CIT v. Ranbaxy Laboratories Ltd.

INCOME TAX ACT, 1961

--MAT--Book profit under section 115JChange in method of depreciation--AO noted that the depreciation which was being claimed in this year had arisen because of difference in the WDV of the asset because of change in method of computing depreciation. AO made addition to the book profit on account of alelged arrear depreciation for the purpose of computing the profit under section 115J. Tribunal deleted the addition. AO submitted that a huge difference could not have arisen due to change in method of calculation of depreciation from straight line metod to WDV method alone. Held: AO while computing the income under section 115J has only the power of examining whether the books of account were certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The AO did not have the jurisdiction to go behind the net profit shown in the Profit and Loss a/c except to the extent provided in the Explanation to section 115J. Further, if this difference has arisen on account of change of method of calculation of depreciation, AO would not touch and go into any other aspect.