V.D. Wakharkar, AM - (1.) IN the appeal filed by the revenue the following ground of appeal was raised:- "On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that left out losses of earlier years due to application of Section 115J(1) are to be allowed to be carried forward and set off in subsequent years, ignoring the overriding provision of Section 115J(1) shall not effect the determination of amount in relation to Relevant Previous year to be carried forward of the subsequent years and thereby does not permit the carry forward of losses of earlier years."
(2.) On the difference of opinion between the Accountant Member and the Judicial Member, the issue arising out of this appeal was referred to the Third Member Under Section 255(4) of the Income Tax Act, 1961. The third Member by this order dated 28.1.2003 agreed with the view expressed by the Accountant Member. In conformity with the opinion of the majority, the revenue's appeal shall be treated as allowed. The order of the learned CIT(A) dated 3.5.1993 on the issue raised by the revenue is set aside and the order of the Assessing Officer is restored. Thus the revenue's appeal is allowed. M.K. Chaturvedi, VP 1. This appeal came before me as a Third Member to express my opinion on the following question: "Whether, on the facts and in the circumstances of the case, the assessee is entitled to carry forward the unabsorbed investment allowance to the extent it has not been set off against income assessed under Section 115J and consequently, whether the order of the Commissioner of Income-tax (Appeals) on interpretation of the provisions of Section 115J(2) of the I.T. Act, 1961 should be confirmed?" 2. I have heard the rival submissions in the light of material placed before me and precedents relied upon. For the relevant assessment year, assessee was originally assessed on an income of Rs. 39,39,228 after allowing deduction for the brought forward unabsorbed investment allowance of Rs. 54,76,236. Subsequently, it was found that the income assessable Under Section 115J was Rs. 47,56,772. Assessing Officer rectified the assessment by resorting to the 154 proceedings. Unabsorbed investment allowance was not allowed to be carried forward by the AO, as the entire unabsorbed investment allowance brought forward from earlier years amounting to Rs. 54,76,276 got adjusted against the assessee's income as computed under normal provisions of the Income-tax Act. 3. The core of dispute was apropos the adjustment of the balance figure of investment allowance of Rs. 8,17,554, i.e. difference between the investment allowance allowed in normal course and as allowed Under Section 115J. According to the assessee, balance figure of investment allowance of Rs. 8,17,544 should be allowed to be carried forward to the subsequent years. CIT(Appeals) agreed with the contention of the assessee. Appeal was allowed. Revenue was in appeal before the Tribunal.
(3.) LEARNED AM adjudicated the issue by following the decision of the Hon'ble Andhra Pradesh High Court rendered in the case of Suryalatha Spinning Mills Ltd. v. Union of India (233 ITR 713)(AP) and the decision of the Hon'ble Karnataka High Court in the case of Widia (India) Ltd. v. CIT (242 ITR 678)(Kar). It was noted by the learned AM that the entire unabsorbed investment allowance brought forward from earlier years was fully set off against the income as computed under the normal provisions of the Income-tax Act. As such, in the computation made Under Section 115J, there will be no amount to be carried forward on account of any unabsorbed investment allowance. LEARNED AM has given the computation as per the normal course as well as the computation Under Section 115J. Investment allowance of Rs. 54,76,276 was deducted from the total income. Net income came to Rs. 39,39,228. This income was computed in consonance with the procedure laid down under the Act. Thereafter, it is imperative on the part of AO to compute the income Under Section 115J. AO did that computation. Resultant income was Rs. 47,56,772. As per the mandate of Section 115J, this income was to be assessed. Assessee pleaded that to the extent income computed Under Section 115J got increased, it should be deemed that unabsorbed investment allowance was not adjusted against that income. as such, it should be carried forward. The submission of the assessee was that the tax would not have been demanded against the amount which was adjusted. LEARNED JM, following the decision of the Hon'ble Gauhati High Court rendered in the case the Lalla Cherra Tea Co. (P.) Ltd. v. CIT (239 ITR 611)(Gauh), decided the issue in favour of the assessee.;