Yogesh Kumar U.S. ORDER
Pradip Kumar Kedia, Member (A)
1. The captioned appeal has been filed by the assessee against the order of the ld. CIT(A)-VII, New Delhi, dated 29.03.2017 arising from the assessment order dated 28.02.2017 passed by the Assessing Officer u/s. 143(3) of the Act, concerning Assessment Year 2012-13.
2. As per the grounds of appeal, the assessee has challenged the computation of adjustment allowable in terms of clause (iii) of Explanation-1 to Section 115JB(2) for computation of book profits made by the Assessing Officer resulting in lower adjustment to the extent of Rs. 93,06,502/-.
3. When the matter was called for hearing, the ld. counsel for the assessee submitted that;
(i) the assessee furnished its return of income computing total income under normal provisions of the Act. Likewise, book profit under Section 115JB was also computed at Nil. In the course of the assessment proceedings, the book profit was re-determined by the assessee at Rs. 1,10,12,730/-. The Assessing Officer computed the tax liability on such book profits accordingly.
(ii) In the first appeal, the assessee contended that it is entitled to adjust the book profit by way of brought forward loss or depreciation as per books of account whichever is less in terms of clause (iii) of Explanation-1 to Section 115JB(2) of the Act.
4. In the first appeal, the assessee reiterated adjustment of carried forward business loss or unabsorbed depreciation whichever is lower, against 'Book Profit' for the purposes of Section 115JB of the Act. The CIT(A) observed that the assessee is not entitled to such adjustment in the facts of the case. The relevant operative paragraph of the order of the CIT(A) reads as under:
5.3 I have carefully considered the assessment order and written submission filed by the Ld. AR. The appellant has provided a working in respect of Book Profit u/s. 115JB as under:
5.4. In the above working, book profits has been adjusted by Rs. 93,06,502/- being the business loss for the F.Y. 2009-10 on the ground that u/s. 115JB under Explanation 1 to clause (iii), the Book Profit can be reduced by the amount of loss brought forward or unabsorbed depreciation whichever is less as per books of accounts. Based on the above said working, the appellant has contended that the amount of loss brought forward or the unabsorbed depreciation whichever is less should be allowed for working of the Book Profit computation. In this manner a sum of Rs. 93,06,502/- is reduced from the Book Profit computation for the assessment year under consideration. From the working, it is evident that the appellant has considered for the F.Y. 2009-10 (A.Y. 2010-11), the loss before depreciation and has separately shown depreciation and amortization. The business loss been adjusted against the opening profit brought forward from 01.04.2009 and the net amount is shown as business loss.
5.5. For the F.Y. 2010-11 (A.Y. 2011-12), similar working has been shown by the appellant but in this year after excluding depreciation and amortization, the result is a Book Profit of Rs. 17,19,98,265/-. However, the appellant has not set off the Book Profit anywhere against the brought forward loss as on 01.04.2010. Provisions of Section 115JB(2) of Explanation 1 to clause (ii) is reproduced as under:
'(2) 12[Every assessee,
[(iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account.
Explanation.-For the purposes of this clause, - (a) the loss shall not include depreciation; (b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil; or].
5.6. On plain reading of the Explanation, it is clear in the computation of Book Profit of the current year, the amount of loss brought forward or unabsorbed depreciation whichever is les........