TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether additional depreciation arising from a retrospective change in the method of providing depreciation from Straight Line Method to Written Down Value Method could be added back while computing book profit under section 115J of the Income-tax Act, 1961. (ii) Whether interest under sections 234B and 234C of the Income-tax Act, 1961 could be charged where total income was determined under section 115J of the Income-tax Act, 1961.
Issue (i): Whether additional depreciation arising from a retrospective change in the method of providing depreciation from Straight Line Method to Written Down Value Method could be added back while computing book profit under section 115J of the Income-tax Act, 1961.
Analysis: The change in the method of depreciation was supported by recognised accounting standards and the shortfall was charged to the profit and loss account for the relevant year. In computing book profit under section 115J of the Income-tax Act, 1961, the Assessing Officer is confined to examining whether the accounts are maintained in accordance with the Companies Act and to making only the adjustments permitted by the statutory Explanation. The officer cannot go behind the net profit shown in the profit and loss account except to the extent expressly authorised.
Conclusion: The addition was not sustainable and the issue was decided in favour of the assessee.
Issue (ii): Whether interest under sections 234B and 234C of the Income-tax Act, 1961 could be charged where total income was determined under section 115J of the Income-tax Act, 1961.
Analysis: Liability to pay advance tax under the advance-tax provisions depends on the computation of current income, whereas under section 115J of the Income-tax Act, 1961 the taxable income is determined by a statutory deeming fiction after the accounts are prepared and audited. Since the applicability of section 115J and the resulting tax liability are ascertained only after the close of the financial year, the advance-tax machinery and the consequential interest provisions cannot be applied in the same manner.
Conclusion: Interest under sections 234B and 234C could not be charged and the issue was decided in favour of the assessee.
Final Conclusion: Both substantial questions were answered against the revenue, and the appeal failed.
Ratio Decidendi: While computing book profit under section 115J of the Income-tax Act, 1961, the Assessing Officer cannot travel beyond the profit and loss account except for the limited statutory adjustments permitted by the provision, and interest for default in advance tax cannot be levied where taxability arises only through the section 115J deeming mechanism after the relevant year ends.
TaxTMI 
TaxTMI 
