2018 (2) TMI 1351

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.... Officer had added an amount of Rs. 131.81 crores on account of advance against depreciation which the CIT(A) deleted. 2. According to the appellant, the following substantial questions of law arises:- "1. Whether, on the facts and in circumstances of the case and in law, the Hon'ble ITAT was right in law in dismissing appeal of the Revenue observing that 'in view of categorical finding of the Supreme Court we hold that the CIT(A) was correct in holding that advance against depreciation cannot be added under the computation of the normal income', whereas the Hon'ble Supreme Court in its decision dated 05.01.2010 has held that the 'advance against depreciation' is 'income received in advance', thus....

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....received or not? In other words, the question is whether the amounts received as an advance which are not due in the relevant accounting year constitutes income of that accounting year. The Supreme Court held that :- "Since the amount of AAD is reduced from sales, there is no debit in the profit and loss account. The amount did not enter the stream of income for the purposes of determination of net profit at all, hence clause (b) of Explanation-I was not applicable. Further, "reserve" as contemplated by clause (b) of the Explanation-I to Section 115JB of the 1961 Act is required to be carried through the profit and loss account. At this stage it may be stated that there are broadly two types of reserves, viz, those that are routed ....