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2014 (11) TMI 92 - AT - Income TaxTaxability of advance against depreciation (AAD) – Advance against depreciation is reserve or not for computation of MAT u/s 115JB - Held that:- Hon'ble Supreme Court [2010 (1) TMI 281 - SUPREME COURT] has given finding in the SLP filed after considering the observation of the Authority for Advance Ruling that advance against depreciation is not meant for uncertain purposes - Advance against depreciation is an amount that is under obligation right from the inception as the same shall be adjusted in future, hence, cannot be designated as reserve - advance against depreciation is nothing but an adjustment by reducing the normal depreciation including in the future years in such a manner that at the end of the useful life of the plant the same shall be reduced to nil - assessee cannot use the advance against depreciation for any other purposes except to adjust the same against future depreciation so as to reduce the tariff in future years. Once AAD is considered as income as is being alleged by Revenue the obvious implication will be that such income in the Balance Sheet is a reserve. It can’t be that AAD is an income and then it vanishes. Income has to be carried to the Balance Sheet and such income carried to Balance Sheet will form part of the ‘Reserve’. Since ‘AAD’ has been held by Supreme Court is not a reserve, this contention of the Revenue can’t be accepted. – Decided against revenue.
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