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Facts
The Revenue appealed the CIT(A)'s order which allowed the set-off of brought forward book loss for AY 2017-18. The assessee was engaged in setting up and maintenance of a Thermal Power plant. The AO disallowed the set-off, but the CIT(A) followed previous tribunal rulings and directed the AO to compute the loss on a cumulative basis.
Held
The Tribunal held that the CIT(A)'s directions to the AO to compute the loss considering the lower of brought forward loss or depreciation on a cumulative basis were in line with the dictum laid down by the jurisdictional Tribunal in the case of DCIT Vs. BIAL and the Mumbai Bench of the Tribunal in the case of Amline Textiles Pvt. Ltd.
Key Issues
Whether the CIT(A) was justified in allowing the set-off of brought forward book loss under Section 115JB on a cumulative basis, contrary to the AO's year-on-year approach and Board's Circular No. 495.
Sections Cited
115JB, 250, 143(2), 144B, 36(1)(va), 43B
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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K & SHRI CHANDRA POOJARIND SHRI LAXMI PRASAD SAHU
Per George George K, Vice President:
This appeal at the instance of the Revenue is directed against CIT(A)’s order dated 25.10.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.
The grounds raised by the Revenue read as follows:
"1.Whether in the facts and circumstances of the case, the Ld. CIT(A) is right in law in holding that Assessee is entitled for set off of brought forward Book Loss in the computation of income under Section 115JB of the Act by relying on decision of Hon'ble Jurisdictional Tribunal rendered in case of M/s. BIAL vide which in turn relied upon decision of Amline Textile (P) Ltd. vs. ITO (27 SOT 152) even when said decision has not reached finality and such a claim is contrary to the provisions of section 115JB and Board's Circular No. 495 dated 22/9/1987 and ignoring application of Explanation (iii) to said section? 2. Whether in the facts and circumstances of the case, the Ld. CIT(A) was right m law in holding that Assessee is entitled for set off of brought forward Book Loss in the computation of income under Section 115JB of the Act by relying an decision of Hon'ble Jurisdictional Tribunal rendered in case of M/s. BIAL side even though the facts in present are distinguishable?"
Brief facts of the case are as follows:
Assessee is engaged in the business of setting up and maintenance of Thermal Power plant. For the Assessment Year 2017-18, the return of income was filed on 30.11.2017 declaring total income of Rs.1,24,72,560/- under the normal provisions of the Act and Rs.3,01,96,250/- under section 115JB of the Act. The assessment was selected for scrutiny by issuance of notice under section 143(2) of the Act on 27.09.2019. During the course of assessment proceedings, assessee submitted that it had wrongly set off carryforward losses in the return of income and filed revised computation offering total income of Rs.2,15,89,719/- under the normal provisions of the Act and Rs.3,01,96,250/- under section 115JB of the Act. The assessment was completed under section 143(3) r.w.s. 144B of the Act vide order dated 26.05.2021 determining the assessed income as per the normal provisions of the Act at Rs.6,55,38,710/- and Rs.9,70,07,780/- under section 115JB of the Act. The details of disallowance made by the AO are as follows:
S. No Particulars Amount in INR 1 Disallowance of brought forward loss 6,68,11,530 and unabsorbed depreciation under section 115JB of the Act
Disallowance under section 36(1)(va) of 2 65,028 the Act Disallowance under section 43B of the 3 1,74,947 Act TOTAL 6,70,51,505
Aggrieved by the Order of Assessment, assessee filed appeal before the First Appellate Authority. The CIT(A) partly allowed appeal of the assessee. As regards the disallowance of brought forward losses and unabsorbed depreciation under section 115JB of the Act, the CIT(A) followed the orders of the Tribunal in the case of DCIT Vs. Bangalore International Airport (BIAL) in (Order dated 27.09.2016) in the case of Amline Textiles Pvt. Ltd., Vs. ITO reported in 27 SOT 152 (Mumbai). The CIT(A), following the above orders of the Tribunal remanded the matter to AO . The CIT(A) directed the AO to compute the loss considering lower of the brought forward losses or the depreciation on a cumulative basis. The conclusions of the CIT(A) read as follows:
“Thus, from the above, it can be observed that Hon'ble Jurisdictional ITAT Bangalore has followed the decision of the co-ordinate bench of the Tribunal in the case Amline Textiles (P.) Ltd.vs. ITO (27 SOT 152) wherein the issue on hand has been considered and decided in favour of the assessee. In view of the same and respectfully following the decision of Hon'ble Jurisdictional ITAT Bangalore (supra), I direct the AO to compute the loss considering lower of the brought forward losses or the depreciation on a cumulative basis as has been held by Hon'ble Jurisdictional ITAT Bangalore. Ground is, thus, allowed for statistical purposes.”
Aggrieved by the Order of the CIT(A), Revenue has filed the present appeal before the Tribunal. The learned DR relied on the grounds raised and submitted that assessee has not established how the facts of the present case are similar to the ITAT order in the case of M/s. BIAL (supra).
The learned AR, on the other hand, took us through the computation of Book profits by the assessee as well as the AO and submitted that the computation made by the AO is directly against the dictum laid down by the jurisdictional Tribunal in the case of DCIT Vs. BAIL (supra). It was submitted that the CIT(A)’s directions and remanding the matter to the AO is legally correct and no interference is called for.
We have heard the rival submissions and perused the material on record. The assessee while computing the lower of the brought forward losses (excluding depreciation) or unabsorbed depreciation, pursuant to clause (iii) of explanation (1) to section 115JB of the Act had adopted consolidated approach relying upon various judicial pronouncements. However, the AO rejected the submissions made by the assessee and had passed an order considering year-on-year approach for the purpose of computation of book profits under section 115JB of the Act. The CIT(A), after considering the facts of the instant case and the facts of the jurisdictional Tribunal in the case of DCIT Vs. BIAL (supra) had restored the matter to the AO directing him to compute the loss considering lower of the brought forward loss or depreciation on cumulative basis as held by the jurisdictional Tribunal in the case of BIAL (supra). The CIT(A) has reproduced the relevant extracts of the Order of the Tribunal in the case of BIAL (supra). Therefore, the same is not reiterated in this order. The directions of the CIT(A) to the AO are in tune with the dictum laid down by the Co-ordinate Bench of the Tribunal in the case of DCIT Vs. BIAL (supra) and the Order of the Mumbai Bench of the Tribunal in the case of Amline Textiles Pvt. Ltd., Vs. ITO (supra). Therefore, we see no reason to interfere in the order of the CIT(A). Hence, we uphold the same as correct and in accordance with law.
In the result, appeal filed by the Revenue is dismsised.