TMI Blog2003 (1) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Companies Act, 1956, and in holding that the assessee ought to have provided depreciation on the same basis as adopted in the earlier years?" - we answer both the questions in the negative and in favour of the assessee. - - - - - Dated:- 23-1-2003 - Judge(s) : S. H. KAPADIA., J. P. DEVADHAR. JUDGMENT The judgment of the court was delivered by J.P. DEVADHAR J.-This tax appeal is filed by the assessee against the order of the Income-tax Appellate Tribunal in I.T.A. No. 515/PN of 1994, dated November 3, 2000, stating that the following substantial questions of law arise out of the aforesaid order of the Tribunal, namely: "1. Whether in view of specific definition of the expression 'book profit' given in Explanation to secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r alia, stated in clauses 3 and 19 as follows: "3. Depreciation.--(i) In the current year the company has provided for depreciation on the written down value method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956, except in respect of items of plant and machinery costing less than Rs. 5,000 for which 100 per cent. depreciation is provided in the year in which they are installed and put to use. (ii) Hitherto depreciation was provided on a straight line method in the following manner: (a) in respect of assets acquired up to 31st January, 1987, at the rates in force at the time of acquisition of the assets and for the whole financial year, and, (b) in respect of assets acquired after 31st January, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not dispute that the profit and loss account was prepared strictly in accordance with the requirements of Parts II and III of Schedule VI to the Companies Act, 1956. However, for the purpose of computing book profits under section 115J of the Income-tax Act, the Assessing Officer took the view that there was no justification for the assessee to change the basis of providing depreciation. According to the Assessing Officer, the change in the method, from the straight line method to the written down value was done only to avoid tax on book profits. Accordingly, the Assessing Officer reworked the depreciation at Rs. 1,60,17,835 by not only excluding the earlier years depreciation but also deducting from book depreciation, the said amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culating the depreciation is taken into account, even then there would be still loss because to the book loss of Rs. 1,64,49,937, the differential amount of Rs. 91,23,951 is added, there would still be book loss of Rs. 73,25,986 and hence the change in the method did not really make any difference and hence the provisions of section 115J of the Income-tax Act were not attracted. Mr. Desai, learned senior counsel appearing on behalf of the Revenue, on the other hand, supported the orders passed by the authorities below. The short question that arises for consideration in this tax appeal is whether it is open to the Assessing Officer to make adjustment to the book profits beyond what is authorised by the definition given in Explanation to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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