2009 (7) TMI 852 - HC - Income Tax

Addition - Excess depreciation claimed from the book profits u/s 115JB - Hence, the issue raised based on the Explanation (iia) to section 115JB is concerned, the same will have no application inasmuch as the insertion of the said provision itself was by way of an amendment, which was introduced by the Finance Act, 2006 with effect from April 1, 2007, while we are concerned with the previous year corresponding to the assessment year 2002-03, with reference to which the said amended provision will have no application - Therefore, do not find any scope to entertain this appeal on the substantial questions raised by the Revenue.

Summary

Issues:
1. Whether the Tribunal was right in deleting the addition of excess depreciation claimed from the book profits under section 115JB of the Act?
2. Whether Explanation (iia) to section 115JB has retrospective effect?

Analysis:
1. The case involved the question of whether the Tribunal was correct in deleting the addition of Rs. 14.30 crores excess depreciation claimed from the book profits under section 115JB of the Income-tax Act. The assessee-company changed the rates of depreciation charge during the accounting year, resulting in a reduction in book profits. The Assessing Officer contended that the resolution passed for the change in depreciation rates was an afterthought as it was done after the closure of the books of account. However, the Tribunal, citing the Supreme Court decision in Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273 (SC), held that the accounts submitted by the company, which were audited, certified, and filed in accordance with the Companies Act, had to be accepted. The Tribunal justified its decision based on the authenticity of the accounts and the compliance with statutory requirements.

2. The second issue pertained to whether Explanation (iia) to section 115JB had retrospective effect. The court examined the provision and noted that it was introduced through an amendment in the Finance Act, 2006, with effect from April 1, 2007. Since the case in question related to the assessment year 2002-03, the court held that the amended provision had no application. Therefore, the court concluded that there was no scope to entertain the appeal on the substantial questions raised by the Revenue.

In conclusion, the High Court dismissed the tax appeal, stating that the Tribunal's decision to delete the excess depreciation claimed from book profits was justified based on the compliance with statutory requirements and the authenticity of the accounts. The court also clarified that the amended provision in Explanation (iia) to section 115JB had no retrospective effect in the context of the case, leading to the rejection of the appeal by the Revenue.