ENRICO REAL ESTATES PVT. LTD., ,KOLKATA vs. ITO, WARD - 14(1), KOLKATA

The relevant facts of the assessee giving rise to this appeal are that the assessee is a Company, which is engaged in construction business. The return of income for the year under consideration was filed by it on 02.06.2016 declaring total income at ‘NIL’ as per the normal provisions of the Act and book profit under section 115JB at Rs.12,42,468/-. While computing the book profit under section 115JB, a deduction of Rs.4,85,914/- was claimed by the assessee on account of unabsorbed depreciation. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee-company had carried forward of business loss of Rs.15,88,290/- but no brought forward unabsorbed Assessment Year: 2015-2016 Enrico Real Estates Pvt. Limited depreciation was claimed in the earlier years as per the schedules of carry forward of loss in the ITR. He, therefore, disallowed the claim of the assessee for deduction of Rs.4,85,914/- on account of unabsorbed depreciation and computed book profit of the assessee under section 115JB at Rs.17,28,382/- in the assessment completed under section 143(3) vide an order dated 29.11.2017.

Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), it was contended on behalf of the assessee that complete particulars as well as detailed break-up of the loss brought forward from the earlier years were furnished before the Assessing Officer to show that the deduction permissible in respect of loss or depreciation, whichever was lower, was actually Rs.7,94,166/- and not Rs.4,85,914/-. It was contended that the Assessing Officer, however, completely ignored these particulars and disallowed even the deduction claimed by the assessee in the return of income on account of unabsorbed depreciation. The ld. CIT(Appeals) did not accept this contention raised on behalf of the assessee-company. He held that a fresh claim was made by the assessee for the first time during the appellate proceedings before him and in the absence of the supporting details and documents, it was not acceptable. He accordingly proceeded to confirm the disallowance made by the Assessing Officer on account of assessee’s claim for deduction for unabsorbed depreciation while computing the book profit under section 115JB. Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal on the following grounds:- “(1) For that on the facts and in the circumstances of the case, the CIT(A) was unjustified in law in upholding the AO’s order assessing book profit at Rs.17,28,382/- without allowing deduction for lower of the business loss or depreciation brought forward from the earlier year, even though the law permitted such set off.

(2) For that on the facts and in the circumstances of the case, the CIT(A) wrongly upheld the AO’s computation of book profit u/s 115JB without properly understanding and appreciating the submissions made and the CIT(A)’s order proceeded on wrong understanding of the material facts placed before him. (3) For that on the facts and in the circumstances of the case, the AO be directed to compute the book profit u/s 115JB after allowing the deduction for Rs.7,94,166/- being the lower amount between depreciation or business loss as brought forward from the earlier year”.

I have heard the arguments of both the sides and also perused the relevant material available on record. The ld. Counsel for the assessee has submitted that the relevant details of carry forward business loss of the earlier years as computed as per the normal provisions of the Act were given in the return of income by the assessee-company and there being no separate column or space provided in the return of income to give such details as per the book profit computed under section 115JB, the assessee could not furnish the same. He has submitted that the letter dated 01.12.2017, however, was filed by the assessee before the Assessing Officer giving all the relevant details but the same could not be considered by the Assessing Officer as he had already completed the assessment on 29.11.2017. He has contended that the ld. CIT(Appeals) ought to have sought the remand report from the Assessing Officer keeping in view that the relevant details furnished by the assessee vide letter dated 01.12.2017 were not considered by the Assessing Officer while deciding the issue. He has urged that this matter may, therefore, be sent back to the Assessing Officer for deciding the same afresh after considering the said details. Keeping in view the relevance of the details furnished by the assessee vide letter dated 01.12.2017, which are remained to be considered either by the Assessing Officer or by the ld. CIT(Appeals), I am inclined to accept the contention of the ld. Counsel for the assessee. Even the ld. D.R. has not raised any objection for sending the matter back to the Assessing Officer for verifying the said details.

In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open Court on April 02, 2019.