TMI Blog2014 (1) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... d if the income determined under the first section (1) of section 115J gives the definition of 'book profit' by incorporating the requirement of section 25 of the Companies Act in the computation of the book profit. Brought forward loss or unabsorbed depreciation whichever is less would be reduced in arriving at the book profits. Sub-section (2), however, provides that the application of this provision would not affect the carry forward of unabsorbed depreciation, unabsorbed investment allowance, business losses to the extent not set off, and deduction under section 80 J, to the extent not set off as computed under the Income-tax Act - The very object of the provision of section 115J is to tax such companies which are making huge profits an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other provisions of the Act? 3) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in holding that there is no infirmity with regard to interpretation of the provisions of Sec.115J in respect of determination of carry forward losses and consequently the CIT(A) was correct in concluding that interpretation of Sec.115J(2) would not conflict with the provisions of Sec.115J(1) of the Act? 2) Having regard to the facts and circumstances of the case, both the counsel though three questions have been referred for the opinion of the Court, they confined to only seeking reference to the Question No.2. Therefore, this Court is not required to answer the Question Nos.1 and 3. In that vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision for doubtful debts as well as prior period expenditure debited to the profit and loss account and 30% thereof is determined at Rs.31,99,780/-. The assessee carried the matter in appeal to the Commissioner of Income Tax (Appeals). 4) Before the Commissioner, Income Tax (Appeals), the assessee raised the issues relating to the disallowance of the deductions claimed by the assessee. The Commissioner (Appeals), did not go into the other claims, but determined the computation of the book profit under Section 115J of the Act. After considering all the contentions of the assessee, the CIT (Appeals) upheld the book profit as determined by the assessing officer. The CIT (Appeals) also observed while refusing to deal with the other grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment 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 profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 (1 of 1956). 155J(2) Nothing contained in sub-section (1) shall affect the determination of the amounts in relation to the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 80 J, to the extent not set off as computed under the Income-tax Act. A Division Bench of this Court in Suryalatha Spg. Mills Ltd., (1997) 223 ITR 713 had construed section 115J in favour of the Revenue, inter alia, because, "the very object of the provision of section 115 J is to tax such companies which are making huge profits and also declaring substantial dividends but are managing their affairs in such a way as to avoid payment of income-tax, as a result of various tax concessions and incentives and for that purpose, the taxable income is determined under sub-section (1) of Section 115J, if any loss equal to the income thus determined is allowed to be adjusted, then that would frustrate and nullify the very object of en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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