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Section 115J of the Income-tax Act, 1961 - Zero tax companies - Assessment year 1989-90 - Where accounts of assessee showed nil as regards carry forward of loss and unabsorbed depreciation, Commissioner rightly revised order of Assessing Officer on issue of allowability of depreciation for working out 30 per cent profit under section 115J [In favour of revenue] The Commissioner revised the assessment order for relevant year on the issue of deduction of unabsorbed depreciation holding that, according to the balance-sheet of the company, as on 31-3-1988, there was no unabsorbed loss or unabsorbed depreciation. Consequently, deduction of unabsorbed depreciation was erroneous according to the provisions of section 115J(1A)(iv). Held that a perusal of the profit and loss account for the year 1988-89 showed that the entire loss including the depreciation for the year was duly set off as against the profits available in the year 1987-88 by taking the depreciation and loss from the general reserve for an adjustment. After adjusting the unabsorbed depreciation as against the general reserve there remained nothing for the assessee to carry forward to the next year for the purpose of computing the profit, as given under section 205(1)(b) of the Companies Act. Since the accounts of the assessee showed nil as regards the carry forward of loss and unabsorbed depreciation, the Commissioner rightly revised the order of the Assessing Officer to take the entire book profit without any further adjustments for the purpose of working out 30 per cent profit under section 115J. CASES REFERRED TO Surana Steels (P.) Ltd. v. Dy. CIT [1999] 237 ITR 777/104 Taxman 188 (SC) (para 7) T. Ravikumar for the Appellant. JUDGMENT Mrs. Chitra Venkataraman, J. - The Revenue is on appeal as against the order of the Tribunal raising the following substantial questions of law: "Whether, in the facts and in the circumstances of the case, the Tribunal was right in holding that the depreciation of the previous years should be deducted for arriving at the book profits under section 115J, even though such depreciation was not carried forward?" 2. In respect of the assessment year 1989-90, the assessee…

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