Foreseeable losses computed as per Accounting Standard -7 are allowable

By TG Team Income Tax Judiciary June 2, 2009

TaxGuru Citation: 2009 taxguru.in 573
Case Name: Jacobs Engineering India Pvt. Ltd. Vs The ACIT (ITAT Mumbai)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2003-04
Courts: ITAT Mumbai

The contention of the assessee regarding allowability of foreseeable loss is accepted in principle, However, the issue is restored to the file of AO for the purpose of quantification and calculation of the said loss in terms of Accounting Standard -7, as the same has not been done.

Deduction under Chapter VI A are to be allowed only on net income and not on gross income. The net income is to be computed after giving full effect to the provisions of sections 80AB, 32, 70, 71 & 72 of the Act. Therefore, the assessee is entitled to claim deduction under Chapter VIA of the Act after determination of eligible profit, as contemplated u/s. 28 to 44 and after giving effect to the provision of section 32, 70, 71 & 72 of the Act. In view of this, the assessee, in the present case, can claim deduction u/s. 80 HHE of the Act, after considering brought forward depreciation and brought forward loss. Thus, the assessee is eligible for deduction u/s. 80 HHE of the Act, only on net income.

INCOME TAX APPELLATE TRIBUNAL, MUMBAI

ITA No. 335IMUMI07 (A.Y. 2002-03)
ITA No.336IMUM/07(AY. 2003-04)

Jacobs Engineering India Pvt. Ltd.

(Formerly known as Jacobs H&G Pvt. Ltd.), Jacobs House, Ramkrishna Mandir Road, Kondivita, Andheri (East) Mumbai -59.