9911796707
TMI Blog1991 (6) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 1987-88 37,424 --------------- Therefore, no depreciation of business loss is to be adjusted against the income of assessment year 1988-89." 3. Before the Id first appellate authority, the assessee has taken the stand :--- (a) that the assessee had not provided depreciation in its books as per the notes given in the balance-sheet in the earlier years : (b) that the depreciation not provided for the Assessment years 85-86, 86-87 and 87-88 was Rs. 6,95,549, against which the book profits before depreciation was Rs. 2,52,994 ; (c) that under section 115J, the book profit is the net profit as shown in the profit and loss account prepared in accordance with the provisions of Part II of 6th Schedule of the Companies Act ; (d) that the book profit under the Companies Act is to be reduced as per clause III by business loss or depreciation, whichever is less, before declaring any dividend ; (e) that Part II of 6th Schedule of the Companies Act requires the provisions of depreciation in the balance-sheet or a statement of quantum of arrears of depreciation to be disclosed ; (f) that in this view of the matter, the balance-sheet after adjustment of total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1988 (hereafter in this section referred to as the relevant previous year) is less than thirty per cent of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent of such book profit. " Explanation : For the purpose of this section, ' Book profit ' means the net profit as shown in the profit and loss account for the relevant previous year prepared in accordance with the provisions of Parts II and III of the Sixth Schedule to the Companies Act, 1956 (1 of 1956), as increased by--- (a) the amount of income-tax paid or payable, and the provision therefor ; or (b) the amounts carried to any reserve, by whatever name called ; or (c) the amount or amounts set aside to provisions made for meeting liabilities other than ascertained liabilities ; or (d) the amount by way of provision for losses of subsidiary companies ; or (e) the amount or amounts of dividends paid or proposed ; or (f) the amount or amounts of expenditure relatable of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and loss account providing, inter alia, certain pre-requisites and under paragraph II(iv), the requirement is that, ' the amount provided for depreciation ', renewals or diminution in value of fixed assets. If such provision is not made by means of a depreciation charge, the method adopted for making such provision. If no provision is made for depreciation, the fact that no provision has been made shall be stated and the quantum of arrears of depreciation computed in accordance with section 205(2) of the Act shall be disclosed by way of a note. 5A. Coming to Part III, it deals with, ' interpretation ' for the purposes of Parts I and II of the Schedule (above referred to). The interpretation provided for are, ' provision ', ' reserve ', ' capital reserve ' and ' liability '. The expression ' provision ' has been interpreted as, ' any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability of which the amount can not be determined with substan tial accuracy. 5B. Now coming to section 205 of the Companies Act and the relevant provisions referred to in section 115J of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment by any general order published in the Official Gazette or by any special order in any particular case : Provided that where depreciation is provided for in the manner laid down in clause (b) or clause (c), then, in the event of the depreciable asset being sold, discarded, demolished or destroyed the written down value thereof at the end of the financial year in which the asset is sold, discarded, demolished or destroyed, shall be written off in accordance with the proviso to section 350." 5C. Sub-section (2) of section 205 sub-clause (a) refers to section 350 of the Companies Act, but that section does not concern a private limited company, hence no useful reference can be made to the said section. 6. Now a reading of section 115J(1), Parts II and III of sixth Schedule to the Companies Act, clause (b) of first proviso to sub-section (1) of section 205 and of sub-section (2) of said section 205 of the Companies Act, makes it abundantly clear that to claim depreciation either the claim has to be under the provisions of the Income-tax Act or else it is to be under section 205(2)(b), i.e., in respect of each item of depreciable asset, for such an amount as is arrived at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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