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TMI Blog2008 (11) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,51,15,393 Book Profit Rs. 24,09,122 4. On being called upon to justify its claim, the assessee furnished detail of the set off of unabsorbed depreciation amounting to Rs. 1.51 crores, which was reduced by it for computing the book profit for the current year. It was explained that as per the provisions of section 115JB(2), the amount of loss brought forward or unabsorbed depreciation, whichever is less as per the books of account, was set off against the profit as per P&L account and also furnished the detail of unabsorbed depreciation and brought forward loss as per books of account, as under :- Depreciation Loss as per Total (Rs.) as per books books excluding depreciation A.Y. 1999-2000 42,25,696 94,88,756 1,37,14,352 A.Y. 2000-2001 44,42,777 1,30,33,168 1,74,76,945 A.Y. 2001-2002 44,53,565 (7,30,402) 37,23,163 A.Y. 2002-2003 19,93,456 22,84,195 42,77,650 1,51,15,393 2,40,75,717 3,91,91,110 5. The Assessing Officer noted that for the assessment year 2001-02 there was book loss of Rs. 37,23,163 after the claim of depreciation amounting to Rs. 44,53,565. After eliminating the effect of the deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the amounts of brought forward loss or unabsorbed depreciation for the purposes of reduction from the net profit as per profit and loss account or it is the aggregate amount of loss brought forward or unabsorbed depreciation as one composite figure? Whereas the assessee's claim is that it is the aggregate amount of loss brought forward or unabsorbed depreciation relating to the earlier years which should be considered for the purpose of deducting from the net profit as per profit & loss account, the revenue is contending that the brought forward losses as well as unabsorbed depreciation in respect of each year is to be separately examined and allowed. The Assessing Officer has not allowed deduction for unabsorbed depreciation amounting to Rs. 44.53 lakhs while computing book profit precisely on the ground that in the assessment year 2001-02 the figure of profit before depreciation is a positive figure at Rs. 7.30 lakhs and as per sub-clause (b) of Explanation to clause (iii) of Explanation (1), the loss excluding depreciation has to be taken at zero. 8. Section 115JB is a special provision for payment of tax by certain companies. Sub-section (1) contains the non obstante claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm 'loss' in clause (iv) of the Explanation as to whether the loss should be considered as before or after taking into account the amount of depreciation. The Hon'ble Supreme Court in the case of Surana Steels (P.) Ltd. v. Dy. CIT [1999] 237 ITR 777 held that the term 'loss' occurring in clause (b) of first proviso to section 205(1) of Companies Act has to be read as amount arrived at after taking into account the depreciation and accordingly the same was to be read and understood in the context of section 115J also. Resultantly the term "loss" was understood as the amount arrived at after taking into account the depreciation. The Legislature made its intention clear by providing in the successor sections that the loss shall not include depreciation, it is so provided in section 115JA and the similar wording has been used in clause (iii) of Explanation (1) to section 115JB also, which is under consideration. Hence the judgment of the Hon'ble Supreme Court rendered in the case of Surana Steels (supra) is not relevant in the context of section 115JB, which specifically states that the loss shall not include depreciation. The net effect of the position as it now exists is that while c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pressing into service of the word 'loss' in this clause in contradistinction to the word 'losses', as has been done in the marginal notes to sections 72, 73, 74, 74A and 75 etc. From here we gather that by using the words 'amount' and 'loss' in this clause, the point has been made clear that it is a composite figure each of the unabsorbed depreciation and brought forward loss, that merits consideration. 13. Moving still further we find from the language of this clause that there is no reference to considering the brought forward loss or unabsorbed depreciation on year to year basis. There is nothing in the language of section, which could suggest, even remotely, that the Legislature intended to consider year-wise figures. If it had desired like that, then it would have been so stated in unequivocal terms in the provision itself. In the absence of any specific mention in this regard in the clause, we are unable to infer such intendment. Since the language of the section is clear and does not admit of any doubt, we are not persuaded to interpret it in the way, the ld. DR impresses upon us to do. 14. The authorities below have concluded that year-wise determination of the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace of what is specifically made available in this section, insofar as the computation of book profit is concerned, the entire mechanism for its calculation is clearly set out in Explanation (1). Not only starting point being the net profit as shown in the profit & loss account but also all the amounts which are to be increased as stipulated in clauses (a) to (h) and those which are to be reduced as specified in clauses (i) to (vii) find separate mention in the scheme of the section itself. So the computation of 'book profit' is to be done strictly as per this Explanation and no assistance from any other section of the Act can be taken for that purpose. When clause (iii) of Explanation (1) clearly states that 'the amount of loss brought forward or unabsorbed depreciation, which is less as per books of account' is liable to be reduced, in our considered opinion, there is no authority for falling upon the command of section 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. 16. There is one more reason for not approving the view taken by the authorities below. Section 72(3) restricts the period to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or vice versa, then no reduction is to be made of the amount of brought forward loss or unabsorbed depreciation, as the case may be. In the earlier part of the order we have held that if there is loss brought forward and unabsorbed depreciation for more than one year, then one combined figure each of unabsorbed depreciation and brought forward loss for such years is to be determined for consideration. Adverting to the facts of our case, we find that none of the figures of unabsorbed depreciation or brought forward loss is Nil, hence this part of the Explanation is not relevant for our purpose. 18. In view of the foregoing discussion 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" under section 115JB. As the aggregate amount of unabsorbed depreciation in respect of the four years is at Rs. 1,51,15,393 which is lower than the aggregate of the loss before depreciation at Rs. 2,40,75,717, in our considered opinion, the assessee had rightly claimed reduction for the lower amount of Rs. 1.51 crores. We, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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