Yokogawa India Limited, Bangalore V. DCIT, Bangalore

ITA 1191/BANG/2010

• Counselvise Citation: 119121114 RSA 2010
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-07-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 29-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARCHANA CHOWDHRY
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SMT. P MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 1191/BANG/2010 (ASST. YEARS 2005-06) M/S YOKOGAWA INDIA LTD., NO.96, ELECTRONICS CITY COMPLEX, HOSUR ROAD, BANGALORE-560 100. APPELLANT PAN NO.AAACY0840P. VS. THE DY. COMMISSIONER OF INCOME-TAX, L.T.U, BANGALORE. . RESPONDENT APPELLANT BY : PADAMCHAND KHINCHA RESPONDENT BY : SMT. ARCHANA CHOWDHRY DATE OF HEARING : 27-07-2011 DATE OF PRONOUNCEMENT : 12-09-2011 O R D E R PER SMT. P MADHAVI DEVI, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEV ANT ASSESSMENT YEAR IS 2005-06. THE APPEAL IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), LTU AT BANGAL ORE DATED 27.08.2009. THE APPEAL ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME-TAX ACT, 1961. ITA NO.1191/B/10 2 2. THE ASSESSEE COMPANY, WHICH IS ENGAGED MAINLY IN THE BUSINESS OF MANUFACTURING, TRADING AND DISTRIBUTION OF PROCE SS CONTROL INSTRUMENTS AND RELATED SERVICES FILED ITS RETURN O F INCOME ON 31.10.2005 DECLARING AN INCOME OF RS.3,26,76,628/-. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME-TAX ACT, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CO MPUTED ITS INCOME ONLY U/S 115JB OF THE ACT BY TAKING THE NET PROFIT AS PER THE PROFIT AND LOSS ACCOUNT AT RS.21,14,42,000/- AND AFTER MAKING ADJUSTMENTS FOR INADMISSIBLE AS WELL AS ADMISSIBLE DEDUCTIONS AND A LSO SETTING OFF BROUGHT FORWARD LOSS RELATING TO EARLIER YEARS DECL ARED TO RS.3,26,76,628/- TO BE THE TAXABLE INCOME OF THE AS SESSEE. HE ALSO OBSERVED THAT WHILE COMPUTING INCOME U/S 115JB OF T HE ACT, A NOTE WAS ATTACHED TO AUDIT REPORT EXPLAINING THAT LOWER OF BUSINESS LOSS BROUGHT FORWARD OR UNOBSERVED DEPRECIATION HAS BEEN REDUCED AFTER GIVING EFFECT TO THE EXEMPTION U/S 10A OF THE INCOM E-TAX ACT. A LETTER WAS ALSO FILED GIVING JUSTIFICATION FOR NOT APPLYIN G THE PROVISIONS OF SEC. 115JB OF THE ACT. IN THE SAID LETTER, IT WAS EXPLAINED THAT BROUGHT FORWARD LOSS IN THE PROFIT AND LOSS ACCOUNT SHOULD NOT BE TAKEN AS IT IS, BUT THE SAME HAS TO BE REWORKED FROM THE EARLIER YE ARS. THE ASSESSING OFFICER HOWEVER WAS NOT CONVINCED WITH THE ASSESSEE S ARGUMENTS. ITA NO.1191/B/10 3 HE PLACED RELIANCE UPON THE DECISION OF THE APEX CO URT IN THE CASES OF APOLLO TYRES LTD. VS. CIT, 255 ITR 273 SC AND MALAY ALA MANORAMA CO. LTD. VS. CIT 300 ITR 251 SC, WHEREIN MODE OF CO MPUTATION OF INCOME U/S 115JB IS STATED AND IT HAS BEEN HELD THA T ASSESSING OFFICER HAS NO LEEWAY IN MAKING ANY ADJUSTMENT TO THE NET PROFIT DECLARED IN THE BOOKS OF ACCOUNTS. HE ALSO HELD THAT IT IS IMM ATERIAL IF THE BOOK PROFIT IS DIFFERENT FROM NET PROFIT AS CLAIMED BY THE ASSESSEE, AND THAT THE TERM BOOK PROFIT IS DEFINED IN SEC. 115JB TO BE THE NET PROFIT AS PER PROFIT AND LOSS ACCOUNT AS INCREASED OR DECREAS ED BY THE ITEMS MENTIONED IN THE SECTION AND ONCE THE ACCOUNTS ARE AUDITED AND CERTIFIED BY THE AUDITORS AND APPROVED BY THE GENER AL BODY MEETING AND THE FINANCIAL STATEMENTS ARE FILED BEFORE THE REGISTRAR OF COMPANIES, THE ASSESSING OFFICER IS BOUND TO ACCEP T RESULTS OF SUCH STATEMENTS AS HELD BY THE APEX COURT IN THE CASE OF APOLLO TYRES. HE THUS HELD THAT THE NET PROFIT AS SHOWN IN THE PROFI T AND LOSS ACCOUNT I.E RS.21,14,42,000/-, IS TO BE TREATED AS THE BOOK PRO FITS AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE COMPUTATION OF INC OME U/S 115JB OF THE ACT. ITA NO.1191/B/10 4 4. HE ALSO OBSERVED FROM THE PROFIT AND LOSS ACCOUN T FILED BY THE ASSESSEE, THAT AN AMOUNT OF RS.209.30 LAKHS IS THE TOTAL BROUGHT FORWARD LOSS OF THE PREVIOUS YEAR, WHICH HAS TO BE CONSIDERED FOR THE PURPOSES OF SEC. 115JB OF THE ACT. AS THE ASSESSIN G OFFICER WAS INFORMED BY THE COUNSEL THAT THIS AMOUNT OF RS.209. 30 LAKHS CONSISTS ENTIRELY OF UNABSORBED DEPRECIATION AND THAT IT HAS NO ELEMENT OF BROUGHT FORWARD BUSINESS LOSS IN IT, THE AO HELD THAT BROUGHT FORWARD BUSINESS LOSS BEING NIL, IT IS THIS LESS ER FIGURE THAT HAS TO BE REDUCED FROM THE NET PROFIT AND NO AMOUNT OF BROUGH T FORWARD BUSINESS LOSS OR UNABSORBED DEPRECIATION CAN BE AL LOWED. 5. AGGRIEVED BY THIS DECISION OF THE ASSESSING OFFI CER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) WHO CONFIRM ED THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI PADAMC HAND KHINCHA WHILE REITERATING THE SUBMISSIONS MADE BY THE ASSES SEE BEFORE THE AUTHORITIES BELOW, SUBMITTED THAT THE ASSESSEE OPER ATED THROUGH THREE BROAD DIVISIONS OR UNITS, NAMELY : A) SOFTWARE SERVICES DIVISION ITA NO.1191/B/10 5 B) PRODUCT SERVICES DIVISION C) SYSTEM SERVICES DIVISION. 7. HE SUBMITTED THAT ONLY SOFTWARE SERVICES DIVISIO N IS REGISTERED AS A SOFTWARE TECHNOLOGY PARK UNIT WITH STPI, WHILE THE OTHER TWO UNITS ARE NON-STPI UNITS. HE SUBMITTED THAT DEDUCT ION U/S 10A IS AVAILABLE TO THE STP UNIT FOR A PERIOD OF 10 YEARS STARTING FROM THE ASSESSMENT YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH THE UNIT BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THING OR COMPUTER SOFTWARE AND ASSESSMENT YEAR 2004-05 WAS THE 10 TH YEAR OF OPERATION. TILL ASST. YEAR 2004-05 THE DEDUCTION WAS CLAIMED AND NO DEDUCTION WAS CLAIMED U/S 10A FOR ASSESSMENT YEAR 2005-06. T HE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION AS PER THE COMPUTATION MADE, THE TAX PAYABLE UNDER REGULAR PROVISIONS OF ACT WAS HIGHER THAN THE TAX D ETERMINED ON BOOK PROFITS U/S 115JB OF THE ACT AND, THEREFORE, INCOME DETERMINED UNDER REGULAR PROVISIONS OF THE ACT WAS DECLARED IN THE R ETURN OF INCOME. HE SUBMITTED THAT IN THE PROCESS OF COMPUTATION OF BOO K PROFITS U/S 115JB OF THE ACT, THE ASSESSEE REDUCED A SUM OF RS.8,44,5 1,767/- AS REPRESENTING THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED ITA NO.1191/B/10 6 DEPRECIATION, WHICHEVER IS LESS AS PER THE BOOKS OF ACCOUNT. HE SUBMITTED THAT THE ASSESSEE HAS INCURRED LOSSES AS PER THE BOOKS OF ACCOUNT IN NON STPI UNITS FOR THE PRECEDING THREE F INANCIAL YEAR I.E 2001-01, 2002-03 AND 2003-04 AND, THEREFORE, THE S UM TOTAL OF THE LOSSES OR DEPRECIATION, WHICHEVER IS LESS, OF NON 1 0A UNITS FOR PREVIOUS 3 YEARS AMOUNTED TO RS.8,44,51,767/-. THU S, ACCORDING TO HIM, THIS AMOUNT IS TO BE REDUCED FROM BOOK PROFITS TO ARRIVE AT THE COMPUTATION OF INCOME OF U/S 115JB OF THE ACT AND A S THE INCOME COMPUTED U/S 115JB OF THE ACT WAS LESS THAN THE INC OME COMPUTED UNDER THE REGULAR PROVISIONS OF THE INCOME-TAX ACT , THE SAME WAS OFFERED AS TAXABLE INCOME FOR THE RELEVANT ASSESSME NT YEAR. COMING TO THE PROVISIONS OF SEC. 115JB OF THE ACT AND THE ADJUSTMENT MADE TO THE BOOK PROFITS UNDER THE SAID SEC., THE LEARNED C OUNSEL FOR THE ASSESSEE TOOK US THROUGH A HISTORY OF SEC. 115JB AS TO WHY IT WAS INTRODUCED AND WHAT WAS THE PROVISION PRIOR TO THE INTRODUCTION OF SEC. 115JB AND SUBMITTED THAT WHILE INTRODUCING SEC . 115JB OF THE INCOME-TAX ACT, IT WAS CLEARLY MENTIONED THAT THE E XPORT ORIENTED UNITS AND UNITS IN FREE TRADE ZONES, WHICHEVER ARE SET UP BEFORE 01.04.2000 WOULD BE OUT OF THE PURVIEW OF THE NEW P ROVISION OF MAT. THUS HE SUBMITTED THAT WHEN THE ASSESSEE IS E LIGIBLE FOR 10A ITA NO.1191/B/10 7 DEDUCTION IN THOSE YEARS, WHILE COMPUTING THE INCOM E UNDER SEC. 115JB OF THE ACT, ALL THE INCOME OF THE 10A UNITS H AS TO BE EXCLUDED. HE SUBMITTED THAT THIS HAS BEEN INTRODUCED TO ENSUR E THAT THE PROFITS OF 10A UNITS ARE NOT CHARGEABLE TO TAX UNDER MAT REGIM E. ACCORDING TO HIM, THE METHODOLOGY OF COMPUTATION OF BOOK PROFIT U/S 115JB IS AIMED AT COMPLETELY ELIMINATING THE PROFITS OR LOSS ES OF 10A UNITS AS THE FIGURES OF INCOME AND EXPENDITURE OF 10A UNITS ARE QUARANTINED FROM SEC. U/S 115JB OF THE ACT. 8. HE SUBMITTED THAT THE VARIOUS CLAUSES I.E (A) TO (I) AND (I) TO (VIII) CONTAINED IN EXPLANATION 1 TO SEC. 115JB ARE AIMED AT COMPLETELY ELIMINATING THE PROFITS OR LOSSES OF A 1 0A UNIT AND EACH CLAUSE PERTAINS TO ONE PARTICULAR ADJUSTMENT WITH N O OVERLAPPING BETWEEN VARIOUS CLAUSES. THUS, WHEN LEGISLATURE PRO VIDED FOR THE EXCLUSION OF PROFITS/LOSS OF A 10A UNIT WHILE COMPU TING BOOK PROFITS FOR A PARTICULAR YEAR, IT COULD NOT HAVE PROVIDED F OR REDUCTION OF BROUGHT FORWARD LOSSES OR UNABSORBED DEPRECIATION A LLOWANCE OF THE SAME UNIT I.E 10A UNIT AGAIN IN A SUBSEQUENT YEAR. ACCORDING TO HIM, THE SANCTITY OF A PROCESS ADOPTED TO ARRIVE AT THE BOOK PROFITS OR LOSSES FOR A YEAR IS NOT TO BE DISCARDED FOR SUBSEQUENT Y EARS BECAUSE ITA NO.1191/B/10 8 CONTINUITY IS TO BE MAINTAINED AND THIS IS POSSIBLE IF THE RESULTS OF SEC. 115JB COMPUTATION IF RESULTING IN A LOSS IS PRESERV ED AND THAT FIGURE IS TAKEN INTO ACCOUNT WHILE GIVING EFFECT TO THE ADJUS TMENT OF LOWER OF PAST LOSS OR DEPRECIATION. THUS, ACCORDING TO HIM, THE REDUCTION OF BROUGHT FORWARD LOSSES OR UNABSORBED DEPRECATION IN CLAUSE (III) TO EXPLANATION 1 WOULD REFER TO NON 10A UNITS ONLY. 9. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO ARGUED THAT THE PROFITS OR LOSSES OF 10A UNITS ARE EXEMPT FROM MAT AND, THE REFORE, THE BROUGHT FORWARD LOSSES OR UNABSORBED DEPRECATION RE LATING TO 10A UNITS WOULD ALSO TAKE THE SAME CHARACTER I.E LOSSES FROM EXEMPT SOURCE AND IT IS A SETTLED PRINCIPLE THAT IF PROFITS FROM A PARTICULAR SOURCE ARE EXEMPT, THE LOSSES FROM SUCH SOURCE CANNOT BE SET O FF AGAINST OTHER INCOME. FOR THIS PROPOSITION, HE PLACED RELIANCE U PON THE DECISION OF APEX COURT IN THE CASE OF CIT VS. HARPRASAD AND CO . PVT. LTD. REPORTED IN 99 ITR 118 (SC), WHEREIN IT WAS HELD TH AT LOSS UNDER THE HEAD CAPITAL GAINS DURING THE PERIOD WHEN CAPITAL GAINS WERE NOT TAXABLE CANNOT BE CARRIED FORWARD AND SET OFF. HE ALSO PLACED RELIANCE UPON THE DECISION OF THE MUMBAI TRIBUNAL IN THE CAS E OF G.K RAMAMURTHY VS. JCIT REPORTED IN 2 ITR 139, WHEREIN IT WAS ITA NO.1191/B/10 9 OBSERVED THAT LONG TERM CAPITAL GAINS FROM SALE OF SHARES SUFFERING STT CANNOT BE SET OFF AGAINST ANY OTHER INCOME SINC E LONG TERM CAPITAL LOSS ON SALE OF SHARES SUFFERING STT IS EXEMPT U/S 10(38). THUS, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE PROFITS OR LOSS OF 10A UNITS HAVING BEEN KEPT OUT SIDE THE PURVIEW OF SEC. 115JB, THE BROUGHT FORWARD LOSSES OR UNABSORBED DEPRECIATION O F 10A UNIT CANNOT BE REDUCED IN COMPUTING THE BOOK PROFITS. F OR THE PROPOSITION THAT THE BOOK PROFITS UNDER SEC. 115JB SHOULD BE R EAL BOOK PROFITS , THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANC E UPON THE FOLLOWING DECISIONS: 1) HITKARI FIBERS LTD. VS. JCIT (2004) 90 ITD 654 (MUM) 2) ITO FRIGSALES INDIA LTD. (2005) 4 SOT 376 (MUM) 3) SYNDICATE BANK VS. ACIT, UDUPI (2006) 7 SOT 51, (BANG) 4) ITO VS. SURAJ JEWELLERY INDIA LTD REPORTED IN (2008) 21 SOT 79 (MUM). 10. HE FURTHER SUBMITTED THAT IF BROUGHT FORWARD LO SSES OR UNABSORBED DEPRECIATION ALLOWANCE FOR THE COMPANY A S A WHOLE IS ITA NO.1191/B/10 10 CONSIDERED FOR REDUCTION, IT IS POSSIBLE THAT THE B OOK PROFITS CHARGEABLE TO TAX U/S 115JB WOULD BE LESS THAN THE BOOK PROFIT S COMPUTED BY REDUCING BROUGHT FORWARD LOSSES OR UNABSORBED DEPRE CIATION RELATABLE TO NON 10A UNITS AND SUCH PROPOSITION WOULD LEAD T O ABSURDITY. HE DREW OUR ATTENTION TO THE DECISION OF THE APEX COUR T IN THE CASE OF VARGHESE K.P VS. ITO REPORTED IN 131 ITR 597, WH EREIN, IT WAS HELD WHERE THE PLAIN LITERAL INTERPRETATION OF A ST ATUTORY PROVISION PRODUCES A MANIFESTLY ABSURD AND UNJUST RESULT, AN INTERPRETATION WHICH ACHIEVES THE OBVIOUS INTENTION OF THE LEGISLA TURE AND PRODUCES A RATIONAL CONSTRUCTION SHOULD BE ADOPTED. HE ALSO DREW OUR ATTENTION TO THE COMMENTARY OF SAMPATH IYENGAR ON INCOME-TAX ACT WHEREIN IT WAS HELD THAT (I) THE STATUTE IS SILENT AS TO THE M ANNER OF SET OFF OF PAST LOSSES OR DEPRECIATION IN COMPUTING THE BOOK PROFI TS, II) MORE THAN ONE MANNER OF SETTING OFF OF PAST LOSSES OR DEPRECI ATION IS POSSIBLE AND III) THE ASSESSEE IN VIEW OF VARIOUS POSSIBILITIES CAN CHOOSE WHAT IS MORE FAVOURABLE AND WHERE A PROVISION IS CAPABLE OF TWO REASONABLE CONSTRUCTIONS, THE VIEW FAVOURABLE TO THE ASSESSEE SHOULD BE PREFERRED. FOR THIS PROPOSITION THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., REPORTE D IN 88 ITR 192 ITA NO.1191/B/10 11 (SC). THE LEARNED COUNSEL FOR THE ASSESSEE THUS SU BMITTED THAT FOR THE EARLIER YEARS, THE OPERATION OF 10A UNIT RESULTED I N PROFIT WHILE THE NON 10A UNIT RESULTED IN LOSS. IN THE PROFIT AND LOSS A CCOUNT, A CONSOLIDATED FIGURE AFTER SETTING OFF 10A PROFITS WITH NON 10A W AS SHOWN. BUT FOR THE PURPOSES OF COMPUTING BOOK PROFITS, THIS FIGURE HAS TO BE SEGREGATED AND ONLY THE BROUGHT FORWARD LOSSES OR U NABSORBED DEPRECIATION OF NON 10A UNITS SHOULD BE CONSIDERED. IT IS ALSO THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT TRIBUNAL HAS THE POWER TO INTERPRET THE PROVISIONS IF THERE IS ANY A MBIGUITY IN THE SAME AND IF TWO INTERPRETATIONS ARE POSSIBLE, INTERPRET ATION WHICH IS FAVOURABLE TO THE ASSESSEE IS TO BE ADOPTED. HE HA S DRAWN OUR ATTENTION TO THE VARIOUS EXAMPLES TO SHOW THAT IF T HE ADJUSTMENTS ARE ALSO TO BE MADE AS PER THE FIGURES AVAILABLE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS COMPUTED UNDER THE COMPANIES ACT, A BSURDITY WOULD OCCUR AND UNDER SUCH CIRCUMSTANCES, THE TRIBUNAL HA S THE POWER TO INTERPRET THE LAW BY TAKING THE INTERPRETATION WHI CH IS FAVOURABLE TO THE ASSESSEE. HE THUS PRAYED THAT THE ORDERS OF TH E AO AS WELL AS THE CIT(A) SHOULD BE SET ASIDE AND THE ADDITION DELETED . ITA NO.1191/B/10 12 11. THE LEARNED DR ON THE OTHER HAND PLACED RELIANC E UPON THE ORDERS OF THE AUTHORITIES BELOW. SHE SUBMITTED THAT THE SEC. 115JB IS A SELF CONTAINED SEC. AND A CODE BY ITSELF. SHE SUBM ITTED THAT THE BOOK PROFIT IS DEFINED UNDER THE EXPLANATION TO SEC. 115 JB TO MEAN THE NET PROFIT AS SHOWN IN THE P & L ACCOUNT OF THE COMPANY PREPARED IN ACCORDANCE WITH THE LAW WOULD BE UNDER THE COMPANIE S ACT AND IT HAS BEEN HELD BY VARIOUS COURTS INCLUDING THE APEX COUR T THAT THE BOOK PROFITS AS COMPUTED UNDER THE RELEVANT PROVISIONS OF THE COMPANIES ACT CANNOT BE INTERFERED WITH. SHE SUBMITTED THAT FOR THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE WAS NOT ELIGIBLE FOR 10A DEDUCTION AND THE BOOK PROFIT AS ARRIVED AT FOR BOTH THE STP UNIT AND NON STP UNITS IS TO BE TAKEN INTO CONSIDERATION WHILE MAKING ADJU STMENTS TO THE BOOK PROFITS. THUS ACCORDING TO HER, THE PROFITS OR LOS SES OF BOTH THE STP AND NON STP UNITS TOGETHER HAVE TO BE COMPUTED FOR MAKING ADJUSTMENT OF BROUGHT FORWARD LOSSES OR UNABSORB ED DEPRECATION, WHICHEVER IS LOWER AND THE AO HAS RIGHTLY REDUCED T HE UNOBSERVED BUSINESS LOSSES OF ALL THE UNITS TAKEN TOGETHER WH ICH IS LOWER THAN THE UNABSORBED DEPRECIATION OF THE PREVIOUS YEARS. T HUS, ACCORDING TO HER, THERE CANNOT BE ANY INCLUSION OR EXCLUSION FRO M THE BOOK PROFITS ITA NO.1191/B/10 13 OTHER THAN THOSE MENTIONED IN THE SECTION ITSELF AN D NOTHING CAN BE IMPORTED OR EXPORTED THERE FROM TO MAKE ANY OTHER A DJUSTMENT. 12. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND TH AT THE ONLY QUESTION BEFORE US IS THIS : WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT AND MAKING ADJUSTMENTS THERE UNDER AS PROVIDED IN T HE EXPLANATION THERETO; WHETHER THE AGGREGATE OF THE PROFITS/LOSS ES OF BOTH STP AND NON STP UNITS IS TO BE TAKEN INTO CONSIDERATION OR WHETHER ONLY THE PROFITS OR LOSSES OF NON STP UNITS ARE TO BE CONSID ERED? AS PER SEC. 115JB OF THE ACT, THE BOOK PROFIT IS DEFINED AS NE T PROFIT AS SHOWN IN THE PROFITS AND LOSS ACCOUNT FOR THE RELEVANT PREVI OUS YEAR PREPARED UNDER SUB-SEC. (2) I.E IN ACCORDANCE WITH PROVISION OF ARTS II & III OF SCHEDULE VI OF THE COMPANIES ACT, 1856 AND THEREAF TER INCREASED BY THE AMOUNT SPECIFIED IN CLAUSES (A) TO (F) AND REDU CED BY CLAUSES (I) TO (VIII). THUS, IT CAN BE SEEN THAT THE NET PROFITS IS TO BE DETERMINED AS PER THE PROVISIONS OF THE COMPANIES ACT AND THEREAF TER THE ADJUSTMENTS ARE TO BE MADE. ITA NO.1191/B/10 14 13. THE HONBLE SUPREME COURT IN THE CASE OF APOLO TYRES HAS ALSO HELD THAT THE BOOK PROFITS PREPARED BY THE COMPANY IN ACCORDANCE WITH COMPANIES ACT CANNOT BE INTERFERED WITH BY THE ASSE SSING OFFICER. WHEN THE ASSESSING OFFICER CANNOT INTERFERE WITH TH E BOOK PROFITS COMPUTED BY THE ASSESSEE UNDER THE COMPANIES ACT, T HE SAME LAW WOULD APPLY TO THE ASSESSEE ALSO I.E THE ASSESSEE C ANNOT ADJUST THE BOOK PROFITS EXCEPT AS PROVIDED UNDER THE COMPANIES ACT. IN THE CASE BEFORE US, THE ASSESSEE IS TRYING TO COMPUTE THE BR OUGHT FORWARD LOSSES UNDER THE NORMAL INCOME-TAX ACT PROVISIONS AND NOT UNDER THE COMPANIES ACT. THE DECISION RELIED UPON BY THE LEA RNED COUNSEL FOR THE ASSESSEE FROM MAKING THE ADJUSTMENT IS NOT RELE VANT TO THE FACTS OF THE CASE BEFORE US. 14. ON THE OTHER HAND, WE FIND THAT THE B BENCH O F THE TRIBUNAL AT AMEDABAD IN THE CASE OF FACEL LTD. VS. ITO REPORTED IN 117 TTJ 891, AMD. HAD AN OCCASION TO DEAL WITH THE SIMILAR ISSUE . IN THAT CASE, THE ASSESSEE SOUGHT TO MAKE ADJUSTMENT OF BROUGHT FORWA RD LOSS VIS--VIS APPLICABILITY OF SEC. 79 AND THE TRIBUNAL HAS HELD THAT CLAUSE-3 OF EXPLANATION TO SEC. 115JB(2) SPECIFICALLY PROVI DES THAT LOWER OF THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPREC IATION IS TO BE ITA NO.1191/B/10 15 REDUCED FROM THE BOOK PROFIT AND IT IS THE AMOUNT, AS PER THE BOOKS OF ACCOUNT WHICH TO BE REDUCED AND NOT THE AMOUNT AS P ER THE INCOME-TAX ACT RECORDS, WHICH HAS BEEN COMPUTED UNDER THE PROV ISIONS OF THE ACT. THUS, OUR DECISION IS FURTHER STRENGTHENED BY THE VIEW EXPRESSED BY THE AMEDABAD BENCH OF THE TRIBUNAL. IN VIEW OF T HE SAME, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF T HE CIT(A) AND THE ASSESSEES APPEAL IS ACCORDINGLY DISMISSED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH SEPT, 2011. SD/- SD/- (A MOHAN ALANKAMONY) (P MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER VMS. BANGALORE DATED : 12/09/2011 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.