LANSHREE PRODUCTS SERVICES LTD.,KOLKATA vs. DCIT, CIR. 7(1), KOLKATA

In the Grounds No. 1 & 2, the assessee has challenged the order passed by the ld. CIT(Appeals) as against the provisions of the Act, whereby the ld. CIT(Appeals) has upheld and confirmed the denial of deduction of Rs.49,44,871/- being lower of the two i.e. book loss or unabsorbed depreciation claimed in terms of clause (iii) of Explanation (1) to Section 115JB of the Act.

The facts in brief are that the assessee filed its return of income claiming deduction of Rs.49,44,871/- being lower of the book loss or unabsorbed depreciation in the computation of book profit under section 115JB of the Act in consonance with clause (iii) of Explanation 1 to the said Section. The assessment was framed under section 143(3) of the Act vide order dated 22.03.2016 accepting the said proposition of the assessee and thus the Rs.49,44,871/- was allowed as stated above. Thereafter ld. Assessing Officer noted that there was a mistake in the assessment framed under section 143(3) Act dated 22.03.2016 as the said order contained an apparent mistake, which has resulted by virtue of allowing Rs.49,44,871/- being lower of the book loss or unabsorbed depreciation in the computation of book profit. According to the ld. Assessing Officer, the assessee has already claimed the adjustment of book loss or unabsorbed depreciation whichever is less of Rs.43,38,991/- in A.Y. 2012-13 and, therefore, there was no deduction available during the current assessment year. The AO accordingly issued notice u/s 154 of the Act dated 12.03.2020 fixing the date on 17.03.2020 and finally passed the rectification order under section 154 of the Act dated 19.03.2020 rejecting the claim of the assessee in respect of lower of the book loss or unabsorbed depreciation amounting to Rs.49,44,871/- when the assessee failed to reply the show cause notice.

In the appellate proceeding, the order of the ld. Assessing Officer was upheld by the ld. CIT(Appeals) by holding that this being an apparent mistake and the ld. Assessing Officer has rightly invoked the rectification proceedings under section 154 of the Act. The ld. CIT(Appeals) noted in the appellate order that the ld. Assessing Officer has given specific details

After hearing the rival contentions and perusing the relevant material available on record, we find that the claim of the assessee of Rs.49,44,871/- while computing net profit under section 115JB is consonance with Clause (iii) of Explanation 1 in the said section. We have also examined the evidences/records/ITRs of the assessee in respect of earlier years and observed that the claim of the assessee is correct and to that extent the finding of the ld. CIT(Appeals) cannot be sustained. So far as the issue of allowing lower of book loss or unabsorbed depreciation while computing the book profit under section 115JB, we are of the considered view that the issue is debatable and cannot be subject matter of the proceedings under section 154 of the Act. The case of the assessee is squarely covered by several decisions of the Coordinate Benches in the case of (i) ITO –vs.-Kanchanganga Estates (P) Limited [1998] 67 ITD 299 (Mum.); (ii) Maccaferri Environmental Solutions (P) Limited –vs.- ITO [2019] 103 taxmann.com 154 (Mumbai-Tribunal); Cadila Healthcare Limited –vs.- DCIT (in ITA No. 1660/AHD/2019 –order dated 20.12.2021); Smt. Vandana Manoj Shah-vs.- ITO (in ITA No. 3100/AHD/2015-order dated 14.03.2016); & M/s. Madhav Stock Vision –vs.- ACIT (in ITA No. 581/MUM/2017-order dated 10.04.2018). We, therefore, respectfully following the ratio laid down by the various Benches of the Tribunal set aside the above order of ld. CIT(Appeals) and direct the ld. Assessing Officer to allow the claim of the assessee of Rs.49,44,871/- while computing the book profit under section 115JB of the Act.