Section 72 & 115JB of the Income-tax Act, 1961 – Minimum alternate tax – Carrying forward the unabsorbed business losses for more than 8 years does not apply in computing the Adjusted Book Profit u/s 115JB.

Facts: AO and CIT(A) erred in rejecting the assessee's rectification petition claiming that in computing its Adjusted Book Profit for Asstt. Year 2009-10 in terms of Sec.115JB, its brought forward unabsorbed business losses relating to Asstt. Years 1996-97, 1997-98 and 1998-99 should have been set off with its Net Profit as per its Profit & Loss Account for the said Assessment Year in terms of Explanation (iii) below Sec. 115JB.

Held, that section 115-JB is a stand-alone provision which does not contain any provision about carry forward of B/F losses, while computing the Book Profit u/s 115-JB. Audited accounts of the company clearly suggests that the assessee had never adjusted the brought forward losses/debit balance of Profit and Loss account with the General Reserve, thus, sum credited in the General Reserve account was a Capital Receipt hence, it should not to be considered in computation of book profit u/s 115JB. AO failed to take into account that the restriction, contained in Sec.72 on carrying forward the unabsorbed business losses for more than 8 years, does not apply in computing the Adjusted Book Profit u/s 115JB. Therefore, we direct the AO to allow the claim of the assessee for adjusting the unabsorbed losses with the book profits under section 115-JB for the year – PEERLESS HOSPITEX HOSPITAL & RESEARCH CENTRE LTD. Vs. DY. CIT [2020] 181 ITD 446 (ITAT-KOLKATA)