TMI Blog2020 (6) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... tion(2). The supreme court in J.K.INDUSTRIES LTD. VS. UNION OF INDIA [ 2007 (11) TMI 401 - SUPREME COURT] has held that books of account do not include balance sheet and profit and loss account. It has further been held that balance sheet and profit and loss account are financial statements. Section 10A of the Act permits a newly established undertaking in Free Trade Zone to claim a deduction from profits as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive Assessment years relevant to the previous year, in which undertaking begins to manufacture of produce such article or things or computer software as the case may be, shall be allowed from the total income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 12.09.2012 on following substantial questions of law: (i) Whether on the facts and in the circumstances of the case, the honourable tribunal was right in law in not allowing deduction of brought forward loss or unabsorbed depreciation relating to non-STPI units in computing book profits under Section 115JB? (ii) Whether on the facts and in the circumstances of the case, the honourable tribunal was right in law in adjusting the past profits of the STPI units from the brought forward loss or unabsorbed depreciation relating to non-STPI units and thus not allowing reduction of the brought forward loss or unabsorbed depreciation relating to non-STPI units while computing the book profits under Section 115JB? (iii) Whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard business loss in it. Thus, it was held that no amount of brought forward loss has to be reduced in the computation of income. It was further held that in computation of income under Section 115JB of the Act, a sum of ₹ 8,44,51,767/- being unabsorbed depreciation claimed in the audit report in Form No.29B does not deserve to be reduced. Accordingly, the book profit of ₹ 21,14,42,000/- was adopted by not giving the benefit of deduction of unabsorbed depreciation amounting to ₹ 8,44,51,767/-. 3. Being aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) by an order dated 27.08.2010, inter alia held that when there is a loss shown in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt. 5. Learned counsel for the assessee submitted that loss brought forward and unabsorbed depreciation has to be taken as per books of accounts and not as per balance sheet. It is further submitted that tribunal ought to have reduced the lower of the brought forward loss and unabsorbed depreciation as per books of account relating to non 10A unit while arriving at book profit for the purposes of Section 115JB of the Act. While inviting the attention of this court to Section 10A as well as Section 115JB it is submitted that from the various adjustments mentioned in explanation-1, two adjustments with reference to Section 10A are evident viz., clause (f) of Section 115JB, which seeks to increase the net profit by the amount of expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT V. WILLIAMSON FINANCIAL SERVICES , (2008) 297 ITR 17, HINDUSTAN UNILEVER LTD. VS. DCIT , (2010) 325 ITR 102, CIT V. PAHARPUR COLLING TOWERS (P) LTD. , (1996) 219 ITR 618 (SC), SRI.VENKATESHWARA TOURIST HOME (P) LTD. , (1996) 219 ITR 618 (SC), SRI.VENKATESHWARA TOURIST HOME (P) LTD. V. ADIT (INVESTIGATION) , (1998) 233 ITR 0736 (KARN.), CIT VS. HARPRASAD AND CO PVT. LTD., , (1975) 99 ITR 118 (SC), APOLLO TYRES LTD. VS. CIT , (2002) 255 ITR 273 (SC), VARGHESE (K.P) VS. ITO , (1981) 131 ITR 597 (SC), CIT VS. VEGETABLE PRODUCTS LTD., , (1973) 88 ITR 192 (SC). 6. On the other hand, learned counsel for the revenue has supported the order passed by the tribunal and has invited our attention to the decision of the supreme court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax net, Section 115J was introduced in the Act with a deeming provision, which makes the company liable to pay tax on atleast 30% of its book profits as shown in its accounts. For the aforesaid purpose, Section 115J makes the income reflected in the companies books of account as the deemed income for the purposes of assessing the tax. It has also been held that sub-Section (1A) of Section 115J does not empower the assessing officer to embark upon a fresh enquiry with regard to the entries made in the books of accounts of the company. The said sub-Section mandates the company to maintain its account in accordance with the provisions of Companies Act. Section 115JB was inserted in the Act by Finance Act, 2000 with effect from 01.04.2001. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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