Appeal Dismissed: Higher Depreciation Rates Valid for Book Profit Calculation

The Tribunal dismissed the Revenue's appeal concerning excess depreciation claimed for computing book profit under section 115J, upholding the CIT(A)'s decision that higher depreciation rates than those in Schedule XIV of the Companies Act, 1956, were valid due to manufacturing risks. Additionally, the Tribunal upheld the CIT(A)'s ruling on the allowability of depreciation not claimed by the assessee, directing the AO to delete the unclaimed depreciation from the total income.

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Issues:
1. Excess depreciation claimed for computing book profit under section 115J.
2. Allowability of depreciation not claimed by the assessee.

Issue 1: Excess Depreciation for Computing Book Profit:
The appeal by the Revenue related to the assessment year 1989-90, concerning excess depreciation claimed in the books for computing book profit under section 115J. The AO found that the assessee had debited depreciation higher than prescribed in Schedule XIV of the Companies Act, 1956. The CIT(A) held that the rates in Schedule XIV are not mandatory but represent minimum rates for profit computation. The company had been using higher rates supported by an engineer's certificate due to manufacturing risks. It was concluded that providing depreciation at rates stipulated in IT Rules, 1962, higher than Schedule XIV, is valid. The Tribunal upheld the CIT(A)'s decision based on a similar case precedent, dismissing the Revenue's appeal.

Issue 2: Allowability of Depreciation Not Claimed:
Regarding the allowance of depreciation not claimed by the assessee, the AO added the unclaimed depreciation amount to the total income under normal IT Act provisions. The CIT(A) emphasized that for depreciation to be allowed, the assessee must claim it, even though the requirement of furnishing particulars was eliminated due to a rule deletion. Citing various judgments, the CIT(A) directed the AO to delete the unclaimed depreciation. The Tribunal upheld this decision based on jurisdictional High Court rulings, rejecting the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decisions on both issues.

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