the assessee's version, the unabsorbed losses to be carried forward were Rs. 3,47,262 whereas, as per the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 115J(1) have been enacted. Section 115J(2) also starts with a non obstante clause which is designed not only to highlight the limited purpose which section 115J(1) is designed to serve but also to highlight the further fact that the other provisions of the Act which normally govern matters such as carry forward of business losses and the like are not to be interfered with. Thus, the provisions of section 115J(2) are designed to keep intact the assessee's right in relation to carry-forward and set-off of business loss and the like." It might be true that the Tribunal has given a narrow meaning to the word "affected" as "adversely affected" as appearing in section 115J(2), as contended by the assessee's counsel in para 7 of the said order of the Tribunal, but in that case the issue was not required to be considered, for it was not the year to which section 115J was applicable and the determination of loss to be carried forward was to be made only in the year to which the loss pertained and not in the subsequent year when it was to be actually set off. [See CIT v. Dalmia Cement (Bharat) Ltd. [1995] 216 ITR 79/82 Taxman 229 (SC)]. 8. The assessee put forward yet another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 115J are self-contained code applicable to companies for computation of income chargeable to tax in certain circumstances. Hence, it is not the province of a Judge to disregard the same or to go outside the enactment. There was a specific provision in section 80VVA which allowed the assessee to carry forward and set off in the subsequent year, the said 30 per cent loss which is not allowed in a particular year. Sub-section (4) of section 80VVA may be quoted in this regard : " 80VVA(4). To the extent to which full deduction cannot be allowed in the assessment year in respect of any provision specified in sub-section (2), by virtue only of the restriction under sub-section (1) (and not by virtue of anything contained in any other section), the amount remaining unallowed shall be added to the amount, if any, to be allowed to the assessee under the said provision for the next following assessment year and be deemed to be part of the deduction admissible to the assessee under the said provision for that year or, if no such deduction is admissible to the assessee for that year, be deemed to be the deduction admissible to the assessee for that year, and so on for succeeding ass ..... 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