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2015 (2) TMI 545 - HC - Income TaxDepreciation at the higher rate of 30% - motor vehicles given on lease - Held that:- We do not think that the order of remand was required to be passed as it is an accepted and admitted position that motor vehicles in question were given on lease and, therefore, motor vehicles have to be treated as given on hire. Accordingly, the appellant-assessee was entitled to higher rate of depreciation.- Decided in favour of the assessee. Computation of MAT - Book profit - Addition of amount credited to special reserve account - transfer by overriding title - held that:- Tribunal confirming the addition of sum transferred to the special reserve pursuant to the provisions of Section 45-IC of the Reserve Bank of India Act, 1934 under Clause (b) of the Explanation to Section 115JB and to the debt redemption reserve - Held that:- Considering language of clause (b) to Explanation (1) to Section 115JB of the Act, the appellant-assessee had adopted a different line of argument relying upon the decision of the Supreme Court in the case of National Rayon Corporation (1997 (7) TMI 113 - SUPREME Court) and Vazir Sultan Tobacco Company Ltd. (1981 (9) TMI 105 - SUPREME Court) and argued that the amounts appropriated‖ under Section 45-IC of the Reserve Bank of India Act, 1934 are not a reserve. We record and express our inability to agree with the said contention for the reasons set out below. Computation of MAT - Book profit - Addition of amount credited to redemption reserve account - transfer by overriding title - Held that:- In respect of Debt Redemption Reserve of ₹ 18,66,00,000/-, no specific explanation was given; on what account and why the said reserve was created. Nothing has been shown or pointed out to us to show why the said reserve was created. The reserve, which is required to be created under Section 45-IC, is out of the profits earned by a non-banking financial institution. It is not an amount diverted at source by overriding title. The Reserve Bank of India Act, 1934 can permit appropriation in respect of the said reserve. The assessee can also ask for specific directions from the Central Government subject to proviso to sub-section (3) of the said Section. The special reserve under Section 40IC of the Reserve Bank of India Act, 1934 of ₹ 9,80,00,000/- and ₹ 16,00,000/- relating to Assessment Years 2006-07 and 2007-09, respectively was not on account of specific or known liability to repay. It is not the case of charge on profits. It was only appropriation of profits after they had been earned. It is not an expense. To reiterate, a reserve is below the line of allocation of profits. The amount mentioned in the reserve does not get reflected in the Profit and Loss account. Further, the amount mentioned in the reserve is not to be kept in a designated bank account, but would get reflected in the form of assets under the heading assets, etc. - Decided in favour of revenue.
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