GILT PACK LTD. Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) ITA No. 701/Ind/1995 by which the Tribunal has reversed the order of CIT(A) and disallowed the depreciation of Rs. 9,70,663 for the asst. yr. 1990 -91.

(2.) THIS appeal was admitted on the following substantial questions of law : "(1) Whether the Tribunal was justified in placing reliance upon the law laid down by this Court in CIT vs. Krishna Oil Extraction Ltd. (1998) 150 CTR (MP) 131 : (1998) 232 ITR 928 (MP) when the issue involved before the Tribunal in an appeal filed by the assessee was not the same which was subject -matter of Krishna Oil Extraction Ltd. ? (2) Whether the Tribunal was justified in disallowing a claim of assessee pertaining to depreciation amount of Rs. 9,70,663 and if so whether it is legally sustainable -

(3.) THE appellant is a limited company governed by the provisions of Companies Act, 1956. The appellant claimed depreciation of past years in the sum of Rs. 9,70,663. The AO disallowed the same on the ground that for the purposes of computation of book profit of a company, the adjustments as provided in the Explanation to sub -s. (1A) of s. 115J have to be made with reference to the profit as per P&L a/c prepared in accordance with the provisions of Part II and Part III of Sch. VI to the Companies Act, 1956. The AO further observed that the said proviso of the Companies Act makes it clear that current year's depreciation as computed in accordance with the Companies Act has to be debited to the P&L a/c and that the loss or depreciation whichever is less for earlier years has to be deducted in view of the provisions of s. 205 of the Companies Act. It was under these circumstances that the AO held that the assessee company has incorrectly debited the sum of Rs. 9,70,663 on account of arrears of depreciation on the basis that the company changed the method of calculating the depreciation from straightline method to the method of WDV on the cost of machinery.