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2023 (3) TMI 1109 - AT - Income TaxDisallowance u/s 2(22)(e) - Whether accumulated profits as per the Companies Act are not the correct accumulated profits to be considered for the purpose of Section 2(22)(e)? - A.R. submitted that the correct accumulated profits have to be ascertained after making necessary adjustments towards depreciation as per Income Tax Act - HELD THAT:- We observe that in case the depreciation as per Income Tax Act is taken into account then the accumulated profits of the assessee would be working out to be in negative meaning thereby that there are no accumulated profits for the purpose of Section 2(22)(e) - In the aforesaid decisions M/S. PUSHPARTHY PACKS PVT. LTD. [2013 (12) TMI 200 - BOMBAY HIGH COURT] and YASHIN HOTELS (P) LIMITED. [2008 (9) TMI 435 - ITAT MADRAS-B] it has been held that the accumulated profits have to be arrived at after allowing depreciation as per the Act and not as per Companies Act. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the addition of disallowance. Appeal of the assessee is allowed.
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