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TMI Blog2008 (5) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 3.That the ld. CIT (Appeals) has failed to appreciate that the depreciation on revalued assets is not admissible while computing book profit under section 115JA as per CBDT letter No. 385/76/88-IT (B) dated 31-1-1989 as well as SLP 212 ITR 61 is also pending on the issue involved. 4.That the order of Ld. CIT (Appeals) being erroneous may be cancelled and order of the Assessing Officer may be restored. 5.Any other ground of appeal, which may be taken at the time of hearing." 2. The present assessment is an assessment framed under the provisions of section 143(3)/154/251/148 of Income-tax Act, 1961. 3. It is observed by the Assessing Officer in the body of assessment order as under:- "It is also considered that the assessee-company has wrongly claimed the depreciation of Rs. 9,70,596 on the amount of revaluation of building and plant and machinery in calculating the book profit and income under section 115JA of the Income-tax Act, 1961. The depreciation on revalued assets is not allowable as per letter No. 385/76/88-IT(8) dated 31-1-1989 of CBDT wherein the situation regarding depreciation has been clarified on para (a) of the said letter." 4. Relying on the above observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery. Thus, the working of book profit as mentioned in para 3.11 (para 2) is adopted at Rs. 1,05,03,926 and, thus, the Ld. CIT(A) observed that the adjustment made by the Assessing Officer is contrary to the law. 6. The issue regarding reassessment was also raised before the CIT (A) and as the assessee was held entitled to get relief on merits, Ld. CIT(A) has not dealt with the issue of validity or otherwise of re-assessment proceedings. The Revenue is aggrieved with such decision of the CIT(A) and, hence, in appeal. 7. Relying on the assessment order it was pleaded by Ld. DR that Assessing Officer had rightly made the adjustment of Rs. 9,70,596 in respect of revalued assets and, thus, book profit was rightly computed by the Assessing Officer and the relief has wrongly been given by the Ld. CIT(A). 8. On the other hand, it was pleaded by Ld. AR that the accounts of the assessee for claiming depreciation on revalued asset were prepared on the basis of Accounting Standard-6 (AS-6). He contended that accounts were to be maintained mandatory as per AS-6, a copy of which is furnished at pages 16-22 of the paper book. The AS-6 was revised in 1994 and it has specifically been mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent provided in the Explanation to section 115J. While holding so their Lordships of Hon'ble Supreme Court have relied on the aforementioned decision of Supreme Court in the case of Apollo Tyres Ltd. ( supra). 11. The Ld. AR further relied on the decision of Delhi Tribunal in the case of Punjab Fibres Ltd. v. Dy. CIT [2000] 72 ITD 68 wherein it has been held that claim for depreciation for current year on revalued assets made by assessee in conformity with the accounting standards and guidance notice issued by the Institute of Chartered Accountants of India could not be disallowed while computing book profits under section 115J. 12. Reliance was further, placed on the decision in the case of Amrit Vanaspati Co. Ltd. v. Dy. CIT [2000] 111 Taxman 186 (Delhi) (Mag.). In that case the assessee had valued its assets in financial year 1984-85 to bring their historical cost to their present market value and charged deprecia- tion on revalued amounts of assets since then and the question raised before the Tribunal was that whether the Assessing Officer was correct in increasing book profit to the extent of depreciation attributable to revaluation of assets and the answer given was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account have not been properly maintained in accordance with the requirements of the Companies Act. On the other hand it has been demonstrated by the Ld. AR that as per mandatory requirement of accounting standards-6, the assessee was under obligation to maintain its accounts as per that standard and to account for the depreciation on revalued assets. If it has not been done so, the auditors were required to bring this fact into the statutory audit report to say that the assessee did not follow the mandatory accounting standard-6. No such qualification is appearing in the statutory audit to suggest that the assessee did not follow accounting standard-6. If the accounts are maintained in accordance with the mandatory accounting standard, the same are in conformity with the requirement of Companies Act. The careful perusal of the documents furnished will reveal that it is also not the case of the Revenue that the accounts of the assessee are not in accordance with the provisions of Parts II and III of Schedule-VI of the Companies Act. If it is so, the adjustment which could be made with regard to increase and decrease can only be the adjustment which is provided in the Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X
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