Case Law Details
Susi Sea Foods Pvt. Ltd. Vs. ACIT (ITA No. 280/Vizag/2010) Visakhapatnam Bench of the Tribunal dated 9 May 2011
Facts :- The taxpayer was a private limited company. For the assessment year 2000-01, since the total income was less than 30% of the book profit, provisions relating to Minimum Alternate Tax were applicable to the taxpayer under section 115JA of the Income-tax Act (“ITA”). While computing the book profit under section 115JA, the taxpayer had reduced unabsorbed depreciation being lower of business loss and unabsorbed depreciation as per clause (iii) of Explanation to section 115JA.
The Assessing Officer (“AO”) held that in the absence of any specific provision in section 115JA with respect to the manner of set off of carry forward losses, the provisions of the ITA relating to carry forward and set off of losses would apply. The AO further held that as per the provisions of the ITA, the profit of a year should be first set off against the business loss and thereafter unabsorbed depreciation would be set off. The AO accordingly adjusted the profits earned for the earlier assessment years against the business loss ignoring the losses carried forward for more than eight years. By doing so, the AO computed the business loss at Nil and this being the lower amount out of business loss and unabsorbed depreciation denied the deduction to the taxpayer while computing book profit.
Issue before the Tribunal :- Whether the business loss carried forward beyond a period of eight years can be deducted while computing book profit under section 115JA of the ITA?
Observations and Ruling of the Tribunal
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