2000 (12) TMI 17

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....at depreciation worked out by the assessee on the basis of the income-tax records and debited to the profit and loss account would not be violative of the provisions of the Companies Act, when the same were not in accordance with Parts II and III of Schedule IV to the Companies Act, 1956?" The controversy has arisen in view of the applicability of section 115J of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The assessee calculated the depreciation on the plant and machinery at 33.33 per cent. as permissible under the Income-tax Rules, 1962, as against 30 per cent. depreciation required to be calculated under Schedule XIV to the Companies Act, 1956. The comparative rates of depreciation on the factory building, plant a....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nbsp; 10 per cent. Vehicles                              20 per cent.     20 per cent." --------------------------------------------------------------------- The board of directors passed the resolution in the following terms on June 29, 1988: "7. The chairman advised the board to consider the provisions of higher rates of depreciation in view of the nature of use of plant and machinery. The provisions of depreciation of higher rates is necessary in view of the nature of use of plant and machinery which is exposed to various chemicals and dyes of highly corrosive nat....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... added the aforesaid amount of excess depreciation. Accordingly, the book profit as per the profit and loss account was calculated at Rs.94,02,208 and the taxable income of the assessee was calculated at Rs.28,20,660 as against assessed income of Rs.23,42,600. Hence, the assessee went in appeal before the Tribunal. The Tribunal held that the circular of the Company Law Board lays down the minimum rate of depreciation for the purpose of distribution of dividend and the company may decide to claim higher depreciation on the basis of a bona fide technological evaluation and proper disclosure is to be made by way of a note forming part of the annual accounts. The Tribunal further held that in the instant case, the proper disclosure was made by ....