9911796707
TMI Blog2019 (8) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) has erred in directing the Assessing Officer to reduce the amount of ₹ 5,37,61,180/- while computing the book profit u/s. 115JB of the I.T. Act of the assessee towards difference in depreciation without appreciating the fact that no such adjustment to book profit is permissible under the provisions of the I.T. Act . 3. Brief facts of the case are as under :- The Assessing Officer in this case made the impugned disallowance by observing as under :- The Assessing Officer has discussed the issue and observed as under: On going through the P L A/c it has been observed that assessee has credited an amount of ₹ 5,37,61,180/- under the head Earlier years adjustment- Difference in depreciation provision . During the assessment proceedings assessee was asked to file the details in respect of the adjustment of difference in depreciation provision amounting to ₹ 5,37,61,180/-. In response assessee filed a chart showing how the assessee has arrived at the figure of difference in value of depreciation. On perusal of the chart it has been observed that the figure of ₹ 5,37,61,180 is the cumulative figure of difference of depreciation from the A.Y. 2001-02 to A.Y. 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition under sec 211 of the of the Companies Act, 1956. 4. The learned assessing officer has not raised any doubts genuineness of change in method of charging depreciation from written down value under Income Tax Act to straight line method under Companies Act. 5. The change in accounting policies regarding depreciation was duly reported in Annual Accounts as per note no 2 of Schedule 13, forming part of the Balance Sheet and Profit Loss Account. 6. The Annual Accounts were duly approved by Board of Directors on 05/09/2011 and subsequently duly adopted by share holders in Annual General Meeting. 7. The said adopted Annual Accounts were duly filed with the Registrar of Companies under Companies Act, 1956. 8. The Appellant has written back the excess depreciation as per the provisions of The Companies Act, 1956 which is generally accepted practice of providing depreciation for Companies. 9. The Honourable IT AT Agra Bench in the matter of ACIT v/s Srinivas Synthetics Packers P Limited held that: 'Coming to the facts of the present case, the learned Authorised Representative has, with reference to the return for each of the four preceding years, shown that the tax for those years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of write back. To the extent the same does not lead to invocation of s. 115JB (s. 115JA), the amount written back can be validly reduced from the current year's profit, the balance not, as it would, if added to the book profit for that year, result in book profit tax, which stands not paid. For example, ₹ 3,68,008 written back for asst. yr. 1997-98, on its add back, results in the book profit for that year to increase to ₹ 15.39 lacs, the tax (including surcharge @ 13 per cent) on which works to ₹ 1,30,449, as against the tax liability for the year, which stands assessed at ₹ 4,32,146 (paper book pp. 16-19), so that s. 115JB does not get invoked. As such, the entire amount written back in that year (₹ 3.68 lacs) could rightly be claimed as a reduction under the proviso to cl. (i) of Expln. 1, and so forth for the other years.' It is respectfully submitted that the facts of this case are exactly similar to the Srinivas Synthetics Packers P Limited case and as such depreciation write back of ₹ 53761180.00 be reduced from the book profit as provided in cl. (i) of Expln. 1 of the Income Tax Act. The learned CIT(A) s concurred with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion relating to those years, i.e., as now written back. To the extent the same does not lead to invocation of section 115JA the amount written back can be validly reduced from the current year's profit, the balance not, as it would, if added to the book profit for that year, result in book profit tax, which stands not paid. The write back of the provision in the instant case was genuine. In the present case, no reservation was expressed by the revenue in this regard, and the assessee had explained it as in pursuance to the change in the method of accounting for depreciation with effect from the current year, consequent to the corresponding Accounting Standard (AS-6) (revised), the Accounting Standards issued by the ICAI having statutory recognition (section 211 of the Companies Act, 1956). Accordingly, the Commissioner (Appeals) was justified in deleting the addition. After considering the facts of the case and the stand of the AO as well as submission of the Appellant and also considering the decision in the case of ACIT v/s Srinivas Synthetic Packers (P) Limited, (supra), it is found that even the depreciation as per the changed method i.e. Straight Line Method, as prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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