Advance against depreciation not taxable as income in regular assessment because it is a timing difference, not a profit reserve.

Advance against depreciation was treated as an amount received in advance and adjustable against future depreciation, with an obligation attached from inception rather than a reserve created out of profits. On that basis, it was regarded as a timing difference and not taxable as income under the regular provisions of the Income-tax Act. The Supreme Court's characterisation of the amount was applied to the regular assessment as well, and the amount could not be added to the assessee's income in computation under section 143(3).

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Issues: Whether advance against depreciation was taxable as income in the regular computation of income and could be brought to tax notwithstanding the Supreme Court's treatment of the amount in the context of book profit under section 115JB.

Analysis: The amount of advance against depreciation was held to be under an obligation from inception and adjustable against future depreciation, not a reserve created out of profits. The Court treated it as an income received in advance and a timing difference, with no basis to characterise it as income for addition in regular assessment under section 143(3). The Supreme Court's findings on the nature of the amount were applied as ative of its tax character for the regular provisions as well.

Conclusion: Advance against depreciation could not be added to the assessee's income under the regular provisions of the Income-tax Act.

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