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Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA
Before: Shri P.M. Jagtap, Vice-(KZ) & Shri S.S. Viswanethra Ravi
ITA No. 1644/KOL/2017 A.Y. 2011-2012 M/s. JCT Limited
IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA ‘C’ BENCH, KOLKATA
Before Shri P.M. Jagtap, Vice-President (KZ) and Shri S.S. Viswanethra Ravi, Judicial Member
I.T.A. No. 1644/KOL/2017 Assessment Year: 2011-2012
Deputy Commissioner of Income Tax,...................................Appellant Circle-11(1), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700 069 -Vs.-
M/s. JCT Limited,..................................................................Respondent 18, Monilal Saha Lane, 2nd Floor, New Market, Kolkata-700 013 [PAN: AAACJ 6733 E]
Appearances by: Dr. P.K. Srihari, CIT, D.R., for the Appellant Shri A.K. Gupta, FCA, for the Respondent
Date of concluding the hearing : January 23, 2019 Date of pronouncing the order : January 25, 2019
O R D E R Per Shri P.M. Jagtap, Vice-President (KZ):- This appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals)-4, Kolkata dated 19.05.2017 and the grounds raised by the Revenue therein read as under:- “1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in allowing the claim without considering the quantum of brought forward business loss vis-a-vis depreciation loss.
That on the facts and in the circumstances of the case, the CIT(A) erred in overlooking Explanation to section 115JB of the Act. Whereby book profit as per the statement of profit and loss for the relevant previous year was supposed to be reduced by the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of accounts”.
ITA No. 1644/KOL/2017 A.Y. 2011-2012 M/s. JCT Limited
The assessee in the present case is a Company, which is engaged in the business of manufacturing and selling of Textile Yarns, Nylon Synthetic Polyester Filament Yarn, Polyster Chips etc. In the assessment originally completed by the Assessing Officer vide an order dated 30.03.2014 passed under section 143(3), the total income of the assessee for the year under consideration was determined at NIL under the normal provisions of the Act and book profit under section 115JB at Rs.21,37,16,635/-. The said assessment was set aside by the concerned ld. CIT vide an order dated 28.03.2016 passed u/s 263 with a direction to the Assessing Officer to frame the assessment afresh after verifying and examining the issue relating to the availability of book loss or unabsorbed depreciation for set off while computing the book profit under section 115JB. As per the direction of the ld. CIT given under section 263, fresh assessment was completed by the Assessing Officer under section 143(3) read with section 263 of the Act vide an order dated 09.11.2016 wherein he held that the total cumulative brought forward loss of the assessee-company as on 31.03.2010 amounting to Rs.10213.43 lakhs being inclusive of depreciation of Rs.53789.44 lakhs, there was no book loss excluding unabsorbed deprecation available for set off from book profit. He accordingly disallowed the claim of the assessee for such set off and computed the book profit of the assessee-company for the year under consideration under section 115JB at Rs.59,97,10,354/-.
Against the order passed by the Assessing Officer under section 143(3) read with section 263 of the Act, an appeal was preferred by the assessee before the ld. CIT(Appeals) and after considering the submissions made by the assessee as well as the material available on record, the ld. CIT(Appeals) decided the issue vide his appellate order dated 19.05.2017 as under:- “I have carefully considered the submissions and the material on record. It is found that there is merit in the contentions of the appellant's A/R that the cumulative brought forward book loss of Rs.10213.43 lacs was not included in the cumulative Brought Forward Loss of Rs. 2
ITA No. 1644/KOL/2017 A.Y. 2011-2012 M/s. JCT Limited
5378,94 lakhs and that only a sum of Rs.1,185,643,995/- being Unabsorbed Depreciation brought forward from the previous year 2001-02 to 2009-10 was included in the Brought Forward Loss of Rs.1,580,004,341/- along with Unabsorbed Business Loss of Rs. 394,360,346/- accumulated since 2008-09. It is found that it is not the case of the A.O that there is any change in the method of working of depreciation by the appellant company, the dispute in question has arisen due to the misappreciation of the cumulative figure of brought-forward loss for disclosure as per company's Act was construed by the A.O. to be inclusive of cumulative Brought Forward Loss of Rs.1,021,343,248/-, which was factually incorrect as per documents on record. On the issue of adjustment of unabsorbed depreciation or book losses, it is well settled by the Hon’ble Apex Court that once the amount of depreciation was actually debited to the P&L A/c. and was certified by the auditors, it was not permissible for the A.O to make further book adjustments. The A.O is directed to allow the appellant's claim for deduction of Rs.38,59,93,719/- being the lesser amount of (i) brought forward depreciation, i.e. Rs. 118,56,43,995 or (ii) brought forward Business loss of previous years of Rs.38,59,93,719/- as stipulated by the provisions of clause (iii) of Explanation 1 to section 115JB of the LT. Act, 1961 for computation of Book profit u/s 115JB of the I.T. Act, after due verification. Thus, grounds nos. 1 to 11 are allowed for statistical purposes”.
The ld. CIT(Appeals) thus accepted the claim of the assessee in principle and directed the Assessing Officer to allow the same after due verification. Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal.
We have heard the arguments of both the sides and also perused the relevant material available on record. The ld. D.R. has contended that the relevant facts and figures for claiming the set off of book loss and unabsorbed depreciation for computing the book profit under section 115JB were not furnished by the assessee and in the absence of the same, the claim of the assessee was disallowed by the Assessing Officer. He has contended that even a perusal of the impugned order of the ld. CIT(Appeals) does not show the basis on which set off of Rs.38,59,93,719 was claimed by the assessee and allowed by the ld. CIT(Appeals). The ld. Counsel for the assessee, on the other hand, has invited our attention to 3
ITA No. 1644/KOL/2017 A.Y. 2011-2012 M/s. JCT Limited
the copy of the auditor’s certificate placed at page no. 29 of the paper book along with the relevant working given on page no. 30 as well as 31 and 32 to show as to how the figure of unabsorbed depreciation eligible for deduction in computation of book profit for the year under consideration was arrived at Rs.38,59,93,719/-. He has submitted that the said certificate dated 28.10.2016 along with the entire working was submitted by the assessee even before the Assessing Officer, but he disallowed the claim of the assessee without considering or appreciating the same. He has contended that the ld. CIT(Appeals), however, has appreciated the said working and on such appreciation allowed the claim of the assessee. 5. The relevant working prepared and furnished by the assessee and duly certified by its auditors in support of its claim is extracted below from pages no. 31 & 32 of the paper book:- Financial Year Total loss as per Unabsorbed Unabsorbed accounts depreciation business loss 1997-98-loss for the 1227390600 607923841 619466759 year Less�1) loss adjusted 1138007257 607923841 530083416 against general reserve being the surplus transferred from profit in earlier years (ii) Surplus profit 89383343 89383343 brought forward from the financial year 1997-98 1998-99-loss for the 826847432 593617143 233230289 year Less: Adjusted by 165805494 165805494 transfer from general reserve Carried forward 661041938 593617143 67424795 Add: 1999-2000-loss 610106818 587720125 22386693 for the year Carried forward 1271148756 1181337268 89811488 Add.: 2000-2001-Loss 2439475323 524865378 1914609945 for the year Carried forward 3710624079 1706202646 2004421433 Less: Loss of earlier 910427118 year adjusted by transfer (i) From
ITA No. 1644/KOL/2017 A.Y. 2011-2012 M/s. JCT Limited
capital reserve (ii) From 2800196961 1706202646 2004421433 share premiu m 2001-02-Loss for the 441192972 441192972 N.A. year Carried forward 441192972 441192972 - Less: 2002-03 Profit 28580870 28580870 - for the year set off against earlier year depreciation Carried forward 412612102 412612102 Add.: 2003-04 Loss 219044499 219044499 N.A. for the year Carried forward 631656601 631656601 - Less: 2004-05 Profit 21044240 21044240 - for the year set off against earlier year depreciation Carried forward 610612361 610612361 - Less: 2005-06 Profit 108416358 108416358 - for the year set off against earlier year depreciation Carried forward 502196103 502196103 - Less: 2006-07 Profit 106769994 106769994 - for the year set off against earlier year depreciation Carried forward 395426009 395426009 - Less: 2007-08 Profit 38007000 38007000 - for the year set off against earlier year depreciation Carried forward 357419009 357419009 - Add: 2008-09 Loss for 613634061 435555538 178078523 the year Carried forward 971053070 792974547 178078523 Add: 2009-10 Loss for 608951271 392669448 216281823 the year Carried forward 1580004341 1185643995 394360346 Less�a) Tax expenses 7364378 F.Y. 2008-09 (b) Tax expenses F.Y. 1002249 2009-10 Loss deducted in 385,993,719 computation of book profit for the year 2010-11
ITA No. 1644/KOL/2017 A.Y. 2011-2012 M/s. JCT Limited
It is manifest from the above working that the total accumulated loss of Rs.38,59,93,719/- was available with the assessee-company as on 31.03.2010 and keeping in view the same, the claim of the assessee for set off of such loss was directed to be allowed by the ld. CIT(Appeals) in computation of book profit under section 115JB after due verification by the Assessing Officer. At the time of hearing, the ld. D.R. has not been able to point out any mistake in the working furnished by the assessee in support of its claim. The only contention raised by him is that this working requires verification by the Assessing Officer. Since the ld. CIT(D.R.) vide his impugned order has directed to allow the claim of the assessee after due verification of the said working by the Assessing Officer, we find no justifiable reason to interfere with the impugned order of the ld. CIT(Appeals). The same is accordingly upheld on this issue dismissing this appeal of the Revenue. 6. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on January 25, 2019. Sd/- Sd/- (S.S. Viswanethra Ravi) (P.M. Jagtap) Judicial Member Vice-President (KZ) Kolkata, the 25th day of January, 2019 Copies to : (1) Deputy Commissioner of Income Tax, Circle-11(1), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700 069 (2) M/s. JCT Limited, 18, Monilal Saha Lane, 2nd Floor, New Market, Kolkata-700 013 (3) Commissioner of Income Tax (Appeals)-4, Kolkata, (4) Commissioner of Income Tax- , (5) The Departmental Representative (6) Guard File By order
Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.