HIGH COURT OF PUNJAB & HARYANA
Lakshmi Precision
Screws Ltd.
v.
Commissioner of
Income-tax, Rohtak
SATISH KUMAR
MITTAL AND RAKESH KUMAR GARG, JJ.
IT REFERENCE NO.
58 OF 1997
January 15, 2008
Section 115J of the Income-tax Act, 1961 - Zero-tax companies - Assessment year 1988-89 - For relevant year, assessee worked out book profits by adjusting brought forward unabsorbed depreciation against current income - Assessing Officer allowed said adjustment - Subsequently, Commissioner observed that as per section 115J, unabsorbed loss or unabsorbed depreciation, whichever is less, was to be deducted from book profits and as in instant case, there was no business loss incurred by assessee, brought forward depreciation was not to be taken into account while working out book profit for purpose of section 115-J - Thus, he held that assessment order was erroneous in so far as it was prejudicial to interest of revenue and cancelled same under section 263 - On appeal, Tribunal upheld order of Commissioner - In reference, assessee submitted that issue in question was squarely covered in its favour by a decision of Supreme Court in Surana Steels (P.) Ltd. v. Dy. CIT [1999] 237 ITR 777/104 Taxman 188 and also, for assessment year 1989-90, in its own case High Court answered similar question of law in favour of assessee and against revenue - Revenue could not controvert said factual and legal position - Whether in view of said decisions, Tribunal was not correct in law in upholding order of Commissioner - Held, yes
ITR No. 125 of 1992 and Surana Steels (P.) Ltd. v. Dy. CIT [1999] 237 ITR 777/104 Taxman 188 (SC) followed.