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2011 (4) TMI 1037 - HC - Income TaxMAT - adjustment in book profit - Whether additional depreciation debited in the accounts for the earlier years because of change in the method of providing depreciation retrospectively - held that - in view of the the case of Rubamin (P) Ltd. (2008 (7) TMI 325 - GUJARAT HIGH COURT), the Income Tax Appellate Tribunal was right in law in upholding the deletion of addition of ₹ 20,77,946/- made by the Assessing Officer to the book profit on account of additional depreciation debited in the books for the earlier years because of change in the method of providing depreciation retrospectively. Whether Tribunal was right in law in upholding the order of the CIT(A) directing not to charge interest u/s 234-B and 234-C of the Act since the total income was determined under section 115-J of the Act - in the case of Kwality Biscuits Ltd. (2006 (4) TMI 121 - SUPREME Court), the Income Tax Appellate Tribunal was right in law in upholding the order of the CIT(A) directing not to charge interest under section 234B and 234C of the Act since the total income was determined under section 115J of the Act - appeal is dismissed
Issues:
1. Additional depreciation claimed in the books for earlier years. 2. Disallowance of additional provision of depreciation. 3. Charging of interest under sections 234B and 234C. Issue 1 - Additional depreciation claimed in the books for earlier years: The appellant revenue challenged the order of the Income Tax Appellate Tribunal regarding the addition of Rs.20,77,946 made by the Assessing Officer to the book profit for assessment year 1989-90. The Assessing Officer disallowed the claim for additional provision of depreciation as the assessee changed the method of providing depreciation from Straight Line Method to Written Down Value Method. The Commissioner (Appeals) upheld the assessee's contention, stating that the change was permitted by accounting standards and not barred by the Companies Act or section 115J of the Income Tax Act. The High Court held that the Assessing Officer's disallowance was unwarranted, following the Supreme Court's decision in Apollo Tyres Ltd. vs. Commissioner of Income-Tax. The Court emphasized that the Assessing Officer's power is limited to examining whether the books are maintained in accordance with the Companies Act. Issue 2 - Disallowance of additional provision of depreciation: The Court referred to a similar case where the Tribunal upheld the deletion of addition of depreciation due to a change in the method of providing depreciation. The Court concluded that the controversy in the present case was similar and stood concluded in favor of the assessee. The Court reiterated that the Assessing Officer's jurisdiction is limited to adjustments provided in the Explanation to section 115J, emphasizing that there cannot be two incomes under the same Act. Issue 3 - Charging of interest under sections 234B and 234C: The Court relied on the decision of the Supreme Court in Commissioner of Income-Tax vs. Kwality Biscuits Ltd. to conclude that the controversy regarding charging of interest under sections 234B and 234C was settled in favor of the assessee. The Court highlighted the provisions of sections 234B and 234C, emphasizing the liability for payment of interest for default in payment of advance tax and failure to pay such tax in prescribed installments. The Court clarified the computation of advance tax and the liability arising under section 115J for payment of tax based on book profits. In conclusion, the High Court dismissed the appeal, upholding the decisions of the Tribunal and Commissioner (Appeals) regarding the additional depreciation claimed and the charging of interest under sections 234B and 234C, based on the relevant legal provisions and precedents cited in the judgment.
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