TMI Blog2007 (2) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 CTR (MP) 131 : (1998) 232 ITR 928 (MP) when the issue involved before the Tribunal in an appeal filed by the assessee was not the same which was subject-matter of Krishna Oil Extraction Ltd. ? (2) Whether the Tribunal was justified in disallowing a claim of assessee pertaining to depreciation amount of ₹ 9,70,663 and if so whether it is legally sustainable ? 3. The appellant is a limited company governed by the provisions of Companies Act, 1956. The appellant claimed depreciation of past years in the sum of ₹ 9,70,663. The AO disallowed the same on the ground that for the purposes of computation of book profit of a company, the adjustments as provided in the Explanation to Sub-section (1A) of Section 115J have to be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss losses as also brought forward depreciation and allow the claim of the appellant while working out profit under Section 115J, and while working out figure he should also take into account the unabsorbed depreciation as also the unabsorbed loss for asst. yr. 1989-90. Since the AO has not given effect to the above appellate order though specifically directed by my predecessor and has rejected the claim of arrears of depreciation, I would hold that the arrears of depreciation has to be deducted while computing book profit for the purposes of Section 115J. From the plain reading of the language of Section 115A(1A) it is clear that the appellant is required to work out the profit and loss as per Sch. VI to the Companies Act which reads as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO is directed to allow arrears of depreciation at ₹ 9,70,663 while working out taxable profits under Section 115J of the IT Act. 5. From the above observations made by the CIT(A), it is clear that as per Section 205(2B) of the Companies Act, the appellant had fully complied with the provisions of the Companies Act and claimed the arrears of depreciation for the purposes of Section 115J. He fortified his arguments by referring to the decision in Beta Nepthol (P) Ltd. v. Dy. CIT (1994) 50 TTJ (Ind) 375, and allowed the depreciation claimed by the assessee. 6. The Revenue then approached the Tribunal in an appeal against the judgment of CIT(A) which dealt with the issue in para 11 of its order dt. 2nd Aug., 2000 (Annex. 'C&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15J within the meaning of net profit given in the Explanation below Section 115J(1A) of the IT Act, 1961 ? It was observed that the provisions of Section 205(1), Clause (b) of the first proviso to the Companies Act stand statutorily incorporated in the IT Act and, therefore, in order to work out the book profit, the loss and depreciation has to be worked out in terms of the Companies Act and thereafter, set off has to be made of whichever is less. In this connection, we may usefully refer to the decision of apex Court in Apollo Tyres Ltd. v. CIT (2002) 174 CTR (SC) 521 : (2002) 255 ITR 273 (SC). In the said case, the Supreme Court has observed that the AO while computing the book profit of a company under Section 115J of the IT Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra). We are of the view that since the controversy has been narrowed down, as stated hereinabove, the first question relating to the applicability or otherwise of the decision of Krishna Oil Extraction Ltd. (supra) to the facts of this case, is not relevant and, therefore, the same is answered in favour of the appellant/assessee. 10. Coming to the second question as to whether the Tribunal was justified in disallowing the claim of the assessee pertaining to the depreciation of ₹ 9,70,663, learned senior counsel has placed heavy reliance on the decision of Bombay High Court in Kinetic Motors Co. Ltd. v. Dy. CIT . The question before the Bombay High Court was whether it was open to the AO to make adjustment to the book profit be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion No. 2 becomes academic. It is not in dispute that under the Companies Act, 1956, both straightline method and WDV method are recognised. Therefore, once the amount of depreciation actually debited to the P L a/c is certified by the auditors, then, as per the decision of the apex Court in the case of Apollo Tyres Ltd. (supra), question No. 2 has to be answered in the negative and in favour of the assessee. 12. We may, at this stage, refer to the decision of the Supreme Court in the case of Karnataka Small Scale Industries Development Corpn. Ltd. v. CIT (2003) 179 CTR (SC) 1 : AIR 2002 SCW 4926. It has been observed that had Section 115J not been introduced, the assessee would have been entitled under the provisions of Sections 32(2), ..... X X X X Extracts X X X X X X X X Extracts X X X X
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