TaxTMI 
TaxTMI 
2013 (9) TMI 1057
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.... by CIT(A) deleting the addition made to the book profit on account of alleged arrear depreciation for the purpose of computing the profit u/s 115J of the Act? (ii) Whether ITAT was correct in deleting the addition of Rs. 2,84,892/- being expenditure incurred on rural development programmes treating them as advertisement and publicity expenses? (iii) Whether ITAT was legally correct in allowing debenture issue expenses of Rs. 38,28,900/- on issue of convertible debentures." Question No. (i) 2. The respondent is a limited company engaged in business of manufacture and sale of drugs etc. For the assessment year 1989-90, the respondent had filed a return of loss of Rs. 4,26,57,272/- under the normal provisions ....
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....permissible and not contrary to the provisions of the Companies Act. Further, Part II and III of the Schedule VI of the Companies Act stipulate and accept that method of computing depreciation could be different from the method described in the Act i.e. the Income Tax Act. The rates prescribed in the Companies Act were the minimum rates. This did not bar an assessee from claiming a higher rate of depreciation. Reference was made to instructions issued by the Institute of Chartered Accountants of India, that if there had been under statement of depreciation, the auditor should quantify the same and bring it to the notice of the shareholders as they must know the impact and effect on the net profit. 5. Tribunal in the impugned order has affi....
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....arlier decision, Kinetic Motors Co. Limited v. Deputy Commissioner of Income Tax; [2003] 262 ITR 330 (Bombay), where there was change in method of computing depreciation under the Companies Act 1956, it was observed: "The short question that arises for consideration in this tax appeal is whether it is open to the Assessing Officer to make adjustment to the book profits beyond what is authorised by the definition given in Explanation to Section 115J of the Income-tax Act, if the accounts are prepared and certified to be in accordance with Parts II and III of Schedule VI to the Companies Act, 1956. In the case of Apollo Tyres ltd. [2002] 255 ITR 273, the apex court held that while computing the income under Section 115J of the Income....
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....d counsel appearing for the respondent submits that they have no objection, in case, the assessing officer carries out the necessary verification and examines whether additional depreciation of Rs. 126.18 lacs was on account of change in method of calculation of depreciation or had arisen on account of the fact that it pertained to earlier period but has been claimed in this year for some other reason other than the change in method of calculation of depreciation. Statement made by the counsel for the respondent is taken on record. We clarify that in case this difference has arisen on account of change of method of calculation of depreciation, the assessing officer will not touch and go into any other aspect. This answers question No.(i) wh....
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....s promotion or advertisement. He, disallowed 20% of the said expenditure on the ground that it relates to publicity, as per the statute then applicable. 11. This order stands affirmed by the Tribunal as per the respondent assessee. Thus the expenditure has been subjected to disallowance as contemplated for expenditure relating to sales promotion or advertisement under Section 37 (3a) and 37 (3c) of the Act. The said observations and findings are equally applicable to the present assessment year. 12. It has been argued and stated that the respondent had shown social responsibility and incurred expenditure for the benefit of poor and needy, but the department in the present case has disallowed the expenditure on the ground that it wa....