The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently in an appeal filed before it, held that the benefit given for sick company u/s 115 JB will not available when net worth of the company has turned positive.
The aforesaid observation was made by the Tribunal when an appeal was preferred before it by the assesseeSupertex Industries Ltd., against appellate order passed by the Commissioner of income tax (appeals) – 9, Mumbai, dated 7/05/2018, for assessment year 2012 – 13.
The brief facts of the case being that assessee was a company, which filed itsreturn of income on 12/9/2012 at Rs. Nil after claiming the entire business income of Rs. 170,50,855/– against unabsorbed depreciation and brought forward business losses, the income of the assessee was assessed u/s 143 (3) of the income tax act by an order dated 9/3/2015.
The learned assessing officer having computed the profit u/s 115 JB at 1,046,480 and levying tax accordingly, the assesseehad preferred an appeal before the CIT – A.
However, the CIT – A, having dismissed the appeal of the assessee per order dated 7/05/2018, the assessee has preffered the instant appeal before the Tribunal.
The sole issue involved in the assessee’s appeal being the question as to whether on the facts and under the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) has erred in upholding the Assessing Officer’s action in computing tax of ₹1,99,395, by applying the provisions of Mat under Section 115JB, without appreciating the fact that the appellant was a sick company under BIFR whose accumulated losses is still not recouped, and hence that it is exempt from provision of section 115JB of the Income-tax Act, 1961 even though the net worth of the company has become positive, the Tribunal consisting of Sandeep SinghKarhail, the Judicial Member, and Prashant Maharishi, the Accountant Member, observed as follows :
“There is no provision under the income tax act or under the sick industrial Companies act to exclude such profit from book profit tax u/s 115 JB of the act in these circumstances. Learned lower authorities have correctly interpreted the law and denied benefit to the assessee.Whenever, the provisionsof law are clear and unambiguous they should be given full effect thereof and should be read as it is without adding or subtracting anything.”
Thus, dismissing the assessee’s appeal, they ruled:
“In view of this, we do not find any infirmity in the orders of the lower authorities. We hold that learned assessing officer is correct in not excluding the book profit earned by the assessee from the provisions of 115 JB of the income tax act as the assessee’s net worth turned positive during the year. There is no infirmity in the order of the learned CIT – A in confirming the same. Solitary ground of appeal of the assessee is dismissed.”
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