TaxTMI 
TaxTMI 
2015 (1) TMI 1525
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....in deleting the addition made to book profit u/s. 115JB of the Income Tax Act, 1961 without verifying the fact that the financial statement prepared by the assessee are not in consonance with the requirements of the Companies Act in view of the judgement of the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. vs. CIT (255 ITR 273). 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 6,56,39,269 made to book profit u/s.115JB of the Income Tax Act, 1961 on re-characterisation of the depreciation claimed in its financial statement as an "impairment of assets" and also not treating the said impairment of assets as a provision for diminution in value of assets. ....
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....) regarding impairment of asset and held that what assessee should have provided in profit and loss is provision for impairment of asset rather than depreciating the asset in toto. Accordingly, the AO made an addition of Rs.6,56,39,269/- on account of provision of diminution in the value of asset, while computing book profit under section 115JB. On appeal, CIT(A) has deleted the addition on the ground that impairment of asset is not a provision but a direct expense, debited to P&L Account which is similar to depreciation. Therefore, there is no question of same being added back to book profit while computing MAT as per clause(i) of the Explanation to section 115JB of the Act. 3. Before us, the ld. DR has submitted that CIT(A) has committ....
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....when assessee changes office premises. The nature of assessee's business is providing telecom services, for which the furniture, fittings and fixtures in the old office cannot be shifted to the new office and therefore, the entire block of asset was discarded and sold as scrap. The ld. Counsel has submitted that in case of retirement of asset the relevant Accounting Standard is AS-10 and as per para14 of AS-10 the gain or loss arising on disposal are generally recognized in P&L Statement. Thus, the ld. Counsel has submitted that this is not a provision for diminution in the value of asset and therefore, it does not fall under Explanation to section 115JB. 4. We have considered the rival submissions as well as relevant material on record.....
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....nt and Disposals 14.1 An item of fixed asset is eliminated from the financial statements on disposal. 14.2 Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realisable value and are shown separately in the financial statements. Any expected loss is recognised immediately in the profit and loss statement. 14.3 In historical cost financial statements, gains or losses arising on disposal are generally recognised in the profit and loss statement. 14.4 On disposal of a previously revalued item of fixed asset, the difference between net disposal proceeds and the net book value is normally charged or credited....