Malayala Manorama Co. Ltd.v. CIT
INCOME TAX ACT, 1961
MAT- Book profit under section 115J-Adjustment for depreciation
Assessee had debited depreciation at the rates prescribed by the Income-tax Rules, 1962 in P&L account. AO disallowed the assessee depreciation claimed on the ground that for purposes of section 115J, depreciation should had been calculated in terms of the Companies Act, 1956 and Schedule XIV thereof. Held:AO, while computing the income under section 115J, had only the power of examining whether the books of account had been certified by the authorities under the 1956 Act for properly maintained in accordance with the 1956 Act. Since, assessee charged depreciation in its books of account at rates prescribed in Income-tax Rules and accounts of assessee had been prepared and certified as per provisions of 1956 Act, therefore, AO would not have any jurisdiction under section 115J to recalculate net profits by substituting depreciation rates prescribed in Schedule XIV to 1956 Act.
Income-tax Act, 1961, Section 115J, read with Schedule XIV, of the Companies Act, 1956
A.Y. : 1988-89 and 1989-90
Decision: In favour of assessee.
Case Law Analysis:Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273/ 122 Taxman 562 (SC),CIT v. Sona Woollen Mills (P.) Ltd. [2007] 160 Taxman 22 (Punj. & Har.); Vardhaman Fabrics (P.) Ltd. [2002] 254 ITR 431/ 122 Taxman 375 (Gau.)