C.N. Ramachandran Nair, J.

1. This is an appeal filed by the revenue against the order of the Tribunal reversing a rectification order passed u/s 154 by the Assessing Officer confirmed in first appeal against the Respondent Assessee. We heard standing counsel for the Appellant and senior counsel Sri Joseph Kodianthara for the Respondent Assessee.

2. The assessment is for the year 1997-98. The Assessing Officer noticed that the income computed based on return filed is below 30 per cent of the book profit and, therefore, assessment was proposed on 30 per cent of the book profit u/s 115JA of the income tax Act. The Assessee claimed deduction of Rs. 1,43,11,514/- as carry forward depreciation, which was originally allowed by the Assessing Officer while completing regular assessment. However, later the Assessing Officer noticed that, by virtue of Clause (b) of Explanation (iii) of Section 115JA, deduction is admissible only if Assessee has brought forward business loss as well as depreciation for the previous year. It was noticed that the carry forward business loss at the end of the year 1994-95 was Rs. 1,07,74,451/- and the carry forward depreciation was Rs. 5,78,04,819/-. How