Commissioner of Income Tax vs Canbank Financial Services Ltd.

Ashok Bhan, J.—The revenue has preferred this appeal against the order passed by the Tribunal in IT Appeal Nos. 795 and 760 (Bang.) of 1991, dated 17-3-1999. By the impugned order, the Tribunal has allowed the appeal of the assessee. According to the revenue, following two substantial questions of law arise from the order of the Tribunal : 1. Whether the Tribunal is correct in holding that the difference between the deemed total income (as computed u/s 115J of the IT Act) and the total income as determined under the Act can be treated as unabsorbed depreciation and carried forward as per section 115J(2) when the company has declared a profit as per regular computation of income?

Whether the difference between the deemed total income as computed u/s 115J and the total income as determined under the regular provision of the Act would defeat the very purpose and object of enacting Chapter XII-B of the Act when the company has declared a profit as per regular computation of income?

The assessee is a public limited company. For the assessment years 1988-89 and 1989-90, the provisions of Chapter XII-B of the income tax Act, 1961 (''the Act''), were applicable. The Assessing Officer for both these assessment years has computed the total income and book profits as per section 115J of the Act. The income returned and the computation is as under:

Asst. yr.

Income returned

Total income Computed

Profit u/s 115J

(Rs.)

(Rs.)

(Rs.)

1988-89

1,15,53,680

41,66,160

1,15,15,430

1989-90

1,64,32,227

1,65,11,070

4,05,74,352

The Assessing Officer after computing the book profits as stated above declined to permit the assessee to carry forward the unabsorbed depreciation.

The assessee being aggrieved against the order of assessment in respect of the assessment years 1988-89 and 1989-90, filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals) after considering various contentions raised by the assessee dismissed the appeal. The assessee preferred a further appeal before the Tribunal which has been allowed. It has been held that the assessee would be entitled to carry forward the unabsorbed depreciation u/s 115J(2).

Admit. We proceed to determine the questions raised with the consent of the counsels for the parties.

The revenue has come up in an appeal u/s 260A of the Act contending that the order passed by the Tribunal runs contrary to the judgment of this Court in Widia (India) Ltd. and Others Vs. Commissioner of Income Tax,

The counsels for the parties agreed that the two points raised in these appeals are concluded in favour of the revenue and against the assessee by the Division Bench''s judgment of this Court referred to above. The counsel for the assessee contends that against the order of the High Court, SLP has been admitted by the Supreme Court. We allow these appeals in terms of the judgment of this Court in Widia (India) Ltd.''s case (supra) and answer the questions in the negative, that is, against the assessee and in favour of the revenue.