TMI Blog2011 (8) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... t as against the general reserve by itself would not defeat the claim of the assessee for considering the unabsorbed declaration in computation of the profit for the next year in terms of Section 205(1) (b), yet, the fact remains that when the accounts were made up for the assessment year 1989-1990, the loss and unabsorbed depreciation remained NIL - On the factual position that the assessee had no unabsorbed loss or unabsorbed depreciation to be carried forward for any consideration in the year under consideration, rightly, the Commissioner of Income Tax gave the direction which is in accordance with the provisions of the Act, as well as the Income Tax Act, 1961 - the order of the Tribunal is set aside - The Tax case Revision is allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was no unabsorbed loss or unabsorbed depreciation. Consequently, deduction of a sum of Rs.2,01,38,614/- was erroneous according to the provisions of Section 115J (1A)(iv) of the Income Tax Act, 1961. 4. The assessee filed its reply contending that for the financial year 1988-1989, the assessee made a book profit of Rs.1132.66 lakhs after making provision for depreciation for that year at Rs.211.72 lakhs, in accordance with the provisions of the Companies Act, 1956. The assessee pointed out that after making provision for depreciation of Rs.2,01,39,000/- the loss suffered during the period came to Rs.26,05,25,000/-. This loss was transferred to the General Reserve, thereby reducing the reserve to a very negligible amount. However, such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of computation of the profit and loss of the company there was no loss or depreciation available as was evident from the balance sheet as on 31.3.1988. 7. The assesee preferred an appeal before the Tribunal. The Tribunal agreed with the assessee and pointed out that since the amount of depreciation of Rs.2,01,39,000/- was well below the total loss of 26,05,25,000/- the officer rightly granted the deduction for the depreciation. The Tribunal further pointed out that the view of the Commissioner that loss or depreciation referred to in clause (iv) of 115 of the Income Tax Act, 1961, means only unabsorbed loss or unabsorbed depreciation was not correct. Thus quoting the decision reported in Surana Steels Pvt. Ltd. Vs. Deputy Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel has produced the records. A perusal of the Profit and Loss Account for the year 1988-1989 shows that the entire loss including the depreciation for the year was duly set off as against the profits available in the year 1987-1988 by taking the depreciation and loss from the general reserve for an adjustment. After this, the assesee had a profit of Rs.1,64,000/- for the purpose of declaring the dividend. Thus, after adjusting the unabsorbed depreciation as against the general reserve there remained nothing for the assessee to carry forward to the next year for the purpose of computing the profit, as given under Section 205(1)(b) of the Companies Act. 11. On the admitted position that the accounts of the assessee showed NIL as reg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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