IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPLICATION NO.106 OF 2002 The CIT, BCV Bombay )..Applicants Vs. M/s.Rim Textiles Pvt.Ltd., )..Respondents ---- Mr.P.S.Sahadevan for the applicants. ---- Coram : F.I.Rebello & R.S.Mohite,JJ Date : 18.03.2009. Judgment :- ( Per : R.S.Mohite,J) 1. The question of law in respect of which the applicants seek a direction is as follows :- "Whether, the facts and in the circumstances the Tribunal was right in law in allowing further deduction of Rs.18,06,380/- on account of unabsorbed depreciation, from the book profit, even though the Assessing officer has allowed the business loss of Rs.1,54,086/- which is the best of the two amount as per the provision of section 205(1)(b) of the companies Act for the purpose of section 115-J of the I.T.Act ?" 2. The question has been dealt with and answered by the Supreme Court against the revenue in the case of Surana Steels Pvt.Ltd., Vs. Dy.Commissioner of Income-tax & Ors. reported in 237 ITR 777. In the aforesaid judgment the Apex Court has held that the word loss as used in the proviso to clause-(b) of : 2 : Section 205(1) of the Companies Act signifies the amount arrived at after taking into account amount of depreciation and it has to be so read and understood in the context of section 115 J of the Income-tax Act. 3. As indicated by the Tribunal and the record, the department proceeded on the footing "loss" did not include depreciation debited in the books and on the footing that where, by ignoring the figure of depreciation in the books, there was no loss, then nothing was to be deducted. ITAT found that this approach was unreasonable and improper. In view of the ratio laid down by the Apex Court, we agree with the findings of the ITAT. Consequently, rule stands discharged. (R.S.Mohite,J) (F.I.Rebello,J)