The ACIT,Range-5, Ahmedabad V. N.K. Industries Ltd., Ahmedabad

ITA 2131/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1876 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 26-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 115JB; 11

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.2131/AHD/2012 WITH CO NO.196/AHD/2012 AND ./ ITA.NO.2132/AHD/2012 WITH CO NO.197/AHD/2012 / ASSTT. YEAR: 2006-07 AND 2007-08 ACIT, CIR.5 AHMEDABAD. VS N.K. INDUSTRIES 7 TH FLOOR, POPULAR HOUSE ASHRAM ROAD AHMEDABAD. PAN : AAACN 9376 P ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SMT.VIBHA BHALLA, CIT - DR ASSESSEE BY : SHRI S.N. SOPARKAR / DATE OF HEARING : 06/04/2016 / DATE OF PRONOUNCEMENT: 07/04/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST SEPARATE ORDERS OF EVEN DATED I.E. 23.7.2012 PASSED BY THE LD.CIT(A)-XI, AH MEDABAD FOR THE ASSTT.YEARS 2006-07 AND 2007-08. ITA NO.2131/AHD/2012 AND 3 OTHERS 2 ON RECEIPT OF NOTICE IN THE REVENUES APPEAL, THE A SSESSEE HAS FILED CROSS OBJECTIONS BEARING CO NO.196 AND 197/AHD/2012 FOR THE RESPECTIVE ASSESSMENT YEARS. 2. THE GROUND NO.2 IS THE SUBSTANTIAL GROUND OF APP EAL, WHICH IS IDENTICAL FOR BOTH THE YEARS. THIS PROJECTS GRIEVA NCE OF THE REVENUE AS UNDER: II) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO GIVE BENEFIT OF UNABSORBED DEPRECIATION OF RS.26,47,30,860/- FOR THE A.Y.2006-07 AND 2007-08 A ND RECOMPUTED THE BOOK PROFITS AS PER THE PROVISIONS O F SECTION 115JB OF THE INCOME TAX ACT. 3. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUG HT SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE ITAT, MUMBAI BENCH IN THE CASE OF AMLI NE TEXTILES P.LTD. VS. ITO, 27 SOT 152. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORDER OF THE AO. 4. THE FACTS ON ALL VITAL POINTS ARE COMMON IN BOTH THE YEARS, THEREFORE, FOR THE SAKE OF REFERENCE, WE TAKE UP TH E FACTS FROM THE ASSTT.YEAR 2006-07. BRIEF FACTS OF THE CASE ARE TH AT THE ASSESSEE- COMPANY AT THE RELEVANT TIME WAS ENGAGED IN CRUSHIN G AND PROCESSING CASTOR SEEDS AND EDIBLE OIL. IT HAS FILED ITS RETU RN OF INCOME ON 30.12.2006 DECLARING NIL INCOME AFTER SETTING OFF O F UNABSORBED DEPRECIATION OF RS.1,40,49,297/- AGAINST THE CURREN T YEAR PROFIT UNDER NORMAL PROVISIONS AND LOSS OF RS.21,12,16,663/- AGA INST THE BOOK PROFIT OF RS.13,07,83,251/- UNDER SECTION 115JB OF THE ACT . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT, AND NOTICE UNDER SECTION ITA NO.2131/AHD/2012 AND 3 OTHERS 3 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. TH E LD.AO TOOK NOTE OF LOSS SUFFERED BY THE ASSESSEE STARTING FROM THE ASS TT.YEAR 1997-98 UPTO THE ASSTT.YEAR 2005-06. SIMILARLY, HE TOOK NOTE OF DEPRECIATION STARTING FROM THE ASSTT.YEAR 1997-98 TO 2005-06. HE, THEREA FTER, WORKED OUT THE AMOUNT, WHICHEVER IS LOWER, OUT OF BUSINESS LOSS AS WELL AS UNABSORBED DEPRECIATION. THE AO HAS WORKED THE AMOUNTS AVAILA BLE FOR SET OFF TO THE ASSESSEE AS PER CLAUSE (III) TO EXPLANATION 1 APPENDED TO SECTION 115JB. THE ISSUE, WHICH HAS BEEN AGITATED BEFORE U S THAT, WHETHER CLAUSE (III) OF EXPLANATION -1 TO SECTION 115JB(2) REFERS TO THE YEAR-WISE CONSIDERATION OF THE AMOUNTS BROUGHT FORWARD LOSS O R UNABSORBED DEPRECIATION FOR THE PURPOSE OF DEDUCTION FROM THE NET PROFIT, AS PER THE PROFIT & LOSS ACCOUNT, OR ITS AGGREGATE AMOUNT OF L OSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION AS ONE COMPOSITE FIGURE. T HERE IS NO DISPUTE WITH REGARD TO THE PROPOSITION THAT EXPLANATION (1)(H) CLAUSE (III) OF 115 JB CONTEMPLATES EXCLUSION OF BROUGHT FORWARD BUSINE SS LOSS OR DEPRECIATION, WHICHEVER IS LOWER, FROM THE NET BOOK PROFIT COMPUTED BY THE ASSESSEE FOR THE PURPOSE OF TAX REQUIRED TO BE PAID AS PER SECTION 115JB. THE AO ALSO NOT DISPUTED THIS PROPOSITION. IN OTHER WORDS, THE ASSESSEE WAS ENTITLED TO REDUCE THE AMOUNT OF BOOK PROFIT EQUIVALENT TO THE UNABSORBED DEPRECIATION OR BUSINESS LOSS, WHICH EVER IS LOWER. THE DISPUTE IS WHETHER THE AO CAN EXAMINE EACH YEAR BRO UGHT FORWARD LOSS OR UNABSORBED DEPRECATION FOR REDUCTION OR HE HAS T O CONSIDER A CONSOLIDATED FIGURE AVAILABLE IN THE BOOKS OF ACCOU NTS, AND THEN, WHICHEVER AMOUNT IS LOWER, I.E. EITHER BUSINESS LOS S OR DEPRECIATION, THAT AMOUNT IS TO BE REDUCED FROM THE BOOK PROFIT. ACCO RDING TO THE AO, EACH YEAR HAS TO BE CONSIDERED, WHEREAS, ACCORDING TO THE ASSESSEE, IT IS THE AGGREGATE AMOUNT OF LOSS OR BROUGHT FORWARD UNA BSORBED ITA NO.2131/AHD/2012 AND 3 OTHERS 4 DEPRECIATION, WHICHEVER LOWER, IS TO BE REDUCED. T HIS CONTROVERSY HAS BEEN SILENCED BY THE ITAT IN THE CASE OF AMLINE TEX TILES PVT. LTD. VS. ITO (SUPRA). THE TRIBUNAL HAS HELD THAT IT IS THE AGGREGATE AMOUNT OF BUSINESS LOSS OR DEPRECIATION WHICHEVER IS LOWER, I S TO BE REDUCED FROM THE BOOK PROFIT. THE DISCUSSION MADE BY THE TRIBUN AL IS WORTH TO NOTE. IT READS AS UNDER: 8. SEC. 115JB IS A SPECIAL PROVISION FOR PAYMENT OF T AX BY CERTAIN COMPANIES. SUB-S. (1) CONTAINS THE NON OBSTANTE CLA USE AND PROVIDES THAT WHERE THE INCOME-TAX PAYABLE ON THE T OTAL INCOME OF A COMPANY AS COMPUTED UNDER THIS ACT IS LESS THAN 1 0 PER CENT OF ITS BOOK PROFIT, THEN SUCH BOOK PROFIT SHALL BE DEE MED TO BE THE TOTAL INCOME OF THE ASSESSEE AND THE TAX PAYABLE BY THE ASSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME-TAX @ 10 PER CENT EXPLN. 1 PROVIDES THE MODE OF COMPUTING 'BOOK PROFI T' BY TAKING NET PROFIT AS SHOWN IN THE P&L A/C AS ITS STARTING POINT TO BE INCREASED BY THE ITEMS MENTIONED IN CLS. (A) TO (H) DEBITED TO THE P&L A/C AND AS REDUCED BY THE ITEMS SPECIFIED IN CL S. (I) TO (VII). AT THIS STAGE IT WILL BE APT TO CONSIDER THE RELEVANT PART OF THIS SECTION AS UNDER : 'EXPLANATION 1 : FOR THE PURPOSES OF THIS SECTION, BOOK PROFIT MEANS THE NET PROFIT AS SHOWN IN THE P&L A/C FOR TH E RELEVANT PREVIOUS YEAR PREPARED UNDER SUB-S. (2), AS INCREAS ED BY (A) TO (G) .................. ................. ... ................. (H) IF ANY AMOUNT REFERRED TO IN CLS. (A) TO (H) IS DEBITED TO THE P&L A/C, AND AS REDUCED BY (I) AND (II) ................. ................... ................. (III) THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSOR BED DEPRECIATION, WHICHEVER IS LESS AS PER BOOKS OF ACC OUNT. EXPLANATION : FOR THE PURPOSES OF THIS CLAUSE, (A) THE LOSS SHALL NOT INCLUDE DEPRECIATION; ITA NO.2131/AHD/2012 AND 3 OTHERS 5 (B) THE PROVISIONS OF THIS CLAUSE SHALL NOT APPLY I F THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION IS NIL, OR' 9. ON GOING THROUGH THE MANDATE OF THE ABOVE PROVISIO N IT TRANSPIRES THAT HAVING INCREASED THE AMOUNT OF NET PROFIT AS PER P&L A/C IN ACCORDANCE WITH CLS. (A) TO (H), CERTAIN ITEMS ARE TO BE REDUCED WHICH, INTER ALIA INCLUDE THE AMOUNT OF LOS S BROUGHT FORWARD OR THE UNABSORBED DEPRECIATION, WHICHEVER I S LESS AS PER THE BOOKS OF ACCOUNT. THE TERM LOSS HAS BEEN DEFI NED FOR THE PURPOSES OF THIS CLAUSE AS EXCLUSIVE OF THE AMOUNT OF DEPRECIATION. 10. HERE IT WOULD BE RELEVANT TO MENTION THAT S. 115J, THE ORIGINAL PREDECESSOR OF S. 115JB ALSO HAS EXPLANATION WHICH PROVIDES THE MECHANISM FOR COMPUTING THE BOOK PROFIT. CLAUSE ( IV) PROVIDES FOR THE REDUCTION OF THE AMOUNT OF THE LOSS OR THE AMOUNT OF DEPRECIATION WHICH WOULD BE REQUIRED TO BE SET OFF AGAINST THE PROFIT OF THE RELEVANT PREVIOUS YEAR AS IF THE PROV ISIONS OF S. 205 OF THE COMPANIES ACT, 1956 ARE APPLICABLE. THERE WAS C ONTROVERSY ON THE INTERPRETATION OF TERM LOSS IN CL. (IV) OF THE EXPLANATION AS TO WHETHER THE LOSS SHOULD BE CONSIDERED AS BEFORE OR AFTER TAKING INTO ACCOUNT THE AMOUNT OF DEPRECIATION. THE HONBL E SUPREME COURT IN THE CASE OF SURANA STEELS (P) LTD. VS. DY. CIT (1999) 153 CTR (SC) 193 : (1999) 237 ITR 777 (SC) HELD THAT TH E TERM LOSS OCCURRING IN CL. (B) OF FIRST PROVISO TO S. 205(1) OF COMPANIES ACT HAS TO BE READ AS AMOUNT ARRIVED AT AFTER TAKING IN TO ACCOUNT THE DEPRECIATION AND ACCORDINGLY THE SAME WAS TO BE REA D AND UNDERSTOOD IN THE CONTEXT OF S. 115J ALSO. RESULTAN TLY THE TERM 'LOSS' WAS UNDERSTOOD AS THE AMOUNT ARRIVED AT AFTE R TAKING INTO ACCOUNT THE DEPRECIATION. THE LEGISLATURE MADE ITS INTENTION CLEAR BY PROVIDING IN THE SUCCESSOR SECTIONS THAT THE LOS S SHALL NOT INCLUDE DEPRECIATION, IT IS SO PROVIDED IN S. 115JA AND THE SIMILAR WORDING HAS BEEN USED IN CL. (III) OF EXPLN. 1 TO S . 115JB ALSO, WHICH IS UNDER CONSIDERATION. HENCE THE JUDGMENT OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF SURANA STEELS (P) LTD. (SUPRA) IS NOT RELEVANT IN THE CONTEXT OF S. 115JB, WHICH SPECIFICALLY STATES THAT THE LOSS SHALL NOT INCLUDE DEPRECIATION. THE NET EFFECT OF THE POSITION AS IT NOW EXISTS IS THAT WHILE COMPUTING THE AMOUNT OF LOSS BROUGHT FORWARD, THE AMOUNT OF D EPRECIATION IS NOT TO BE CONSIDERED. IN OTHER WORDS, THE LOSS FOR THE PURPOSES OF S. 115JB HAS TO BE COMPUTED BEFORE DEPRECIATION. ITA NO.2131/AHD/2012 AND 3 OTHERS 6 11. THE BASIC RULE OF INTERPRETATION OF THE PROVISIONS IS THE STRICT RULE, THAT IS, FOLLOW WHAT HAS BEEN EXPRESSLY STAT ED IN THE PROVISION AND GO BY THE PLAIN LANGUAGE OF THE SECTI ON. IT IS NOT PERMISSIBLE TO IMPORT ANY THING INTO STATUTORY PROV ISION AND READ WHAT IS NOT EXPLICITLY PROVIDED. THE NEED FOR UNEAR THING THE REAL INTENTION ARISES ONLY WHEN THE LANGUAGE OF THE SECT ION IS AMBIGUOUS, VAGUE OR UNCERTAIN. WITH THIS BASIC PRIN CIPLE OF INTERPRETATION ON HAND, WE MOVE ON TO EXAMINE THE R IVAL CONTENTIONS MADE BY THE PARTIES AS TO WHETHER CL. ( III) IT REFERS TO CONSIDERATION OF YEAR-WISE SEPARATE FIGURES OF UNAB SORBED DEPRECIATION AND LOSS BROUGHT FORWARD OR THE COMPOS ITE FIGURES. 12. CLAUSE (III) STATES THAT THE AMOUNT OF LOSS BROUG HT FORWARD OR UNABSORBED DEPRECIATION, WHICHEVER IS LESS AS PER B OOKS OF ACCOUNT IS TO BE REDUCED FROM THE NET PROFIT. AS P ER THE PLAIN LANGUAGE OF THIS PROVISION, IT IS NOTED THAT THE WO RD EMPLOYED IN THE PROVISION IS THE 'AMOUNT' AND NOT THE 'AMOUNTS' OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION, WHICHEV ER IS LESS. THE REFERENCE TO THE 'AMOUNT OF' BROUGHT FORWARD LO SS OR UNABSORBED DEPRECIATION WHICHEVER IS LESS SHOWS THE INTENTION OF THE LEGISLATURE FOR CONSIDERING ONE CONSOLIDATED FI GURE OF BROUGHT FORWARD LOSS OR UNABSORBED DEPRECIATION FOR THE EAR LIER YEARS IN TOTALITY AND NOT ON YEAR-TO-YEAR BASIS. THE USE OF THE WORD 'AMOUNT' IN SINGULAR CONVEYS THE AIM OF REFERRING I T TO ONE FIGURE. WHEREVER THE LEGISLATURE DESIRED TO USE THE WORD 'A MOUNT' IN PLURAL, IT SPECIFICALLY USED THE WORD 'AMOUNTS' INS TEAD OF THE 'AMOUNT' AS CAN BE SEEN FROM THE HEADING OF S. 40 AMOUNTS NOT DEDUCTIBLE. FROM HERE WE CAN EASILY DEDUCE THAT FO R THE PURPOSES OF CL. (III) OF EXPLN. 1 THE UNABSORBED DEPRECIATIO N FOR AIL THE EARLIER YEARS IS TO BE CLUBBED INTO ONE AMOUNT; AND THE AMOUNT OF BROUGHT FORWARD LOSS (BEFORE DEPRECIATION) IS ALSO TO BE TAKEN BY SUMMING UP ALL THE FIGURES OF LOSS OF EARLIER YEARS , AND THEN THE LOWER OF THESE TWO AMOUNTS IS TO BE REDUCED FROM TH E NET PROFIT AS SHOWN IN THE P&L A/C SO AS TO COMPLY WITH THE PRESC RIPTION OF CL. (III) OF EXPLN. 1. SIMILAR POSITION IS COMING UP FR OM THE PRESSING INTO SERVICE OF THE WORD LOSS IN THIS CLAUSE IN C ONTRADISTINCTION TO THE WORD LOSSES, AS HAS BEEN DONE IN THE MARGINAL NOTES TO SS. 72, 73, 74, 74A AND 75, ETC. FROM HERE WE GATHER THAT B Y USING THE WORDS AMOUNT AND LOSS IN THIS CLAUSE, THE POINT HAS BEEN MADE ITA NO.2131/AHD/2012 AND 3 OTHERS 7 CLEAR THAT IT IS A COMPOSITE FIGURE EACH OF THE UNA BSORBED DEPRECIATION AND BROUGHT FORWARD LOSS, THAT MERITS CONSIDERATION. 13. MOVING STILL FURTHER WE FIND FROM THE LANGUAGE OF THIS CLAUSE THAT THERE IS NO REFERENCE TO CONSIDERING THE BROUG HT FORWARD LOSS OR UNABSORBED DEPRECIATION ON YEAR-TO-YEAR BASIS. T HERE IS NOTHING IN THE LANGUAGE OF SECTION, WHICH COULD SUG GEST, EVEN REMOTELY, THAT THE LEGISLATURE INTENDED TO CONSIDER YEAR-WISE FIGURES. IF IT HAD DESIRED LIKE THAT, THEN IT WOULD HAVE BEEN SO STATED IN UNEQUIVOCAL TERMS IN THE PROVISION ITSELF . IN THE ABSENCE OF ANY SPECIFIC MENTION IN THIS REGARD IN THE CLAUS E, WE ARE UNABLE TO INFER SUCH INTENDMENT. SINCE THE LANGUAGE OF THE SECTION IS CLEAR AND DOES NOT ADMIT OF ANY DOUBT, WE ARE NOT PERSUAD ED TO INTERPRET IT IN THE WAY, THE LEARNED DEPARTMENTAL REPRESENTAT IVE IMPRESSES UPON US TO DO. 14. THE AUTHORITIES BELOW HAVE CONCLUDED THAT YEAR-WIS E DETERMINATION OF THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION IS TO BE CONSIDERED AND IF IN A PARTICULAR YEARAS IN ASST. YR. 2001-02 UNDER CONSIDERATIONTH ERE IS NO LOSS BEFORE DEPRECIATION, THEN THE BENEFIT OF UNABSORBED DEPRECIATION CANNOT BE GRANTED. IN FORMING THIS OPINION, ASSISTA NCE HAS BEEN TAKEN FROM THE OPENING WORDS OF SUB-S. (1) OF S. 11 5JB AS WELL AS SUB-S. (5) OF THIS SECTION. SUB-S. (1) STARTS WITH A NON OBSTANTE CLAUSE : 'NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT,........' AND SUB-S. (5) STA TES THAT : 'SAVE AS OTHERWISE PROVIDED IN THIS SECTION, ALL OTHER PROVI SIONS OF THIS ACT SHALL APPLY TO EVERY ASSESSEE, BEING A COMPANY, MEN TIONED IN THIS SECTION'. IT IS ON THE STRENGTH OF THESE TWO SUB-SE CTIONS THAT THE LEARNED CIT(A) HAS DECIDED THAT ALL OTHER PROVISION S OF THE ACT MERIT CONSIDERATION IN THE DETERMINATION OF THE BOO K PROFIT UNDER S. 115JB AND HENCE THE PROVISIONS OF SS. 71 TO 73 WILL ALSO APPLY AND WHEN SO APPLIED S. 72 SERVES AS GUIDING LIGHT AS PE R WHICH THE BENEFIT OF CARRY FORWARD OF BUSINESS LOSS IS LIMITE D TO EIGHT YEARS. THE CASE IS MADE OUT THAT SINCE THE BUSINESS LOSS C AN BE CARRIED FORWARD ONLY FOR EIGHT YEARS, AND IN THE NINTH YEAR , THE UNABSORBED LOSS OF THE FIRST YEAR WILL CEASE TO BE AVAILABLE F OR SET OFF, ALBEIT FOR SECOND TO SEVENTH YEARS, IT CAN STILL BE CARRIED FO RWARD, IT AUTOMATICALLY IMPLIES THAT THE AMOUNT OF LOSS HAS T O BE CARRIED FORWARD ON YEAR TO YEAR BASIS FOR THE PURPOSES OF S . 115JB ALSO ITA NO.2131/AHD/2012 AND 3 OTHERS 8 AND HENCE IT CANNOT BE A SINGLE FIGURE OF LOSS FOR ALL THE YEARS. AS ALL THE PROVISIONS OF THE ACT INCLUDING S. 72 APPLY BY VIRTUE OF SUB- SS. (1) AND (5) OF S. 115JB, IT HAS BEEN OPINED THA T THE UNABSORBED DEPRECIATION AND UNABSORBED BUSINESS LOSS ARE TO BE MAINTAINED YEAR-WISE. 15. WE ARE NOT CONVINCED WITH THIS LINE OF THINKING FO R THE REASON THAT WHAT IS CONTEMPLATED BY SUB-SS. (1) AND (5) IS THAT THE OTHER PROVISIONS OF THE ACT SHOULD BE CONSIDERED AS IN OP ERATION WHILE GIVING EFFECT TO S. 115JB. REFERENCE TO 'OTHER PROV ISIONS OF THIS ACT' CLEARLY INDICATES THAT WHAT IS PROVIDED IN S. 115JB SHOULD BE RELIGIOUSLY FOLLOWED ACCORDINGLY AND ANYTHING OVER AND ABOVE THAT WILL BE SUBJECT TO THE OTHER PROVISIONS OF THE ACT. BY NO STRETCH OF IMAGINATION CAN IT BE CONSTRUED AS SUBSTITUTING THE OTHER PROVISIONS OF THE ACT IN PLACE OF WHAT IS SPECIFICA LLY MADE AVAILABLE IN THIS SECTION, INSOFAR AS THE COMPUTATI ON OF BOOK PROFIT IS CONCERNED, THE ENTIRE MECHANISM FOR ITS CALCULAT ION IS CLEARLY SET OUT IN EXPLN. 1. NOT ONLY STARTING POINT BEING THE NET PROFIT AS SHOWN IN THE P&L A/C BUT ALSO ALL THE AMOUNTS WHICH ARE TO BE INCREASED AS STIPULATED IN CLS. (A) TO (H) AND THOS E WHICH ARE TO BE REDUCED AS SPECIFIED IN CLS. (I) TO (VII) FIND SEPA RATE MENTION IN THE SCHEME OF THE SECTION ITSELF. SO THE COMPUTATION OF BOOK PROFIT IS TO BE DONE STRICTLY AS PER THIS EXPLANATION AND NO ASSISTANCE FROM ANY OTHER SECTION OF THE ACT CAN BE TAKEN FOR THAT PURPOSE. WHEN CL. (III) OF EXPLN. 1 CLEARLY STATES THAT THE AMOU NT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION, WHICH IS LESS A S PER BOOKS OF ACCOUNT IS LIABLE TO BE REDUCED, IN OUR CONSIDERED OPINION, THERE IS NO AUTHORITY FOR FALLING UPON THE COMMAND OF S. 72 FOR HOLDING THAT THE BUSINESS LOSS IS TO BE CONSIDERED ON YEAR- TO-YEAR BASIS AND NOT AS AN AGGREGATE FIGURE FOR ALL YEARS IN UNISON. 16. THERE IS ONE MORE REASON FOR NOT APPROVING THE VIE W TAKEN BY THE AUTHORITIES BELOW. SEC. 72(3) RESTRICTS THE PER IOD TO WHICH THE LOSS CAN BE CARRIED FORWARD TO NOT MORE THAN EIGHT ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR FO R WHICH THE LOSS WAS FIRST COMPUTED. AS PER THIS SECTION IF THE RE IS A BROUGHT FORWARD LOSS WHICH IS MORE THAN EIGHT YEARS OLD, TH AT HAS TO BE ABANDONED AND ONLY THE BROUGHT FORWARD LOSS OF LESS THAN THE PRESCRIBED PERIOD CAN BE CARRIED FORWARD FOR SET OF F AGAINST THE BUSINESS INCOME. ON THE CONTRARY THERE IS NO PROHIB ITION IN S. ITA NO.2131/AHD/2012 AND 3 OTHERS 9 115JB AS PER WHICH THE AMOUNT OF UNABSORBED LOSS IS TO BE DISCARDED AFTER THE EXPIRY OF EIGHT YEARS FROM THE YEAR IN WHICH IT WAS FIRST COMPUTED. EVEN IF LOSS IS BROUGHT FORWARD FROM 50 YEARS BACK, THAT HAS ALSO TO BE RECKONED. TO PUT IT SIMPL Y THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION HAS TO BE CONSIDERED FOR AS MANY YEARS AS CORNING IN THE BOOK S OF ACCOUNT IRRESPECTIVE OF ANY RIDER FOR A PARTICULAR NUMBER O F YEARS. WE, THEREFORE, HOLD THAT REFERENCE TO THE PROVISIONS OF SS. 71 TO 73 FOR ARRIVING AT THE CONCLUSION THAT S. 115JB REFERS TO YEAR-WISE CONSIDERATION OF THE LOSS BROUGHT FORWARD OR UNABSO RBED DEPRECIATION, IS ERRONEOUS. 17. NOW WE TURN TO EXAMINE CL. (B) OF EXPLANATION TO C L. (III) OF EXPLN. 1 TO S. 115JB(2), WHICH PROVIDES THAT THE P ROVISIONS OF THIS CLAUSE SHALL NOT APPLY IF THE AMOUNT OF LOSS BROUGH T FORWARD OR UNABSORBED DEPRECIATION IS NIL. THE LEARNED CIT(A) HAS RELIED ON THIS PROVISION FOR UPHOLDING THE ACTION OF THE AO T HAT SINCE THE LOSS BEFORE DEPRECIATION FOR ASST. YR. 2001-02 IS NIL, H ENCE NO DEDUCTION IS PERMISSIBLE FOR THIS YEAR. A BARE PERUSAL OF THI S PROVISION BRINGS OUT THE INTENTION OF THE LEGISLATURE IN NOT ALLOWIN G THE REDUCTION OF THE SUBJECT-MATTER OF CL. (III) FOR THE PURPOSES OF COMPUTING BOOK PROFIT, IF THE AMOUNT OF UNABSORBED DEPRECIATION O F BROUGHT FORWARD LOSS IS NIL. IN OTHER WORDS IT HAS BEEN PRO VIDED THAT THE REDUCTION IS NOT TO BE PERMITTED IF ONE OF THESE TW O FIGURES NAMELY, LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION, IS NIL. TO PUT IT SIMPLY IF ONE OF THESE TWO FIGURES IS NIL, THEN THE OTHER FIGURE WILL BE IGNORED ALTOGETHER. THE RATIONALE BEHIND THIS PO RTION OF ENACTMENT IS NOT TO UNNECESSARILY ALLOW THE REDUCTI ON OF ONE, IF THE OTHER IS NOT THERE. SINCE THE LOSS IS TO BE CONSIDE RED BEFORE DEPRECIATION AND IF THERE IS BROUGHT FORWARD LOSS O NLY, BUT NO CORRESPONDING UNABSORBED DEPRECIATION OR VICE VERSA , THEN NO REDUCTION IS TO BE MADE OF THE AMOUNT OF BROUGHT FO RWARD LOSS OR UNABSORBED DEPRECIATION, AS THE CASE MAY BE. IN THE EARLIER PART OF THE ORDER WE HAVE HELD THAT IF THERE IS LOSS BROUGH T FORWARD AND UNABSORBED DEPRECIATION FOR MORE THAN ONE YEAR, THE N ONE COMBINED FIGURE EACH OF UNABSORBED DEPRECIATION AND BROUGHT FORWARD LOSS FOR SUCH YEARS IS TO BE DETERMINED FOR CONSIDERATION. ADVERTING TO THE FACTS OF OUR CASE, WE FIND THAT NO NE OF THE FIGURES OF UNABSORBED DEPRECIATION OR BROUGHT FORWARD LOSS IS NIL, HENCE THIS PART OF THE EXPLANATION IS NOT RELEVANT FOR OU R PURPOSE. ITA NO.2131/AHD/2012 AND 3 OTHERS 10 18. IN VIEW OF THE FOREGOING DISCUSSION WE ARE OF THE CONSIDERED OPINION THAT THE LOWER OF THE SOLITARY FIGURES OF T HE UNABSORBED DEPRECIATION OR LOSS BROUGHT FORWARD FOR ALL THE EA RLIER YEARS TAKEN TOGETHER, IS TO BE REDUCED FOR THE PURPOSES OF COMP UTING 'BOOK PROFIT' UNDER S. 115JB. AS THE AGGREGATE AMOUNT OF UNABSORBED DEPRECIATION IN RESPECT OF THE FOUR YEARS IS AT RS. 1,51,15,393 WHICH IS LOWER THAN THE AGGREGATE OF THE LOSS BEFOR E DEPRECIATION AT RS. 2,40,75,717, IN OUR CONSIDERED OPINION, THE ASSESSEE HAD RIGHTLY CLAIMED REDUCTION FOR THE LOWER AMOUNT OF R S. 1.51 CRORES. WE, THEREFORE, ACCEPT THE ASSESSEES CONTENTION ON THIS POINT. 19. IN THE RESULT, THE APPEAL IS ALLOWED. 5. THE LD.CIT() HAS FOLLOWED THIS DECISION OF THE T RIBUNAL, BUT, FURTHER OBSERVED THAT IN THE ASSTT.YEARS 2002-03, 2 004-05 AND 2005-06, THE ASSESSEE WAS NOT HAVING UNABSORBED DEPRECIATION , WHICH COULD BE ACCUMULATED OR AGGREGATED FOR THE PURPOSE OF EXCLUS ION, BECAUSE, IN THESE YEARS, BUSINESS LOSS WAS LESSER THAN THE DEPR ECIATION. HE EXCLUDED THESE THREE AMOUNTS BY OBSERVING AS UNDER: 3.7 PERUSAL OF THE WORKING OF UNABSORBED DEPRECIAT ION AS COMPUTED BY THE APPELLANT AND REPRODUCED IN PARA NO .3.3 OF THIS ORDER, THE APPELLANT HAD COMPUTED THE ELIGIBLE UNAB SORBED DEPRECIATION AT RS.32,65,78,659/- TO BE SET OFF AGA INST BOOK PROFITS FOR THE PURPOSES OF 115JB COMPUTATION. THIS IS NOTH ING BUT THE AGGREGATE OF BOOK DEPRECIATION FOR THE A.YRS 97-98 TO 2005-06. IN MY CONSIDERED VIEW, THIS WORKING IS ALSO ERRONEOUS. PROVISIONS OF CLAUSE-(III) OF EXPLANATION 1 TO SEC.115JB(2) DOES NOT PROVIDE BENEFIT OF AGGREGATE OF BOOK DEPRECIATION. ON THE C ONTRARY IT PROVIDES FOR THE AMOUNTS OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION, WHICHEVER IS LESS AS PER BOOKS OF ACC OUNT. IN THE INSTANT CASE IT IS NOTICED THAT IN THE A.YRS 2002-0 3, 2004-05 AND 2005-06 THE APPELLANT HAS EARNED A BUSINESS PROFIT AFTER MAKING PROVISIONS OF BOOK DEPRECIATION. THIS CLEARLY MEANS THAT IN THESE YEARS THE APPELLANT DOES NOT HAVE ANY UNABSORBED DE PRECIATION AS THE SAME HAS ALREADY BEEN ADJUSTED AGAINST THE BUSI NESS PROFIT OF THAT YEAR. IN THIS REGARD IT WILL BE PERTINENT TO M ENTION THAT THE ITA NO.2131/AHD/2012 AND 3 OTHERS 11 HON'BLE ITAT IN THE CASE OF AMLINE TEXTILES PVT. LT D. (SUPRA) HAS NOT DISCUSSED SUCH SITUATION AND THE HON'BLE ITAT H AS NOT PRESCRIBED THE COMPUTATION OF UNABSORBED DEPRECIATI ON/CASH LOSS IN SUCH SITUATION. IN MY CONSIDERED VIEW THE APPELL ANT'S CASE IS NOT COVERED BY THE RATIO OF AMLINE TEXTILES PVT. LTD. T O THIS EXTENT. IN VIEW OF ABOVE I HOLD THAT THE. APPELLANT IS NOT HAV ING UNABSORBED DEPRECIATION FOR THE A.YRS 2002-03, 2004-05 AND 200 5-06. IF THE UNABSORBED DEPRECIATION FOR THESE THREE YEARS IS TA KEN OUT FROM THE AGGREGATE OF UNABSORBED BOOK DEPRECIATION AS WO RKED OUT BY THE APPELLANT, THE ELIGIBLE UNABSORBED DEPRECIATION TO BE SET OFF AGAINST THE BOOK PROFITS FOR THE COMPUTATION OF PRO FITS U/S.115JB WILL BE RS.26,47,30,860/- [32,65,78,659 - 2,51,36,2 62 - 1,95,43,321 1,71,68,216]. THE A.O. IS DIRECTED TO G IVE BENEFIT OF UNABSORBED DEPRECIATION OF RS. 26,47,30,860/-,FOR T HE A.Y.2006-07 & 2007-08 AND RECOMPUTED THE BOOK PROFITS AS PER TH E PROVISIONS OF SEC.115JB OF THE I.T.ACT FOR THESE YEARS. THIS WILL BE STRICTLY CONFORMITY WITH THE RATIO OF AMLINE TEXTILE PVT.LTD . VS. ITO, 27 SOT 152 (MUM.). THE RATIO OF THIS CASE HAS BEEN CO NSISTENTLY FOLLOWED BY THE HONBLE AHMEDABAD ITAT ALSO. 4. AS A RESULT THE APPEAL IS PARTLY ALLOWED. 6. THE ASSESSEE HAS CHALLENGED THIS PART OF THE CIT (A)S ORDER IN ITS CO. BUT AT THE TIME OF HEARING, THE LD.COUNSEL FOR THE ASSESSEE DID NOT PRESS THE CO, THEREFORE, WE DO NOT DEEM IT NECESSAR Y TO DEAL THIS FINDING OF THE CIT(A). THE REST OF THE FINDING OF THE CIT( A) IS IN LINE WITH THE TRIBUNALS ORDER PASSED IN THE AMLINE TEXTILES P.LT D.(SUPRA). THE LD.FIRST APPELLATE AUTHORITY HAS RIGHTLY PLACED REL IANCE UPON THE ORDER OF THE ITAT AND HAS RIGHTLY HELD THAT THE AGGREGATE OF BUSINESS LOSS OR DEPRECIATION, WHICHEVER LOWER IS TO BE CONSIDERED F OR REDUCTION OUT OF THE BOOK PROFIT. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE APPEALS OF THE REVENUE BOTH ARE DISM ISSED. ITA NO.2131/AHD/2012 AND 3 OTHERS 12 SIMILARLY, THE ASSESSEE DID NOT PRESS COS., THEREF ORE, BOTH THE COS. ARE ALSO DISMISSED. 7. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED AND BOTH THE COS. OF THE ASSESSEE ARE ALSO DISMISSED. ORDER PRONOUNCED IN THE COURT ON 7 TH APRIL, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER