TMI Blog2008 (8) TMI 1010X X X X Extracts X X X X X X X X Extracts X X X X ..... firming the order of the CIT (A) whereby he deleted the adjustment made by the Assessing Officer for the extra debit of depreciation of Rs.1,87,82,248/- in respect of furnace for changing straight line method to WDV method in respect of this asset only? 2. The brief facts giving rise to the present Tax Appeal are that the assessee had provided for extra depreciation of Rs.1,18,97,739/- on the furnace in the books of account by changing the straight line method to WDV method. The Assessing Officer made adjustment of this amount while computing book profit under Section 115JA of the Act. 3. Being aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n substance. It was an additional debit not supported by the requirements of Part-II of Schedule VI of the Companies Act. Such change was made in respect of only the furnace which reflects colourable device. She has, therefore, submitted that while applying the ratio of Apollo Tyres Limited (supra), the Tribunal has ignored the fact that Part-II of the Schedule does not permit additional debit of depreciation arising from the change of straight line method to WDV method and it was a colourable device to reduce tax incidence. The principle of lifting the corporate veil in the case of colourable device as settled in several decisions including Juggilal Kamlapat Durga Prasad More and McDowell Co. is applicable to book profit under Section 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e certified by the authorities under the companies Act as having been properly maintained in accordance with the Companies Act. The Assessing Officer, thereafter, has the limited power of making increases and reductions as provided for in the Explanation to Section 115J. The assessing Officer does not have the jurisdiction to go behind the net profits shown in the profit and loss account except to the extent provided in the Explanation. The use of the words in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act in Section 115J was made for the limited purpose of empowering the Assessing Officer to rely upon the authentic statement of accounts of the company. While so looking into the accounts of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Companies Act, there is a mention about the provision of depreciation for the earlier year i.e. 1993-94. In Note No.4 for the year 1996-97 under the Companies Act, the assessee has mentioned about the change in the method of providing depreciation, i.e. from straight line method to Written Down Value Method. Thus, it is seen that the conditions laid down in the second proviso to Section 115JA(2) are satisfied. It is, thus, clear that the assessee has maintained the books of accounts as per the provisions of the Companies Act, which have been certified by the auditors and laid before the Annual General Meeting of the shareholders. After taking note of the annual accounts of the assessee-company and after following the principles laid d ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
