M/S. INDIA LAND AND PROPERTIES LIMITED,MUMBAI vs. DCIT, CENTRAL CIRCLE-6(4), MUMBAI

The only issue in this appeal of assessee is against the order of CIT(A) in confirming the action of the Assessing Officer in re-computing the book profit under section 115JB of the Act by invoking the provisions of Section 79 of the Act. For this, assessee has raised the following ground:-

1. The Hon’ble CIT(A) erred on facts and circumstances of the case and in re-computing book profit under section. 115JB at ₹7,46,85,490/- by invoking the provisions of section 79 of the Act.

For this, he stated that this issue is squarely covered by the decision of ITAT Ahmadabad Bench in the case of Fascel Ltd. vs. ITO “16. Sub-section (5) of Section 115JB of the Act, on first brush of reading, gives an impression that it is re-incorporation of the provisions of the Act to a company which are excluded by Sub-section (1) of Section 115JB. A closure look, however, makes it clear that it reincorporate only those provisions which are not otherwise provided in Section 115JB. Clause (iii) of the Explanation specifically provides for the allowance of loss brought forward or unabsorbed depreciation and, therefore, the other provisions of the Act relating to the earlier years' loss or unabsorbed depreciation would not be applicable. Because Clause (iii) of the Explanation states that such loss or unabsorbed depreciation has to be as per the books of accounts and not as computed under Income Tax Act, therefore, in our opinion, Sub-section (5) is also of no help to the Revenue. In any case, as understood, vide CBDT Circular No. 13 of 2001 dated 9.11.2001, this Clause applies only for provisions other than computation and since the loss or unabsorbed depreciation is a part of the computation of book profit under Section 115JB itself, the provisions

In our considered opinion, therefore, Revenue authorities are not justified in reducing the loss for assessment year 2000-01 and earlier assessment years by invoking Section 79 of the Act, which is a position under the Income Tax Act, whereas, the lower of the loss brought forward or unabsorbed depreciation that is to be reduced under Clause (iii) of the Explanation, is to be the amount as per the books of account of the assessee. We, accordingly, reverse the orders of the CIT(A) as well Assessing Officer and direct the Assessing Officer to consider the loss as per the books of accounts of the assessee irrespective of the fact whether the same is allowable or not under Section 79 of the Act.”

When these facts were confronted to the learned Sr. DR, she only relied on the orders of the lower authorities.