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Issues:
1. Excess claim of depreciation for machinery used for 9 days only. 2. Allowability of full depreciation without considering Schedule XIV of the Companies Act. 3. Compliance with section 211 of the Companies Act regarding true and fair picture of profits. Issue 1: Excess claim of depreciation The assessee claimed depreciation for machinery used for only 9 days, resulting in an excess claim of depreciation. The Commissioner invoked section 263 of the Income Tax Act to rectify the error in allowing full depreciation. The Tribunal set aside the Commissioner's order, leading to the current appeal. Issue 2: Allowability of full depreciation The crux of the matter lies in whether full depreciation is permissible for the entire year when assets were used for a limited period. The Commissioner emphasized proportionate depreciation as per Schedule XIV of the Companies Act. However, the Tribunal overturned this decision, prompting the appeal by the revenue. Issue 3: Compliance with Companies Act section 211 Section 211 mandates companies to present a balance sheet reflecting a true and fair view of their financial status. The debate centers on whether depreciation should be calculated pro rata from the asset addition date, as per Schedule XIV. The judgment references the case law of Apollo Tyres Limited, emphasizing the limited scope of the Assessing Officer's jurisdiction regarding net profit determination. In conclusion, the High Court dismissed the appeal, ruling against the revenue's contentions. The judgment asserts that once the balance sheet is certified under the Companies Act, the Assessing Officer lacks jurisdiction to scrutinize the net profit shown in the profit and loss account. The decision underscores the importance of adhering to statutory provisions and case law interpretations in determining depreciation and ensuring a true and fair representation of financial statements.
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