Case Law Details
Peico Electronics & Electrical Ltd. Vs CIT (Kolkata High Court)- We are of the opinion that the term ‘loss’ as occurring in clause (b) of the proviso to Section 205 (1) of the Companies Act has to be understood and read as the amount arrived at after taking into account the depreciation. Then alone the formula prescribed in this clause would make sense and it would be consistent with the object sought to be achieved by enacting Section 115-J of the Income-tax Act, 1961. If loss were to be taken as pre-depreciation loss then the resultant computation will not be in conformity with the tenor of the provisions of Section 205. The language of clause (b) of the proviso to Section 205 (1) is clear.
It applies to those cases where the depreciation has been provided in accordance with the provisions of sub-section (1) of Section 205. The depreciation is provided for in the Profit and Loss Account. The loss is arrived at after taking into account the depreciation provided. It is therefore clear that the word loss as used in proviso, clause (b) to Section 205 (1) signifies the amount arrived at after taking into account the amount of depreciation and it has to be so read and understood in the context of Section 115-J of the Income-tax Act, 1961. We do not agree with the view taken by the High Court that in case there is profit in a year but after adjustment of depreciation it results in loss, no adjustment in the book profit under Section 115-J can be allowed. The view taken by the High Court would partially defeat the object sought to be achieved by Section 11 5-J of the Income-tax Act, 1961. We also do not agree with the High Court saying that having lifted Section 205 (1) (b) from the Companies Act into Section 11 5-J of the Income-tax Act, there is no occasion to refer to the Companies Act, 1956 at all.
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction (Income-Tax)
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