TMI Blog2023 (3) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... other sources. Since AO has not adopted the correct method and not complied with the provisions of section 72(2) and Ld. CIT (Appeals) has also not considered the contention made by the assessee regarding the correct method of setting off of business loss and unabsorbed depreciation, we are of the view that the finding of the Ld. CIT (Appeals) on this issue needs to be reversed and the same is set aside and the grounds No. 2(a) to 2(b) of the appeal raised by the assessee are allowed. AO is directed to give effect of the brought forward business loss and unabsorbed depreciation as per the computation of income filed by the assessee with the only difference with regard to brought forward loss for A.Y. 2009-10, which has been assessed - as against the business income for A.Y. 2011-12 the assessee is eligible for set off of assessed business loss and set off of balance amount of unabsorbed business loss for A.Y. 2010-11 which will thus leave balance of unabsorbed business loss to be carried forward for A.Y. 2011-11 - As regards the unabsorbed depreciation is concerned, the claim made by the assessee is correct and the Ld. AO is directed to accept the same. Not allowing deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of unabsorbed depreciation of Rs. 2420618/- as per books of account of asst year 2009-10 and 2010-11 of Rs. 1428430/- and 992188/- from MAT book profit computation stating that deficit of Rs. 8100194/- was already adjusted in F.Y. 31.03.2010 with the general reserve. The same be allowed in full. (3) (c) That on the facts and circumstances of the case the Ld. CIT(A) erred in agreeing with AO in ignoring the clear mandate of Section 115JB(2) Explanation land settled law regarding adjustments/deductions to be made. The appellant be allowed deduction Rs. 2420618/- in full. 3. From perusal of the above grounds, we notice that the issue raised in Ground No. 1 is general in nature, which does not need for adjudication. In Ground No. 2, the issue relates to set off of brought forward business loss and unabsorbed depreciation; and Ground No. 3 relates to computation of book profit under section 115JB of the Act. 4. At the outset, Ld. Sr. Counsel for the assessee stated that both the lower authorities erred in not giving set off of business loss as per section 72(2) read with section 32(2) of the Income Tax Act. 5. On the other hand, Ld. D.R. supported the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any business or profession carried on by him and assessable for that assessment year: Provided that the business or profession for which the loss was originally computed continued to be carried on by him in the previous year relevant for that assessment year; and (ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on: Provided that where the whole or any part of such loss is sustained in any such business as is referred to in section 33B which is discontinued in the circumstances specified in that section, and, thereafter, at any time before the expiry of the period of three years referred to in that section, such business is re-established, reconstructed or revived by the assessee, so much of the loss as is attributable to such business shall be carried forward to the assessment year relevant to the previous year in which the business is so re-established, reconstructed or revived, and-- (a) it shall be set off against the profits and gains, if any, of that business or any other business carried on by him and assessable for that assessment year; and (b) if the loss cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of assessed loss for A.Y. 2009-10 and 2010-11 respectively. 9. Now going through the calculation of assessed income by the Ld. Assessing Officer for the assessment year 2011-12 dated 19.02.2014, we notice that against the positive income for A.Y. 2011-12 under the head business income at Rs. 2,83,08,208/-, Ld. Assessing Officer adjusted the brought forward assessed losses for A.Y. 2009-10, at Rs. 1,93,31,345/- and unabsorbed depreciation of Rs. 16,16,894/- and the remaining amount of positive income was adjusted against the assessed brought forward business loss for A.Y. 2010-11 and thereafter while dealing with the unabsorbed depreciation to be set off against the income from capital gain and income from other sources, the Ld. Assessing Officer gave the set off of unabsorbed depreciation of Rs. 7,44,245/-. This working of the Ld. Assessing Officer contains the mistakes as they are not in consonance with the provision of section 72(2) of the Act. The correct method for adjustment of brought forward losses, which the Ld. Assessing Officer ought to have adopted, was to first set off the brought forward assessed business loss for A.Ys. 2009-10 and 2010-11 against the positive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation, hence, there cannot be any adjustment of either unabsorbed loss or unabsorbed depreciation from the book profit. This view of the Ld. Assessing Officer has been confirmed by the Ld. CIT (Appeals) also. 11. Before us, Ld. Counsel for the assessee referring to the written submission filed before the Ld. CIT (Appeals) stated that Ld. Assessing Officer erred in observing that deficit of Rs. 81,00,144/- was adjusted fully on 31.03.2010. The Ld. Assessing Officer further erred in stating the adjustment with general reserve etc, wherein section 115JB(2) Explanation (1)(i)(iii), nowhere put any condition as such invoked by the Ld. Assessing Officer. It is further submitted that in so far 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 and loss account but also all the amounts which are to be increased as stipulated in clauses (a) to (j) and those which are to be reduced as specified in clauses (i) to (viii), find separate mention in the scheme of the section itself.. So, the computation of book profit is to be done strictly, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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