TaxTMI 
TaxTMI 
2019 (8) TMI 1114
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....he book profit u/s. 115JB of the I.T. Act of the assessee towards difference in depreciation without appreciating the fact that no such adjustment to book profit is permissible under the provisions of the I.T. Act". 3. Brief facts of the case are as under :- The Assessing Officer in this case made the impugned disallowance by observing as under :- "The Assessing Officer has discussed the issue and observed as under: "On going through the P&L A/c it has been observed that assessee has credited an amount of Rs. 5,37,61,180/- under the head "Earlier years adjustment- Difference in depreciation provision". During the assessment proceedings assessee was asked to file the details in respect of the adjustment of di....
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....s rightly credited the amount of Rs. 5,37,61,180/- in its P&L A/c treated the same as profit, however reduced the same while determining the Book Profit. As per provisions of section 115JB reduction of this extraordinary item is not covered in any of subsection or clause. Further it is worthy to mention here that adjustments to profit as per P&L A/c can be made only as per defined provisions of section 115JB and in this case deduction of Rs. 5,37,61,180/- as credited in P&L A/c on account of depreciation difference is nowhere admissible. Therefore, the treatment of the assessee is not acceptable as discussed above." 4. Upon assessee's appeal learned CIT(A) noted the assessee's submission as under :- 1. Even if the Appellant had ....
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....the matter of ACIT v/s Srinivas Synthetics Packers P Limited held that: 'Coming to the facts of the present case, the learned Authorised Representative has, with reference to the return for each of the four preceding years, shown that the tax for those years stood computed under the regular provisions, even as the MAT provision (s. 115JB) was applicable for the said years, implying that there has been no claim of tax reduction qua the amount of book profit represented by the excess depreciation relating to those years, i.e., as now written back. In this regard, we would firstly state that as distinct from a reserve, which represents only an appropriation of profits, so that it stands necessarily included in the book profit of t....
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....e provision(s) (which, as aforesaid, by definition, only go to reduce the profits for the relevant year), so that they cannot go to increase the same, as in the case of, or in contradistinction to, the reserves, i.e., treated the two at par. The only meaningful way to harmonize this apparent anomaly is to increase the book profit of the relevant year(s); the provision of s. 115JB (or even s. 115JA) being applicable, by the amount of write back. To the extent the same does not lead to invocation of s. 115JB (s. 115JA), the amount written back can be validly reduced from the current year's profit, the balance not, as it would, if added to the book profit for that year, result in book profit tax, which stands not paid. For example, Rs. 3,6....
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.... 1956 which is generally accepted practice of providing depreciation for Companies and when there was change in the depreciation method as per Accounting Standard-6 (AS-6) issued by the Institute of Chartered Accountants of India, the appellant as such reduced the provisions of depreciation of the earlier years and credited the same to the appropriation part of the profit and loss account i.e. credited to the profit and loss as appropriation account and the said treatment has been given as per the Guidance Note issued by the Institute of Chartered Accountants of India. The Id. AR has further submitted that the issue in the present case is fully covered by the decision in the case of the Hon'ble IT AT, Agra in the case of ACIT v....
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.... regard, and the assessee had explained it as in pursuance to the change in the method of accounting for depreciation with effect from the current year, consequent to the corresponding Accounting Standard (AS-6) (revised), the Accounting Standards issued by the ICAI having statutory recognition (section 211 of the Companies Act, 1956). Accordingly, the Commissioner (Appeals) was justified in deleting the addition." After considering the facts of the case and the stand of the AO as well as submission of the Appellant and also considering the decision in the case of ACIT v/s Srinivas Synthetic Packers (P) Limited, (supra), it is found that even the depreciation as per the changed method i.e. Straight Line Method, as prescribed under ....