TMI Blog2023 (5) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Assessee : Shri Satyajeet Goel, Adv. For the Revenue : Shri Kanv Bali, Sr. DR ORDER PER ANIL CHATURVEDI, AM : This appeal filed by the assessee is directed against the order dated 29.08.2018 of the Commissioner of Income Tax (Appeals)-4, Kolkata relating to Assessment Year 2011-12. 2. Assessee is the company stated to be engaged in the business of manufacturing trading of synthetic/wollen/worsted yarn fabrics synthetics fabrics, manufacturing and trading of ready-made garments, generation of power, processing of synthetics etc. Assessee electronically filed its return of income for AY 2011-12 on 23.09.2011 declaring total income of Rs.7,43,42,220/- under the normal provisions of the Act and Rs.10,38,62,502/- under 115JB of the Act. The case of the assessee was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 13.03.2014 and the total taxable income was determined at Rs.9,26,29,490/-. 3. Aggrieved by the order of AO assessee carried the matter before CIT(A) who vide order dated 29.08.2018 in Appeal No.815/CIT(A)-4/2014-15 granted partial relief to the assessee. 4. Aggrieved by the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and business loss in windmill division. He noted that while computing the claim of deduction for the year under consideration, assessee had not set off the unabsorbed depreciation and business loss of windmill division of earlier years against the income of windmill. He was of the view that if the unabsorbed losses and unabsorbed depreciation of earlier years would have been set off against the profits of the year then there would have been no positive income from the windmill division and, therefore, the claim of deduction u/s 80IA of the Act was not allowable. The submissions of the assessee that the initial assessment year for the purpose of claiming deduction under 80IA was AY 2011-12 and any loss or unabsorbed depreciation of earlier years which has already been set off with other income in earlier years cannot be brought forward notionally and adjusted against the profit of the eligible undertaking was not found acceptable to AO. The AO, thereafter for the reasons noted in the order denied the claim of deduction u/s 80IA of the Act. 7. Aggrieved by the order of AO assessee carried the matter before CIT(A). Before CIT(A) assessee apart from various submissions to support i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the claim of the assessee that from AY 2004-05 to 2010-11 assessee had not claimed deduction as it had incurred losses in the wind power undertaking. It is further the contention of the assessee that the loss and unabsorbed depreciation of the wind power undertaking that was incurred in earlier years has already been set off against other income in earlier years and since there remains no brought forward losses or depreciation, notional brought forward losses cannot be adjusted against the profit of the eligible undertaking. The aforesaid factual submissions of the assessee with respect to the initial assessment year, the setting off of losses and unabsorbed depreciation against the income of earlier years has not been controverted by Revenue. The only issue, therefore, is whether the notional loss or unabsorbed depreciation of the wind power unit of earlier years can be adjusted against the profit of the eligible undertaking? We find that the identical issues arose before the Hon ble Bombay High Court in the case of CIT vs. Hercules Hoists Ltd. (supra). The question for adjudication before the Hon ble High Court and its findings are as under: - 2. The Revenue has framed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of the assessee. Looking forward to a period of ten years from the initial assessment is contemplated. It does not allow the Revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though the same were set off against other income of the assessee and the set off against the current income of the eligible business. Once the set off is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally. A fiction created in sub section does not contemplates to bring set off amount notionally. The fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created. 9. The said judgment of the Madras High Court has been confirmed by the Apex Court, as such has attained finality. Even in the assessee's own case for the previous year, the losses were set off in the relevant years. The Revenue had challenged the said action before this Court in Income Tax Appeal No.2485 of 2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed. He, accordingly, denied the claim of the assessee for excluding the interest subsidy for working out the provisions of MAT. 16. Aggrieved by the order of CIT(A), assessee is now before the Tribunal. 17. Before us, Ld. AR reiterated the submissions made before lower authorities and further relying on the decision of Delhi Tribunal in the case of Indogulf Cropsciences Ltd. (supra) in ITA No.7610/2017 order dated 13/10/2022 submitted that the Tribunal while deciding the issue in favour of the assessee in that case had also considered the decision of Hon ble Karnataka High Court in the case of B B Infratech Ltd. (supra). He, therefore, submitted that following the decision of the coordinate bench of Tribunal, the claim of the assessee be allowed. 18. Ld. DR, on the other hand, supported the order of lower authorities and also placed reliance on the decision of Karnataka High Court in the case of B B Infratech Ltd. (supra). 19. We have heard the rival submissions, perused the material on record. 20. The issue in the present ground is about the computation of book profits for the purpose of Section 115JB of the Act. It is the case of the assessee that the interest s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of taxable liability as per the provisions of Section 115- B of the Income-tax Act, 1961 can be altered on any subject or item which oherwise is not falling in the Explanation to Section 115JB of the Act? and has observed that provisions of Section 115JB is a complete code in itself and the increase or reduction of income is permissible only to the extent provided under the explanation to the said section and following the judgment of Hon ble Supreme Court of India in Appollo Tyres Ltd. vs. CIT [2002] 255 ITR 273/122 taxman 562 had held that the Tribunal in that case had not committed any error while characterizing both capital receipts and revenue receipts in a like manner for the computation of book profits u/s 115JB of the Act. 9. Giving thoughtful consideration to the matter on record and the submissions made before the Bench it can be observed that on the basis of judgment of Hon ble Karnataka High Court in B B Infratech Ltd. (supra) that Hon ble Karnataka High Court was dealing with the matter where an amount of Rs. 43,00,000/- pertaining to remission of liability under one time settlement of outstanding loan with ING Vysya Bank was the disputed income which w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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