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TMI Blog1998 (8) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... meant for promoting business relations. However the Assessing Officer did not accept the explanation given by the assessee and applying the provisions of rule 6B of the I.T. Rules, made an addition of Rs. 40,722 to the total income of the assessee-company. 2.2 On appeal the first appellate authority deleted the impugned addition relying on certain judicial decisions. 2.3 Aggrieved, the department is on second appeal before us now. The Id. D.R. relied on the order of the Assessing Officer. The Id. counsel for the assessee Shri S. N. Soparkar reiterated the contentions made before then first appellate authority and vehemently argued that these articles were not meant for advertisement. He also relied on the decision of the Hon'ble Bombay High Court in the case of CIT v. Allana Sons (P.) Ltd. [1995] 216 ITR 690 / [1993] 70 Taxman 288. 2.4 We have considered the rival submissions, facts and materials including the decision of the Bombay High Court cited supra. On consideration of the facts and circumstances in totality in the light of the decision of the Bombay High Court we are satisfied that the claim of the assessee as upheld by the CIT(A) should prevail over the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the purpose of depreciation and investment allowance." Now the law is well-settled and this ground of appeal is squarely governed by the decision of the Hon'ble Supreme Court in the case of CIT v. P. J. Chemicals Ltd. [1994] 210 ITR 830 / 76 Taxman 611 in favour of the assessee and against the revenue. Accordingly we decline to interfere. 5. The fourth ground of appeal reads as under : "On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in directing to recompute the book profit under section 115J of the Income-tax Act, as per the profit and loss account to be prepared adopting the WDV method for depreciation as against the straight line method consistently adopted and thus ignoring the profit declared by the assessee-company as per the annual report." The assessee is a private limited company with previous year ending on 31-3-1990. In the printed copy of the profit and loss account laid before the annual general meeting it had charged depreciation on straight line method. However in the profit and loss account prepared for the purpose of section 115J, it had adopted WDV method for depreciation as provided for in the Income-tax Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l accounts (comprising profit and loss account and balance sheet) which are placed before the annual general meeting, in contradistinction to such condition as was spelt out in the first proviso and second provison of sub-section (2) of section 115JA which was inserted by the Finance (No. 2) Act of 1996 w.e.f. 1-4-1997. Therefore he submitted that the assessee is free to adopt a different rate or method of depreciation for the preparation of profit and loss account for the purposes of section 115J so long as the profit and loss account is in conformity with the requirements of Part II and Part III of Schedule VI to the Companies Act. 5.4 In the instant case we are concerned with the A.Y. 1990-91 for which section 115J(1) r.w. sub-section (1A) is applicable. The issue before us is whether the assessee, being a company, in preparing the profit and loss account for the purpose of section 115J is to adopt the same rate or same method of depreciation which was adopted in the profit and loss account placed before the annual general meeting. 5.5 Sub-section (1A) of section 115J is as follows : "Every assessee, being a company, shall, for the purpose of this section, prepare its prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e profit and loss account laid before the company at its annual general meeting in accordance with the provisions of the Companies Act, 1956 (1 of 1956): Provided further that where a company had adopted or adopts the financial year under the Companies Act, 1956 (1 of 1956) which is different from the previous year under the Act, the method and rates which have been adopted for calculating depreciation for such financial year or part of such financial year falling within the relevant previous year." 5.8 On a comparison it will be evident that : (a) The main part of sub-section (2) of section 115JA is the same as sub-section (1A) of 115J. (b) The proviso found in sub-section (2) of section 115JA are not to be found in sub-section (1A) of section 115J. (c) The first proviso cited supra refers to profit and loss account laid before the annual general meeting of the company, a reference not found in 115J(1) or (1A). (d) The proviso puts a condition that the same rate or same method of depreciation are to be adopted both in the profit and loss account prepared for purposes of section 115JA and in the profit and loss account laid before the annual general meeting, (such a con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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