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TMI Blog2024 (11) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... f calculating profits within the meaning of the phrase accumulated profits under section 2(6A)(e), an allowance of depreciation should be made by way of a deduction at the rates provided for by the Income-tax Act itself. Also in JAMNADAS KHIMJI KOTHARI. [ 1972 (10) TMI 24 - BOMBAY HIGH COURT] held that phrase accumulated profits does not mean profits as disclosed by the company s balance-sheet. The profits disclosed would be subject to adjustment and the depreciation as granted in accordance with the rates prescribed by the Income-tax Act would have to be deducted for ascertaining the accumulated profits - Decided in favour of assessee. - Hon ble The Chief Justice Alok Aradhe And Hon ble Sri Justice J. Sreenivas Rao For the Petitioner : Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 148 of the Act was issued to the assessee. In response to the aforesaid notice, the assessee requested that the return filed on 29.06.2000 be treated as response to the notice under Section 148 of the Act. The Assessing Officer inter alia treated the loan taken by the assessee from M/s.Rajadhani Hotels Private Limited in which assessee was a shareholder, during the period from 01.04.1999 to 19.12.1999, as deemed dividend under Section 2(22)(e) of the Act. It was further held that the accumulated profits of M/s.Rajadhani Hotels Private Limited were more than the advance given to the appellant. The contention of the assessee that there are no accumulated profits and if the reworking of profits is done by deducting the correct am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-tax (Appeals) and allowed the appeal preferred by the Revenue. Hence, this appeal. 6. Learned counsel for the assessee submitted that the issue involved in this appeal is squarely covered by the decisions of Bombay High Court in Navnit Lal C Javeri and Jamnadas Khimji Kothari (supra). It is further submitted that the decision of the Supreme Court in P.K. Badiani (supra) does not apply to the fact situation of the case and the Appellate Tribunal grossly erred in reversing the well-reasoned order passed by the Commissioner of Income-tax (Appeals). It is therefore submitted that the impugned order passed by the Appellate Tribunal be set aside. 7. On the other hand, learned counsel for the Revenue submitted that the Appellate T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction, for example, under Section 10(2)(vii). In our opinion, therefore, for the purpose of calculating profits within the meaning of the phrase accumulated profits under section 2(6A)(e), an allowance of depreciation should be made by way of a deduction at the rates provided for by the Income-tax Act itself . 10. Another Division Bench of Bombay High Court in Jamnadas Khimji Kothari (supra) held as follows: As regard question No.2, the answer is: The phrase accumulated profits does not mean profits as disclosed by the company s balance-sheet. The profits disclosed would be subject to adjustment and the depreciation as granted in accordance with the rates prescribed by the Income-tax Act would have to be deducted for ascertaining the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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