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2017 (5) TMI 1497 - HC - Income TaxAddition u/s 36(1)(vii) on account of provisions of bad and doubtful debts - Held that - Bad debts clai is to be allowed. See T.R.F. Ltd. vs. CIT 2010 (2) TMI 211 - SUPREME COURT Addition on account of foreign exchange fluctuation - Held that - Addition made is to be deleted. See Commissioner of Income Tax vs. Woodward Governor India 2009 (4) TMI 4 - SUPREME COURT Addition made on account of disallowance of depreciation - effective ownership - Held that - Tribunal correctly deleted the addition as relying upon the decision of Delhi High Court in the case of CIT vs. Bharat Aluminum Company Ltd. (2009 (10) TMI 505 - DELHI HIGH COURT) and CIT vs. Yamaha Motors India Pvt. Ltd. 2009 (8) TMI 27 - DELHI HIGH COURT and CIT vs. Sonal Gum Industires 2009 (2) TMI 84 - GUJARAT HIGH COURT as held as held that though as per section 32(1) in order to get entitled to claim depreciation asset is to be owned by the assessee and it is also be used for the purpose of business and profession but this expression when applied to block of assets and not any specific building machinery plant or furniture in said block of assets as individual assets loose their identity after becoming inseparable part of block of assets. Condition for eligibility of depreciation that machinery is used for the purpose of business would mean that discarded machine is used for the purpose of business in the earlier years for which depreciation is allowed. Addition made while computing book profits u/s.115 JB - Held that - In computing the income u/s 115JA the AO while computing the income has only the power of examining whether the books of accounts certified by the auditors under the Companies Act has been maintained in accordance with schedule VI. The AO thereafter has the limited power of making increases and reduction as provided for in the explanation to the ld section. Since the so-called excess depreciation provided by the assessee is not in deviation from the accounting principles and standards laid down by the Companies Act/ICAI this cannot be added in computing the book profit u/s 115JB. This addition to the book profit is therefore directed to be deleted. See Apollo Tyres Ltd. vs. CIT 2002 (5) TMI 5 - SUPREME Court Assessee appeal allowed.
Issues:
1. Application for framing additional substantial questions of law. 2. Challenge to Tribunal's judgment and order. 3. Interpretation of provisions related to bad debts, foreign exchange fluctuation, and disallowance of depreciation. 4. Compliance with accounting principles for computing book profits. Analysis: 1. The department filed an application seeking to frame additional substantial questions of law, which was disposed of as the questions pertained to factual appreciation rather than legal issues. 2. The appellant challenged the Tribunal's decision partially allowing the assessee's appeal and dismissing the department's appeal. The High Court framed substantial questions of law related to bad debts, foreign exchange fluctuation, disallowance of depreciation, and computation of book profits under Section 115JB of the Income Tax Act. 3. The counsel for the appellant argued that the Tribunal erred in allowing bad debts and foreign exchange fluctuation, contrary to the Assessing Officer's view. However, the respondent cited precedents, including the Supreme Court's decision in T.R.F. Ltd. v. CIT, to support the assessee's position. The High Court ruled in favor of the assessee on these issues. 4. Regarding the disallowance of depreciation, the Tribunal's decision was based on precedents from Delhi High Court, Gujarat High Court, and Mumbai ITAT. The High Court upheld the Tribunal's decision, emphasizing that depreciation on the entire block of assets is allowable even if some assets within the block were not used, as established by legal interpretations. 5. For the issue concerning the computation of book profits, the Tribunal relied on the Supreme Court's decision in Apollo Tyres Ltd. v. CIT and a subsequent High Court decision. The High Court concurred with the Tribunal's interpretation, stating that excess depreciation in compliance with accounting standards cannot be added to compute book profits under Section 115JB. 6. Consequently, the High Court dismissed the appeal, affirming the Tribunal's decision on all issues raised in the case.
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