2004 (5) TMI 524 - AT - Income Tax

Tribunal allows appeal on book profit determination, upholds depreciation claim, and rules in favor of interest exemption.

The Tribunal ruled in favor of the appellant in a case concerning the determination of book profit under section 115JA for the assessment year 1997-98. ... Minimum alternate tax Issues:1. Determination of book profit under section 115JA for assessment year 1997-98.2. Dispute regarding the depreciation amount allowed by the Assessing Officer.3. Chargeability of interest under section 234B.Issue 1: Determination of Book Profit under Section 115JAThe appeal was against the order passed by the ld. CIT(A) for the assessment year 1997-98. The appellant disputed the order confirming the Assessing Officer's calculation of the book profit at Rs. 10,15,177 instead of Rs. 31,65,75. Reference was made to the Supreme Court decision in the case of Apollo Tyres Ltd., where it was established that the Assessing Officer must accept the authenticity of accounts as per the Companies Act. The appellant argued that the Assessing Officer erred in allowing depreciation of Rs. 10,65,660 instead of Rs. 17,64,262 as per the audit report. The Tribunal, after considering the submissions and relevant provisions, held in favor of the appellant, citing the Apollo Tyres Ltd. case. Consequently, the Tribunal set aside the CIT(A) order and accepted the appellant's claim regarding the depreciation amount.Issue 2: Dispute Over Depreciation Amount AllowedThe appellant contested the Assessing Officer's decision to allow depreciation of Rs. 10,65,660 instead of Rs. 17,64,262 as claimed in the audit report, based on the Companies Act provisions. The Tribunal, relying on the Apollo Tyres Ltd. case, concluded that the Assessing Officer was not justified in deviating from the depreciation amount claimed by the appellant. The Tribunal, therefore, ruled in favor of the appellant, emphasizing the requirement for the Assessing Officer to adhere to the Companies Act provisions while determining book profits under section 115JA.Issue 3: Chargeability of Interest under Section 234BGiven the Tribunal's decision in favor of the appellant on the book profit calculation issue, the chargeability of interest under section 234B was considered consequential. Consequently, the Tribunal held and directed accordingly in favor of the appellant. As a result, the appeal was partly allowed by the Tribunal.This detailed analysis of the judgment highlights the key issues involved, the arguments presented by the parties, the relevant legal provisions, and the Tribunal's decision on each issue.