Judgment :- Ramachandran Nair J. The sole question raised in the appeal filed by the assessee is whether the Tribunal was justified in confirming the levy of additional tax under Section 143 (IA) of the Income Tax Act, hereinafter referred to as the “Act” for short, on the difference in loss computed by the Assessing Officer in the intimation issued under Section 143(1)(a) of the Act. We have heard the learned senior counsel Sri. Sarangan appearing for the petitioner and the learned senior standing counsel Sri. P.K.R. Menon appearing for the respondent. 2. For the assessment year 1991-92 the assessee filed its return declaring a loss of Rs. 2,74,33,874/- which included the claim of depreciation on black assets of Rs. 1,35,95,225/-. However, while assessing the income, the Assessing Officer noticed that the assessee has claimed depreciation in full whereas eligibility was only 70% under the fourth proviso to Section 32(1) of the Act. He therefore issued proceedings under Section 143(1)(a) of the Act. Consequently, the assessee’s claim of depreciation stood reduced by Rs. 25,93,202/-. The assessee has not disputed the intimation issued under Section 143(1)(a) of the Act. However, while issuing intimation under Section 143(1)(a) of the Act, the Assessing Officer levied additional tax under Section 143(IA) of the Act on the reduced amount of loss by virtue of Clause (ii) of Section 143 (IA)(a) of the Act introduced by the Finance Act. 1993 with effect from 4.1989. It is against the demand of additional tax the assessee filed appeal. In fact the assessee first applied for rectification of the proceedings issued by the Assessing Officer for withdrawing the levy and demand of additional tax on differential loss. When this was turned down, the assessee filed appeal. Even though the order of appeal was in favour of the assessee, on Second Appeal by the Department, the Tribunal reversed it, against which the assessee filed this appeal before this Court. Before this Court, the contention raised by the assessee is that the reduction of loss and depreciation is not covered by Section 143 (IA) of the Act. According to the assessee, reduction in loss attracting liability for additional tax under Section 143 (IA) of the Act does not take in reduction or dis-allowance of claim of depreciation in proceedings under Section 143 (1)(a) of the Act. According to the assessee, reduction in loss attracting liability for additional tax under Section 143 (IA) of the Act does not take in reduction or dis-allowance of claim of depreciation in proceedings under Section 143 (1)(a) of the Act. In the first round this Court felt that the assessee should be given one more opportunity by the officer. Therefore, this Court set aside the Tribunal’s order and remanded the matter to the Assessing Officer for passing fresh orders. However, the Assessing Officer again levied additional tax under Section 143(IA) of the Act on the amount of loss reduced in the intimation issued under Section 143(1)(a) of the Act. The appeal against this order was unsuccessful and in the Second Appeal, the Tribunal also confirmed the same, against which this appeal is filed under Section 260A of the Act. 2. 3. The learned senior counsel appearing for the appellant assessee contended that reduction in the claim of depreciation in proceedings under Section 143(1)(a) of the Act is not covered by Clause (ii) of Section 143(IA)(a) of the Act. In support of the said contention, the assessee relied on Section 72 of the Act which provides for carry forward and set off unabsorbed loss. The specific case of the assessee is that even after completion of the assessment unabsorbed loss and depreciation are carried over separately and are set off in the computation of income for the subsequent years. However, the standing counsel appearing for the respondent submitted that for the purpose of levy of additional tax, all what is required to be seen is whether in the intimation issued under Section 143 (1)(a) of the Act the income returned is increased or the loss returned is reduced by the Assessing Authority. If the loss is reduced on account of reduction in the claim of depreciation in proceedings issued by the Assessing Officer under Section 143(1)(a) of the Act, then additional tax is payable on the different amount is the contention. 3. 4. If the loss is reduced on account of reduction in the claim of depreciation in proceedings issued by the Assessing Officer under Section 143(1)(a) of the Act, then additional tax is payable on the different amount is the contention. 3. 4. In order to consider the claim, we have to refer to the relevant provisions, that is, Section 143(IA) of the Act, which is extracted below: “(IA)(a) where as a result of the adjustments made under the first proviso to clause (a) of sub section (1),- (ii) the income declared by any person in the return is increased; or (iii) the loss declared by such person in the return is reduced or is converted into income, the Assessing Officer shall.- .(A) in a case where the increase in income under sub-clause (i) of this clause has increased the total income of such person, further increase the amount of tax payable under sub-section (1) by an additional income tax calculated at the rate of twenty per cent on the difference between the tax on the total income so increased and the tax that would have been chargeable had such total income been reduced by the amount of adjustment and specify the additional income tax in the intimation to be sent under sub-clause (i) of clause (a) of sub-section (1); .(B) in a case where the loss so declared is reduced under sub-section (ii) of this clause or the aforesaid adjustments have the effect of converting that loss into income, calculate a sum (hereinafter referred to as additional income tax) equal to twenty per cent of the tax that would have been chargeable on the amount of the adjustments as if had been the total income of such person and specify the additional income-tax so calculated in the intimation to be sent under sub-clause (i) of clause (a) of sub-section (1).” 5. The short question to be considered is whether reduction in loss on account of dis-allowance of depreciation made by the Assessing Officer in proceedings issued under Section 143(1)(a) of the Act will justify demand of additional tax under Section 143(1A) of the Act. The short question to be considered is whether reduction in loss on account of dis-allowance of depreciation made by the Assessing Officer in proceedings issued under Section 143(1)(a) of the Act will justify demand of additional tax under Section 143(1A) of the Act. Admittedly, the assessee filed its return declaring loss and that there is no dispute that dis-allowance of depreciation made by the Assessing Officer by way of prima facie adjustment is correctly done as the assessee’s claim was contrary to the statuary provisions, in as much as when the assessee’s eligibility is 70% of the depreciation, the assessee claimed 100%. However, the assessee’s contention is that loss and depreciation are distinct and separate and therefore reduction of business loss for the purpose of additional tax does not take in loss attributable to reduction in depreciation. We are unable to accept this contention because all what is stated in Section 143(1A) is that if the result of adjustment under Section 143(1)(a) of the Act is increase in income or reduction in loss additional tax is automatically leviable on the differential income or reduced loss as the case may be. Admittedly, the result of adjustment is reduction in loss to the extent of Rs. 25,93,202/- representing excess claim of depreciation claimed by the assessee. Section 29 of the Act provides that the income referred to in Section 28 shall be computed in accordance with the provisions contained in Section 30 to section 43D of the Act. Depreciation is an allowance provided under Section 32 of the Act and therefore depreciation has to be reckoned in the computation of business income. Therefore whenever the assessee has a claim of depreciation in the computation of business income and the result is loss such loss is also covered by Section 143(1A) of the Act. Of course, the assessee is right in their claim that Section 72 of the Act provides for carry forward and set off unabsorbed depreciation and business loss. However the same does not mean that depreciation is not reckoned for the computation of profits or loss for the purpose of the assessment. Of course, the assessee is right in their claim that Section 72 of the Act provides for carry forward and set off unabsorbed depreciation and business loss. However the same does not mean that depreciation is not reckoned for the computation of profits or loss for the purpose of the assessment. The provision contained in Section 32 of the Act does not control Section 143(1A) of the Act which provides for levy of additional tax based on net result of the computation of income or loss for the relevant year by the Assessing Officer in exercise of the powers conferred under Section 143(1(a) of the Act. In other words if the adjustment made by the Assessing Officer results in reduction of loss on account of disallowance of part or full depreciation claimed by the assessee, the same will justify levy of additional tax under Section 143 (1A) of the Act. Consequently, we answer the question referred against the assessee and in favour of the Department and dismiss the assessee’s appeal.