ASSISTANT COMMISSIONER OF INCOME TAX Vs. LALLACHERRA TEA CO (P) LTD

JUDGEMENT

(1.) This appeal by the Revenue for the asst. yr. 1988-89 is directed against the order of the Commissioner of Income-tax (Appeals) [for short CIT(A)] and sole point of controversy relates to carry forward of unabsorbed losses. The controversy arises in the following circumstances.

(2.) The assessee is a private limited company carrying on business of manufacture and sale of tea. For the asst. yr. 1988-89 the assessee-company filed its return declaring income of Rs. 74,450 on 29th July, 1988. The Asstt. CIT (AO in short) on consideration of the relevant material computed the assessees income at Rs. 2,55,866 which was set off against brought forward losses of Rs. 4,87,417 of the asst. yr. 1987-88. The net result of above was that carry forward loss to be adjusted in the following assessment year worked out at Rs. 2,31,551. This figure is subject-matter of controversy before me.

(3.) The AO after computing the total income found that "Special provisions relating to Companies" contained in S. 115J of the IT Act (hereinafter referred to as "the Act") were applicable in this case as total income computed was less than 30 percent (thirty percent) of the "book profit". He then computed book profit in terms of Explanation to S. 115J(1) of the Act at Rs. 2,48,158 and treated 30 per cent thereof i.e., Rs. 74,477 (rounded to Rs. 74,450) as "deemed total income chargeable to tax" under S. 115J of the Act.