(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) Assessee has filed this appeal calling in question decision of the Income Tax Appellate Tribunal dated 15.2.2000. At the time of admission of appeal, following substantial questions of law were framed :
"(a) Whether in the facts and circumstances of the case, the Tribunal was right in law in holding that notwithstanding the fact that assessee is liable to pay tax u/s 115 J(1) of the income tax Act,1961 on an amount equal to 30% of its book profit, right of the assessee to set off unabsorbed depreciation/ loss/ investment allowance shall stand exhausted so as to make its total income at NIL and thereby lose the benefit of such carry forward to the extent of 30% of book profits ?
(b) Whether in the facts and circumstances of the case,the Tribunal was right in law in interpreting sub-section (2) of section 115 J to mean that even though an assessee is liable to pay tax on 30% of its book profits it must have an independent calculation of set off of its unabsorbed depreciation/ loss/ investment allowance so as to make current year's income at NIL and not at 30% of book profits on which the assessee is liable to pay tax ?
(c) Whether in the facts and circumstances of the case, the Tribunal was justified in interpreting the fiction under section 115 J by not restricting the set off of carry forward loss/ depreciation to the extent to make the current year's income equivalent to 30% book profits on which assessee is liable to pay tax?"
Though three different questions have been framed,the issue is identical namely, with respect to assessee's claim for carrying forward unabsorbed depreciation/loss/ investment allowance to the extent of 30% of the book profit in case of assessment as made in section 115J of the Income Tax Act. We are not recording the facts in detail since it is pointed out to us by the counsel on both sides that issue is squarely covered by the Apex Court in decision in case of Karnataka Small Scale Industries Development Corporation Ltd. v. Commissioner of Income-tax reported in (2002) 258 ITR 770. In the said decision the Apex Court held that even where the book profit liability is imposed, the amounts of business loss, unabsorbed depreciation, investment allowance, etc. as at the beginning of the accounting year are to be adjusted and set off to the same extent of such brought forward loss, unabsorbed depreciation, etc., as they would have been adjusted or set off had the assessee been assessed to tax in the regular way and only the resultant amounts of loss, unabsorbed deprecation etc., can be carried forward to the next year.
In the result,the questions are answered in the affirmative i.e. against the assessee and in favour of the revenue. Tax Appeal is dismissed.
(Akil Kureshi,J.) (Harsha Devani,J.) (raghu) Top