TMI Blog2008 (11) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... on 72 for holding that the business loss is to be considered on year to year basis and not as an aggregate figure for all years in unison. To put it simply the amount of loss brought forward or unabsorbed depreciation has to be considered for as many years as coming in the books of account irrespective of any rider for a particular number of years. We, therefore, hold that reference to the provisions of sections 71 to 73 for arriving at the conclusion that section 115JB refers to year-wise consideration of the loss brought forward or unabsorbed depreciation, is erroneous. We are of the considered opinion that the lower of the solitary figures of the unabsorbed depreciation or loss brought forward for all the earlier years taken together, is to be reduced for the purposes of computing book profit u/s 115JB. As the aggregate amount of unabsorbed depreciation in respect of the four years which is lower than the aggregate of the loss before depreciation. in our considered opinion, the assessee had rightly claimed reduction for the lower amount. We, therefore, accept the assessee s contention on this point. In the result, the appeal is allowed. - R.S. SYAL AND SMT. ASHA V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer noted that there was a book profit of Rs. 7,30,402. He, therefore, took the amount of loss excluding depreciation at zero for this year and did not allow any set off on this count in the computation of book profit in terms of the provisions of clause ( iii ) of Explanation (1) to section 115JB(2). He however allowed deduction of Rs. 1.06 crores in respect of unabsorbed depreciation for the remaining three assessment years, that is 1999-2000, 2000-01 and 2002-03. Thus the amount of deduction claimed by the assessee at Rs. 44,53,565 towards unabsorbed depreciation for the year ending on 31-3-2001 was refused for the purpose of computing the book profit under section 115JB. No relief was allowed in the first appeal. 6. Before us the learned Counsel for the assessee contended that the calculation made by the assessee was in accordance with the provisions of clause ( iii ) to the Explanation (1) below section 115JB(2), as per which the total amount of loss brought forward or the unabsorbed depreciation, whichever is less as per the books of account, was liable to be reduced from the net profit as shown in the Profit Loss account for the purposes of deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ante clause and provides that where the income-tax payable on the total income of a company as computed under this Act is less than 10 per cent of its book profit, then such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income-tax at the rate of 10 per cent. Explanation (1) provides the mode of computing "book profit" by taking net profit as shown in the profit and loss accounts as its starting point to be increased by the items mentioned in clauses ( a ) to ( h ) debited to the profit loss account and as reduced by the items specified in clauses ( i ) to ( vii ). At this stage it will be apt to consider the relevant part of this section as under : " Explanation (1) - For the purposes of this section, book profit means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by - ( a )to ( g ) ****** ( h )if any amount referred to in clauses ( a ) to ( h ) is debited to the profit and loss account, and as reduced by ( i ) ( ii ) ****** ( iii )the amount of loss brought forward or unabsorbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not include depreciation. The net effect of the position as it now exists is that while computing the amount of loss brought forward, the amount of depreciation is not to be considered. In other words, the loss for the purposes of section 115JB has to be computed before depreciation. 11. The basic rule of interpretation of the provisions is the strict rule , that is, follow what has been expressly stated in the provision and go by the plain language of the section. It is not permissible to import any thing into statutory provision and read what is not explicitly provided. The need for unearthing the real intention arises only when the language of the section is ambiguous, vague or uncertain. With this basic principle of interpretation on hand, we move on to examine the rival contentions made by the parties as to whether clause ( iii ) it refers to consideration of year-wise separate figures of unabsorbed depreciation and loss brought forward or the composite figures. 12. Clause ( iii ) states that the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account is to be reduced from the net profit. As per the plain language of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impresses upon us to do. 14. The authorities below have concluded that year-wise determination of the amount of loss brought forward or unabsorbed depreciation is to be considered and if in a particular year - as in assessment year 2001-02 under consideration - there is no loss before depreciation, then the benefit of unabsorbed depreciation cannot be granted. In forming this opinion, assistance has been taken from the opening words of sub-section (1) of section 115JB as well as sub-section (5) of this section. Sub-section (1) starts with a non obstante clause : "Notwithstanding anything contained in any other provisions of this Act, ........" and sub-section (5) states that : "Save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being a company, mentioned in this section." It is on the strength of these two sub-sections that the learned CIT(A) has decided that all other provisions of the Act merit consideration in the determination of the book profit under section 115JB and hence the provisions of sections 71 to 73 will also apply and when so applied section 72 serves as guiding light as per which the benefit of carry f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ison. 16. There is one more reason for not approving the view taken by the authorities below. Section 72(3) restricts the period to which the loss can be carried forward to not more than eight assessment years immediately succeeding the assessment year for which the loss was first computed. As per this section if there is a brought forward loss which is more than eight years old, that has to be abandoned and only the brought forward loss of less than the prescribed period can be carried forward for set off against the business income. On the contrary there is no prohibition in section 115JB as per which the amount of unabsorbed loss is to be discarded after the expiry of eight years from the year in which it was first computed. Even if loss is brought forward from 50 years back, that has also to be reckoned. To put it simply the amount of loss brought forward or unabsorbed depreciation has to be considered for as many years as coming in the books of account irrespective of any rider for a particular number of years. We, therefore, hold that reference to the provisions of sections 71 to 73 for arriving at the conclusion that section 115JB refers to year-wise consideration of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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