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TMI Blog2021 (7) TMI 1244X X X X Extracts X X X X X X X X Extracts X X X X ..... see submitted that in assessment proceedings under section 143(3) of the Act, the Assessing Officer while computing book profit under MAT provisions disallowed assessee's claim of brought forward unabsorbed depreciation and levied penalty under section 271(1)(c) of the Act. The ld. Authorized Representative for the assessee submitted that in the Financial Fear 2002-03, the assessee suffered loss of Rs. 75,83,118/- and also had unabsorbed depreciation of Rs. 33,82,891/-. The assessee claimed set off of unabsorbed depreciation, being less than the business losses of Financial Year 2002- 03, against book profits of Financial Year 2003-04, in accordance with provisions of Sec.115JB(1), Explanation 1 Clause (iii). The assessee claimed set off of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s approved year to year basis approach. These two divergent views taken by different benches of Tribunal makes the issue contentious. 2.2. The ld. Authorized Representative for the assessee pointed that in the case of ACIT vs. Arvind Mills Ltd. in ITA No.3440/Ahd/2010 for assessment year 2004-05 decided on 05/08/2011 the Revenue had assailed the order of CIT(A) in deleting the addition made by Assessing Officer rejecting assessee's claim of year wise unabsorbed depreciation while calculating book profit under section 115JB of the Act. The stand of the Revenue was that unabsorbed depreciation/business loss should be considered on cumulative basis. The Tribunal rejected the plea of Revenue and concurred with the findings of CIT(A) holding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act are not attracted. 3. Per contra, Ms. Shreekala Pardeshi representing the Department vehemently defended the order of CIT(A) in confirming levy of penalty. The ld. Departmental Representative submitted that the assessee while computing books profit under section 115JB has wrongly claimed unabsorbed depreciation of immediately preceding assessment year. The Assessing Officer found that there was no brought forward loss/unabsorbed depreciation that could have been allowed to the assessee under section 115JB of the Act. Moreover, the assessee accepted the disallowance made by the Assessing Officer and did not contest by filing any further appeal. The ld. Departmental Representative prayed for dismissing appeal of the assessee and u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation were to be considered on year to year basis. The assessee in support of its computation of claim placed reliance on the decision of Tribunal in the case of Amline Textiles Pvt. Ltd. (supra). As against this, the Assessing Officer rejected the claim of assessee following aggregation approach, as reflected in the Balance Sheet. Per approach of Assessing Officer there would be no unabsorbed depreciation/business losses available for adjustment under section 115JB of the Act. There are two school of thoughts in computing set off of unabsorbed depreciation/business losses i.e. year to year basis vs aggregation. Both views are possible as per the language of Explanation- 1 clause (iii) to section 115JB (1) of the Act. This makes the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puting book profits u/s 115JB of the Act. In light of the fact discussed above coupled with the fact that divergent views have been expressed by the Tribunal on the issue of treating unabsorbed depreciation/business loss of preceding assessment years while computing book profits u/s 115JB, makes the issue debatable. Hence, no penalty under section 271(1)(c) of the Act can be levied on such disallowance. 8. It is no more res-integra that levy of penalty is not automatic. Even if addition/disallowance made by Assessing Officer is accepted by the assessee and is not contested further, it would not result in levy of penalty. Assessment proceedings and penalty proceedings are separate and distinct. The Assessing Officer has to record satisfacti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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