The ACIT, Co.Circle-2, Baroda V. Bell Ceramics Limited, Bharuch

ITA 1851/AHD/1993

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76759 (ITAT-AHMEDABAD)
• Duration Of Justice: 21 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-05-2014
• Assessment Year: 1990-1991
• Appeal Filed On: 28-05-1993
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK OJHA
• Keywords: Depreciation
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO.1851/AHD/1993 A.Y. 1990-91 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2, BARODA. VS BELL CERAMICS LIMITED VILLAGE DORA, TALUKA AMOD, BHARUCH. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI VIVEK OJHA SR.D.R., ASSESSEE(S) BY : SHRI SALIL AGARWAL WITH SHRI SANJEEV JAIN / DATE OF HEARING : 20/05/2014 / DATE OF PRONOUNCEMENT: 30/05/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE ARISING FRO M AN ORDER OF LEARNED CIT(A)-II, BARODA DATED 09.03.1993. THE GRO UND WHICH IS REQUIRED TO BE ADJUDICATED BY US IN THIS APPEAL IS REPRODUCED BELOW: 1.(IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DIRECTING TO RECOMPUTED THE BOOK PROFIT U/S. 115J OF THE IT ACT, AS PER THE PROFIT & LOSS ACCOUNT TO BE PREPARED ADOPTING THE W.D.V. METHOD FOR DEPRECIATION AS AGAINST THE STRAI GHT LINE METHOD CONSISTENTLY ADOPTED AND THUS IGNORING THE PROFIT D ECLARED BY THE ASSESSEE COMPANY AS PER THE ANNUAL REPORT. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) DATED 31.12.1992 WERE THAT THE TO TAL INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF IT ACT WAS CALCUL ATED AT RS.NIL; HENCE, THE AO HAS COMPUTED THE INCOME BY INVOKING THE SPEC IAL PROVISIONS OF SECTION 115J. THE AO HAD OBSERVED THAT THE ASSESSEE COMPANY HAD ITA NO.1851/AHD/1993 ACIT, CO. CIRCLE -2, BARODA VS. BELL CERAMICS LIMIT ED. A.Y.1990-91 - 2 - CLAIMED DEPRECIATION AS PER WDV METHOD AS PER A SEP ARATE WORKING OF DEPRECIATION AT RS.2,71,12,046/- AS UNDER: 10. THE ASSESSEE COMPANY HAS FILED RETURN OF INCOM E GIVING WORKING OF APPLICABILITY OF SECTION 115J OF THE ACT. AS PER TH E WORKING GIVEN BY THE ASSESSEE COMPANY CHARGEABLE PROFIT U/S.115J OF THE ACT COMES TO RS.2,51,255/- AS UNDER: PROFIT AS PER PROFIT & LOSS A/C. (MEMORANDA) RS.8 ,37,516 ADD: DEPRECIATION DEBITED IN THE BOOKS OF ACCOUNTS RS.2,71,12,046 RS.2,79,49,562 LESS: DEPRECIATION AS PER SEPARATE WORKING ATTACHED (AS PER PROVISIONS OF IT ACT) RS.2,71,12 ,046 RS. 8,37,516 30% OF THE BOOK PROFIT RS. 2,51,255 IT WAS ALSO NOTED BY THE AO THAT ALONG WITH A RETU RN THE ASSESSEE HAS FURNISHED P & L A/C. AND BALANCE SHEET DULY AUD ITED AS PER AUDIT REPORT U/S. 44AB OF IT ACT AS FORM NO.3CB, WHEREIN DEPRECIATION ON STRAIGHT LINE METHOD WAS SHOWN AT RS.98.04 LACS. AC CORDING TO AO AS PER SECTION 115J(1A), A RESPONSIBILITY IS ON THE COMPAN Y TO PREPARE ITS P&L A/C IN ACCORDANCE WITH THE PROVISIONS OF PART-II AN D PART-III OF SCHEDULE IV OF COMPANIES ACT. SO THE DEPRECIATION WAS ALSO R EQUIRED TO BE PROVIDED AS PER THE PROVISIONS OF COMPANIES ACT, CO MMENTED BY AO. HOWEVER, THE ASSESSEE HAD CLAIMED DEPRECIATION AS P ER THE PROVISIONS OF IT ACT. ACCORDING TO AO UNDER THE COMPANIES ACT, TH ERE WAS NO PROVISION TO CLAIM THE DEPRECIATION AS PER THE PROV ISIONS OF IT ACT; HENCE, THE AO HAS IGNORED THE ASSESSEES SEPARATE WORKING OF WDV AND THEREUPON COMPUTED THE CHARGEABLE PROFIT U/S.115J O F IT ACT AS UNDER: COMPUTATION U/S.115J OF THE ACT. BOOK PROFIT AS PER PRINTED COPY OF ACCOUNTS (BEFORE PROVISIONS, DIVIDENDS, ETC.) RS.1,35,46, 000.00 LESS: SET OFF U/S.205(1) OF THE COMPANIES ITA NO.1851/AHD/1993 ACIT, CO. CIRCLE -2, BARODA VS. BELL CERAMICS LIMIT ED. A.Y.1990-91 - 3 - ACT (DEPRECIATION OR LOSS WHICHEVER IS LESS) RS. 53,19,000.00 TOTAL RS. 82,27,000.00 CHARGEABLE PROFIT U/S.115J OF THE ACT. 30% OF THE ABOVE I.E. 30% OF RS.82,27,000.00 RS.24 ,68,100.00 2.1 BEFORE WE PROCEED FURTHER IT IS BETTER TO CLARI FY THAT THE REASON FOR ADOPTING RS.53,19,000/- BY THE AO; INSTEAD OF ADOPT ING DEPRECIATION AMOUNT OF RS.98.04 (STRAIGHT LINE METHOD AS PER THE PRINTED BALANCE SHEET) WAS GIVEN AS UNDER: 11.2 AS PER THE PROVISIONS OF SECTION 115J OF THE ACT, THE ASSESSEE COMPANY IS ENTITLED TO GET SET OFF OF BUSINESS LOSS OF DEPR ECIATION WHICHEVER IS LESS U/S.205(1)(B) OF THE COMPANIES ACT, I.E. DEPRECIATI ON/BUSINESS LOSS CLAIMED BY THE ASSESSEE COMPANY IN THE PREVIOUS YEAR; WHICHEVE R IS LESS. THE ASSESSEE COMPANY HAS SHOWN DEPRECIATION AT RS.98.04 LAKHS AN D BUSINESS LOSS AT RS.53.19 LAKHS, THEREFORE, THE ASSESSEE COMPANY IS ELIGIBLE TO GET DEDUCTION OF BUSINESS LOSS AT RS.53.19 LAKHS, WHICH IS ALLOWED T O THE COMPANY. ACCORDINGLY, CHARGEABLE PROFIT U/S.115J OF THE ACT COMES TO RS.24.681 LAKHS AS PER THE WORKING GIVEN IN THE COMPUTATION OF TOTA L INCOME. 2.2 THE ASSESSEE HAS CHALLENGED THE COMPUTATION OF THE AO AND LD. CIT(A) HAS DIRECTED THE AO, ACCEPTING ASSESSEES CO NTENTION, AS FOLLOWS: 7. THE NEXT GROUND OF APPEAL PERTAINS TO THE COMPU TATION OF BOOK PROFIT UNDER THE PROVISIONS OF SECTION 115J OF THE INCOME TAX ACT, 1961. THE BRIEF FACTS ARE THAT THE APPELLANT HAD BEEN FOLLOWING STR AIGHT LINE METHOD IN THE ANNUAL ACCOUNTS PREPARED UNDER THE COMPANIES ACT, 1 956 AND PRESENTED BEFORE THE ANNUAL GENERAL MEETING, WHICH HAS BEEN R EFERRED TO AS THE PRINTED BALANCE SHEET OF THE COMPANY. THE BOOK PROFIT OF TH E COMPANY AS PER THE SAID BALANCE SHEET WORKED OUT TO BE RS.82.27 LAKHS (AFTE R ALLOWING DEDUCTION U/S.205 (1)(B) AND 30% THEREOF COMES TO RS.24.68 LA CS. THE APPELLANT HAD, HOWEVER, CONTENDED THAT THE APPELLANT HAD PREPARED SEPARATE BALANCE SHEET AS REQUIRED U/S.115J OF THE INCOME TAX ACT, 1961 AN D FOLLOWING THE WRITTEN DOWN VALUE OF THE METHOD OF CHARGING DEPRECIATION A ND THEREBY THE BOOK PROFIT FOR THE PURPOSE OF SECTION 115J CAME TO RS.8 ,37,516 AND 30% THEREOF BECAME RS.2,51,255. THE APPELLANT, THEREFORE, CONTE NDED THAT SINCE THE BALANCE SHEET, WHICH HAS BEEN FILED BY THE APPELLAN T ALONGWITH THE RETURN OF INCOME HAS BEEN PREPARED IN ACCORDANCE WITH THE PRO VISIONS OF SCHEDULE VI TO THE COMPANIES ACT, 1956 AND, THEREFORE, THERE IS NO REASON WHY THE SAME SHOULD NOT BE ACCEPTED TO BE THE BOOK PROFIT AND TH E PROVISIONS OF SECTION 115J TO BE APPLIED ACCORDINGLY.. ITA NO.1851/AHD/1993 ACIT, CO. CIRCLE -2, BARODA VS. BELL CERAMICS LIMIT ED. A.Y.1990-91 - 4 - 7.3 SUB-SECTION (1A) CLEARLY CASTS AN OBLIGATION TO PREPARE PROFIT AND LOSS ACCOUNTS SPECIFICALLY FOR THE PURPOSE OF SECTION 11 5J AND THE ONLY REQUIREMENT FOR PREPARATION OF THE SAID ACCOUNT IS THAT THE SAI D ACCOUNT SHOULD BE IN ACCORDANCE WITH THE SCHEDULE VI TO THE COMPANIES AC T, 1956. IT IS NOT THE CASE THAT THE ACCOUNTS NOW PREPARED AND SUBMITTED A RE NOT IN ACCORDANCE WITH THE PROVISIONS OF SCHEDULE VI TO THE COMPANIES ACT, 1956. THE CASE IS PROPOSED TO BE MADE OUT THAT THE ACCOUNTS, WHICH AR E MADE FOR THE PURPOSE OF COMPLYING WITH THE PROVISIONS OF THE COMPANIES ACT, 1956 MUST NECESSARILY BE CONSIDERED FOR THE PURPOSE OF APPLICATION OF SECTIO N 115J OF THE ACT. I AM UNABLE TO ACCEPT THE SAID CONTENTIONS. SINCE, THERE IS NO AMBIGUITY IN THE LEGISLATIONS, INTENTION FOR PREPARATION OF FRESH PR OFIT AND LOSS ACCOUNTS FOR THE PURPOSE OF SECTION 115J OF THE INCOME TAX ACT, THER E SHOULD NOT BE ANY LIMITATION ON THE METHOD AND MANNER OF PREPARATION THEREOF SO LONG AS IT IS WITHIN AND IN ACCORDANCE WITH THE PROVISIONS OF SCH EDULE VI TO THE COMPANIES ACT, 1956. THE EXPLANATION TO SUB-SECTION (1A) ALSO MAKE IT CLEAR THAT WHAT IS REQUIRED TO BE CONSIDERED FOR THE PURPOSE OF ASCERT AINING THE BOOK PROFITS IS THE PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT PREPARED UNDER SUB-SECTION 1A AND FOR THE PURPOSE OF THE COMPANIES ACT, 1956. 7.4 IT IS ALSO SEEN THAT THE ASSESSEE HAS FOLLOWED THE WDV METHOD OF CHARGING DEPRECIATION, WHICH IS ALSO PERMITTED TO B E FOLLOWED UNDER SCHEDULE VI TO THE COMPANIES ACT, 1956 AND, THEREFORE, THERE CANNOT BE ANY OBJECTION TO THE FOLLOWING THE SAID METHOD OF CHARGING DEPREC IATION. 7.5 IT IS ALSO INTERESTING TO NOTE THAT THE AO HIMS ELF HAS ALSO FOLLOWED ALL ALONG THE PROFIT AND LOSS ACCOUNT SO PREPARED IN TH E COMPUTATION OF TOTAL INCOME AND HAD ALSO COMPLETED IGNORED THE PRINTED B ALANCE SHEET, EXCEPT FOR THE PURPOSE OF SECTION 115J OF THE INCOME TAX ACT, 1961 7.7 IN VIEW OF THE OBSERVATIONS MADE ABOVE, THE AO IS DIRECTED TO RE- COMPUTE THE BOOK PROFIT AFTER CONSIDERING THE PROFI T AND LOSS ACCOUNT SUBMITTED ALONGWITH THE RETURN OF INCOME AND IGNORI NG THE PROFIT AS DISCLOSED BY THE APPELLANT IN THE PRINTED BALANCE SHEET OF TH E APPELLANT COMPANY. 2.3 THAT ISSUE WENT UPTO THE RESPECTED ITAT C BEN CH AHMEDABAD IN ITA NO.1851/AHD/1993 AND DECIDED VIDE ORDER DATE D 24.8.1999; RELEVANT PORTION IS EXTRACTED AS UNDER: 5.4 IN THE INSTANT CASE, WE ARE CONCERNED WITH THE A.Y. 1990-91 FOR WHICH SEC.115J(1) READ WITH SUB-SECTION (1A) IS APPLICABL E. THE ISSUE BEFORE US IS WHETHER THE ASSESSEE, BEING A COMPANY, IN PREPARING THE P&L ACCOUNT FOR THE PURPOSE OF SEC. 115J IS TO ADOPT THE SAME RATE OR S AME METHOD OF DEPRECIATION WHICH WAS ADOPTED IN THE PROFIT AND LOSS ACCOUNT, P LACED BEFORE THE ANNUAL GENERAL MEETING 5.8 ON A COMPARISON IT WILL BE EVIDENT THAT: (A) THE MAIN PART OF SUB-SECTION (2) OF SEC. 115JA IS THE SAME AS SUBSECTION (1A) OF 115J. ITA NO.1851/AHD/1993 ACIT, CO. CIRCLE -2, BARODA VS. BELL CERAMICS LIMIT ED. A.Y.1990-91 - 5 - (B) THE PROVISO FOUND IN SUB-SECTION (2) OF SEC. 11 5JA ARE NOT TO BE FOUND IN SUB-SECTION (1A) OF SEC. 115J. (C) THE FIRST PROVISO CITED SUPRA REFERS TO PROFIT AND LOSS ACCOUNT LAID BEFORE THE ANNUAL GENERAL MEETING OF THE COMPANY, A REFERENCE NOT FOUND IN 115J(1) OR(1A). (D) THE PROVISO PUTS A CONDITION THAT AT THE SAME R ATE OR SAME METHOD OF DEPRECIATION ARE TO BE ADOPTED BOTH IN THE PROFIT A ND LOSS ACCOUNT PREPARED FOR PURPOSES OF SEC. 115JA AND IN THE PROFIT AND LO SS ACCOUNT LAID BEFORE THE ANNUAL GENERAL MEETING, (SUCH A CONDITION IS NOT FO UND IN 115J(1) OR (1A). (E) THE SECOND PROVISO TO SUB-SEC.(2) OF SEC. 115JA SPECIFICALLY REFERS TO A COMPANY WHOSE FINANCIAL YEAR UNDER THE COMPANIES AC T DOES NOT COINCIDE WITH THE PREVIOUS YEAR UNDER THE I.T. ACT - A, CONT INGENCY NOT MENTIONED IN 115J(1) OR (1A). 5.9 FOR ALL THESE REASONS WE HOLD THAT SUB-SECTION (1A) OR SEC. 115J AS IT STOOD FOR THE A.Y. 90-91 COVERS EVERY ASSESSEE BEIN G A COMPANY, NO MATTER WHETHER FINANCIAL YEAR UNDER THE COMPANIES ACT AND THE PREV IOUS YEAR UNDER THE I.T. ACT COINCIDE WITH EACH OTHER OR NOT OR THE MANDATE OF THE SUB-SECTION IS FOR EVERY ASSESSEE BEING A COMPANY TO PREPARE ITS PROFI T AND LOSS ACCOUNT FOR PURPOSES OF SEC. 115J IN ACCORDANCE WITH THE PROVIS IONS OF PART II AND III OF SCHEDULE VI TO THE COMPANIES ACT AND THAT THERE IS NO FURTHER REQUIREMENT THAT THE PROFIT AND LOSS ACCOUNT SO PREPARED SHOULD BE SAME OR SIMILAR TO THE PROFIT AND LOSS ACCOUNT PLACED BEFORE THE ANNUAL GE NERAL MEETING OF THE COMPANY. 5.10 THE RATES OF DEPRECIATION MENTIONED IN SCHEDUL E XIV OF THE COMPANIES ACT ARE THE MINIMUM RATES OF DEPRECIATION AND THE C OMPANIES ARE FREE TO ADOPT ANY RATE NOT BELOW THE RATE PRESCRIBED AS PER THE CLARIFICATION OF COMPANY LAW BOARD. FURTHER WDV METHOD OF DEPRECIATI ON IS ALSO AN APPROVED METHOD UNDER SCHEDULE XIV OF THE COMPANIES ACT. MOREOVER THE RATES MENTIONED IN SCHEDULE XIV ARE RELEVANT FOR PU RPOSES OF SEC. 205 (DIVIDEND DECLARATION) AND 350 (MANAGERIAL REMUNERA TION) OF THE COMPANIES ACT. AS A MATTER OF FACT SEC.350 IS NOT APPLICABLE TO THE ASSESSEE, IT BEING A PRIVATE LIMITED COMPANY. LASTLY PART II AND III OF SCHEDULE VI TO THE COMPANIES ACT DOES NOT REQUIRE THAT THE RATE OR MET HOD OF DEPRECIATION PRESCRIBED IN SCHEDULE XIV SHOULD BE ADOPTED FOR PR EPARING THE P&L ACCOUNT. 5.11 IN THE LIGHT OF OUR DISCUSSIONS, WE UPHOLD THE ORDER OF THE CIT(A) AND THE REVENUES APPEAL FALLS ON THIS ISSUE. 3. THE REVENUE DEPARTMENT WAS NOT SATISFIED WITH TH E ORDER OF THE TRIBUNAL; HENCE, MATTER WENT UPTO THE HONBLE GUJAR AT HIGH COURT AND IN INCOME TAX REFERENCE NO.67 OF 1999 VIDE AN ORDER DA TED 14.03.2007, THE HONBLE COURT HAS APPROVED THE VIEW OF THE TRIB UNAL. ITA NO.1851/AHD/1993 ACIT, CO. CIRCLE -2, BARODA VS. BELL CERAMICS LIMIT ED. A.Y.1990-91 - 6 - 4. REVENUE DEPARTMENT; STILL NOT SATISFIED; CHALLEN GED THE ORDER OF THE HONBLE HIGH COURT BEFORE THE HONBLE SUPREME COURT AND IN CIVIL APPEAL NO.5004 OF 2009 VIDE AN ORDER DATED 30 TH OF JULY, 2009, PRONOUNCED AS UNDER: ASSESSEE IS A PRIVATE LIMITED COMPANY. FOR THE PRE VIOUS YEAR ENDING 31 ST MARCH, 1990, IN THE PRINTED COPY OF THE PROFIT AND LOSS ACCOUNT AS APPROVED BY THE ANNUAL GENERAL MEETING (AGM), DEPRECIATION S TOOD CALCULATED ON STRAIGHT LINE METHOD, WHEREAS IN THE SEPARATE ACCOU NTS PREPARED BY THE ASSESSEE FOR THE PURPOSES OF SECTION 115J, ASSESSEE ADOPTED WRITTEN DOWN VALUE METHOD FOR DEPRECIATION A PROVIDED IN THE INC OME TAX ACT, 1961. WHETHER IT WAS OPEN TO THE ASSESSEE TO DO SO WAS TH E QUESTION WHICH AROSE FOR DETERMINATION BEFORE THE TRIBUNAL WHICH HAS NOT BEE N SQUARELY ANSWERED AND THE HIGH COURT VIDE ITS IMPUGNED JUDGMENT HAS MEREL Y COPIED EXTRACTS FROM THE JUDGMENT OF THE TRIBUNAL. WE ARE ALSO NOT SURE AS TO WHAT WAS NET PROFIT OF THE COMPANY DURING THE RELEVANT YEAR. IN THE ABOVE CIRCUMSTANCES, WE SET ASIDE THE IMPUGN ED JUDGMENT OF THE HIGH COURT AND REMIT THE MATTER TO THE TRIBUNAL FOR DE N OVO CONSIDERATION IN ACCORDANCE WITH LAW. 5. BECAUSE OF THE DIRECTIONS OF THE HONBLE APEX CO URT, THIS APPEAL IS NOW AGAIN FIXED FOR HEARING BEFORE US. 5.1 DURING THE PENDENCY OF THE IMPUGNED GROUND SO R ESTORED BY THE APEX COURT, IN THE MEANTIME, THERE WERE CERTAIN DEV ELOPMENTS IN RESPECT OF THE INTERPRETATION OF THE RELEVANT PROVISIONS OF THE STATUTE. THE MOST IMPORTANT ONE WAS AN ORDER OF MALAYALA MANORAM, 300 ITR 251 (SC) , WHEREIN IT WAS HELD THAT THE ITO HAS NO JURISDICTIO N TO REWORK THE BOOK PROFIT U/S. 115 J BY SUBSTITUTING THE RATES OF DEPR ECIATION PRESCRIBED IN SCHEDULE-XIV OF COMPANIES ACT FOR THE RATES PRESCRI BED IN IT RULES WHICH HAVE BEEN CONSISTENTLY APPLIED BY THE ASSESSE E COMPANY. BUT THEREAFTER IN THE CASE OF DYNAMIC ORTHOPEDICS, 321 ITR 300 (SC) ON THE ISSUE OF COMPUTATION OF DEPRECIATION FOR THE PURPOS E OF COMPUTING BOOK ITA NO.1851/AHD/1993 ACIT, CO. CIRCLE -2, BARODA VS. BELL CERAMICS LIMIT ED. A.Y.1990-91 - 7 - PROFIT FOR SECTION 115J IT WAS HELD THAT THE JUDGME NT OF MALAYALA MANORAMA (SUPRA) NEEDS RECONSIDERATION BY A LARGER BENCH. BECAUSE OF THE PENDENCY OF THE ISSUE BEFORE LARGER BENCH OF TH E HONBLE SUPREME COURT IN THE PAST SEVERAL YEARS; THIS APPEAL REMAIN ED PENDING BEFORE THE TRIBUNAL AHMEDABAD. WE HAVE NOTED THAT WAY BACK FRO M THE YEAR 2010 THIS APPEAL WAS NOT FINALIZED ONLY DUE TO THE FACT THAT THE ISSUE BEING REFERRED TO THE LARGER BENCH OF THE HONBLE SUPREME COURT; THEREFORE, MATTER REMAINED IN LIMBO. NOW BEFORE US, LEARNED AR SHRI SALIL AGARWAL AND SHRI SANJEEV JAIN HAS PLACED TWO LATEST DEVELOP MENTS IN THIS REGARD BY CITING FIRST A DECISION OF M/S. OSWAL AGRO MILLS IN ITA NO.20 & 21 OF 1998 ORDER DATED 5 TH MARCH, 2004 WHEREIN IT WAS OBSERVED AS UNDER: WE NOTICE THAT IN THE CIRCUMSTANCES OF THE PRESENT CASE, THE ASSESSING OFFICER NEVER DOUBTED THE DEPRECIATION AMOUNTS CLAIMED AS I S EVIDENT FROM THE ASSESSMENT ORDER AND THE FINAL COMPUTATION, WHICH F ORMS THE BASIS OF THE PRESENT APPEAL. AS FOR THE MERITS OF THE SUBMISSION S OF THE REVENUE, WITH REGARD TO THE LIMITED INQUIRY THAT CAN BE UNDERTAKE N, THIS COURT IS OF THE OPINION THAT THE LAW DECLARED IN APOLLO TYRES LTD. (SUPRA) IS AS AUTHORITATIVE AS PRONOUNCED, SINCE IT WAS BY A THREE JUDGE BENCH. THE SUPREME COURT CLEARLY RULED THAT ONCE A CERTIFICATE IS ISSUED BY THE STATUTORY AUDITOR THAT THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET HAVE BEEN PREPARED IN ACCORDANCE WITH THE SCHEDULE VI OF THE COMPANIES ACT, 1956 AND THE ASSESSING OFFICER IS SHOWN THE CERTIFICATE TO SHOW THAT DEPRECIATION IS CLAIMED IN TERMS OF THE COMPANIES ACT, HE CEASED TO HAVE ANY JURISDICTION T O REASSESS OR RE-APPRISE THE CORRECTNESS OF THAT CERTIFICATE. WHILST THERE C OULD BE DIFFICULTIES, SOME OF THEM GENUINE OR LEGITIMATE WITH REGARD TO THE NATUR E OF DECLARATIONS HAVING REGARD TO THE PRIMA FACIE MATERIAL THAT MAY BE DISC ERNIBLE BY THE TAX AUTHORITIES, WE ARE CLEAR THAT SO LONG AS THE APOLL O TYRES LTD. (SUPRA) AND MALAYALA MANORAMA CO. (SUPRA) PREVAIL, IT IS IMPERM ISSIBLE FOR THIS COURT TO TAKE ANY DIFFERENT VIEW; THAT WOULD BE DOING VIOLAT ION TO THE LAW OF PRECEDENTS AND WOULD PLAINLY AMOUNT TO JUDICIAL IMPROPRIETY. I N THESE CIRCUMSTANCES THE FIRST QUESTION FORMULATED IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 5.2 LIKEWISE IN ANOTHER JUDGMENT PASSED BY HONBLE CALCUTTA HIGH COURT IN THE CASE OF RAGHAV INDUSTRIES BEARING ITA NO.34 OF 2003 ORDER DATED 8 TH SEPTEMBER, 2011, THE COURT HAS HELD AS UNDER: ITA NO.1851/AHD/1993 ACIT, CO. CIRCLE -2, BARODA VS. BELL CERAMICS LIMIT ED. A.Y.1990-91 - 8 - APART FROM THE AFORESAID FACT, MR. KHAITAN CONTEND S THAT THE CASE BEFORE US IS NOT GOVERNED BY THE PROVISIONS CONTAINED IN SECT ION 115J, BUT BY THE PROVISIONS CONTAINED IN SECTION 115JA WHICH CAME IN TO FORCE WITH EFFECT FROM 1 ST APRIL, 1997 AND IN SUB-SECTION 2 OF THE SAID SECTI ON 115JA, A PROVISO HAS BEEN ADDED WHICH WAS ABSENT IN SECTION 115J OF THE ACT. BY RELYING UPON THE SAID PROVISO MR. KHAITAN CONTENDS THAT THERE IS NO TRACE OF DOUBT AT PRESENT THAT IN A CASE GOVERNED BY SECTION 115JA OF THE ACT , THE ASSESSEE IS ENTITLED TO RELY UPON THE PROVISIONS OF THE ACT OR THE RULES FO R THE PURPOSE OF DEPRECIATION AND ALL THAT IS REQUIRED UNDER SECTION 115JA IS THAT THE DEPRECIATION SHOULD HAVE BEEN DEBITED IN THE PROFIT AND LOSS ACCOUNT WHICH SHOULD HAVE BEEN APPROVED IN THE ANNUAL GENERAL MEE TING IN ACCORDANCE WITH THE PROVISIONS OF SECTION 210 OF THE COMPANIES ACT, 1956. MR. KHAITAN, HOWEVER, DRAWS OUR ATTENTION TO THE FA CT THAT IN A SUBSEQUENT DECISION OF THE SUPREME COURT IN THE CASE OF DYNAMI C ORTHOPEDICS P. LTD. VS. COMMISSIONER OF INCOME TAX, REPORTED IN (2010) 321 ITR 300, THE CORRECTNESS OF THE DECISION OF THE SUPREME COURT IN THE CASE OF MALAYALA MANORAMA CO. LTD. (SUPRA) HAS BEEN DOUBTED AND THE MATTER HAS BEEN REFERRED TO A LARGER BENCH FOR DECISION. MR. KHAITA N, THEREFORE, PRAYS FOR SETTING ASIDE THE ORDER PASSED BY THE TRIBUNAL BELO W AND FOR RESTORATION OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APP EALS) IN ACCORDANCE WITH THE PRESENT LAW OF THE LAND. MR. NIZUMUDDIN, T HE LEARNED ADVOCATE, APPEARING ON BEHALF OF THE REVENUE, ON THE OTHER HA ND, HAS CONTENDED BEFORE US THAT IN VIEW OF THE FACT THAT IN A SUBSEQUENT DE CISION OF HT SUPREME COURT IN THE CASE OF DYNAMIC ORTHOPEDICS P. LTD. (SUPRA) THE DECISION TAKEN IN THE CASE OF MALAYALA MANORAMA CO. LTD. (SUPRA), THE EAR LIER DECISION OF THE SAME COURT HAS BEEN DESCRIBED AS A WRONG ONE, WE SHOULD FOLLOW THE DECISION OF DYNAMIC ORTHOPEDICS P. LTD. (SUPRA) AND SHOULD NOT INTERFERE WITH THE DECISION OF THE TRIBUNAL. AFTER HEARING THE LEARNED ADVOCATES FOR THE PARTIES AND AFTER GOING THROUGH THE MATERIALS ON RECORD, WE DO NOT FIND ANY SUBSTAN CE IN THE CONTENTION OF MR. NIZUMUDDIN THAT IN CASE OF THE CONFLICTING DECISION S OF THE SUPREME COURT OF EQUAL STRENGTH, THE LATTER SHOULD BE BINDING UPON U S AS A PRECEDENT. IN OUR OPINION, SO LONG THE DECISION OF THE TWO-JUDGE BENC H IN THE CASE OF MALAYALA MANORAMA CO. LTD. (SUPRA) IS NOT UPSET BY A LARGER BENCH, NOTWITHSTANDING THE FACT THAT A SUBSEQUENT TWO-JUDGE BENCH IN THE C ASE OF DYNAMIC ORTHOPEDICS P. LTD. (SUPRA) HAS DISAGREED WITH THE SAID VIEW, THE DECISION OF MALAYALA MANORAMA CO. LTD. SHOULD BE BINDING AS A P RECEDENT UPON US. 6. WITH THIS LEGAL BACKGROUND, WE HAVE ALSO HEARD L EARNED DR WHO HAS PLACED RELIANCE ON THE PROVISIONS OF IT ACT AND PLEADED THAT EVERY ASSESSEE BEING A COMPANY IS REQUIRED TO PREPARE ITS P & L A/C AS PER THE PROVISIONS OF PART-II AND III OF SCHEDULE-IV OF COM PANIES ACT, 1956. HE ITA NO.1851/AHD/1993 ACIT, CO. CIRCLE -2, BARODA VS. BELL CERAMICS LIMIT ED. A.Y.1990-91 - 9 - HAS MENTIONED THAT AS PER THE PROVISO TO SECTION 2 OF SECTION 115JA IT IS PRESCRIBED THAT WHILE PREPARING P & L A/C THE DEPRE CIATION SHALL BE CALCULATED ON THE SAME METHOD AND RATES WHICH HAVE BEEN ADOPTED FOR CALCULATION THE DEPRECIATION FOR THE PURPOSE OF PRE PARING THE P & L A/C LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETI NG IN ACCORDANCE WITH THE PROVISIONS OF SECTION 210 OF THE COMPANIES ACT, 1956. HOWEVER, THE ARGUMENT OF LEARNED A.RS., MR. SHRI SALIL AGARWAL A ND MR. SANJEEV JAIN IS THAT THE YEAR UNDER CONSIDERATION IS A.Y. 1991, THE PROVISIONS OF SECTION 115J(1) AND THE PROVISIONS OF SECTION 115J (1A) ARE APPLICABLE. HE HAS POINTED OUT THAT THE PROVISIONS OF SECTION 1 15JA WERE INSERTED W.E.F. 1.4.1997. THE SAID PROVISO WHICH IS RELIED U PON BY THE LEARNED DR WAS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION . 6.1 WE FIND FORCE IN THE ARGUMENTS OF LEARNED AR BE CAUSE THE DISTINCTION BETWEEN THE TWO PROVISIONS HAS BEEN CON SIDERED BY THE RESPECTED TRIBUNAL BENCH, RELEVANT PORTION ALREADY REPRODUCED ABOVE. DUE TO THE REASONS ASSIGNED IN THAT JUDGMENT, WE AL SO HEREBY HOLD THAT THE PROVISIONS OF SECTION 115J(1) AND SUB SECTION ( 1A) WERE APPLICABLE FOR THE YEAR UNDER CONSIDERATION, I.E., A.Y. 1990-9 1. WE ARE NOT IN AGREEMENT WITH THE LD. DRS ARGUMENT HENCE EXPRESS OUR VIEW THAT THE FIRST PROVISO BELOW SEC. 115JA(2) IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. THEREFORE FOR THE YEAR UNDER CONSIDE RATION THE ASSESSEE WAS NOT REQUIRED TO ADOPT THAT AMOUNT OF DEPRECIATI ON WHICH WAS CALCULATED FOR THE AUDITED ACCOUNTS LAID BEFORE THE ANNUAL GENERAL MEETING. NEXT, WE HEREBY FOLLOW THE DECISIONS OF HONBLE DE LHI HIGH COURT AS PRONOUNCED IN THE CASE OF OSWAL AGRO MILLS (SUPRA) AND THE ITA NO.1851/AHD/1993 ACIT, CO. CIRCLE -2, BARODA VS. BELL CERAMICS LIMIT ED. A.Y.1990-91 - 10 - DECISION OF HONBLE CALCUTTA HIGH COURT HAS PRONOUN CED IN THE CASE OF M/S. RAGHAV INDUSTRIES LTD. (SUPRA) AND THEREUPON AFFIRM THE FINDING OF LEARNED CIT(A) AS PER PARAGRAPH 7.7 OF THE ORDER, R EPRODUCED ABOVE. 6.2 ONE MORE POINT IS LEFT FOR READJUDICATION THAT THE HONBLE COURT IN THE ORDER DATED 30 TH JULY, 2009 (SUPRA) HAS COMMENTED THAT THE NET PROF IT OF THE COMPANY WAS NOT MADE AVAILABLE TO THE HONBL E COURT. LEARNED AR HAS MENTIONED THAT THE AUDITED ACCOUNTS ARE VERY MUCH BEFORE THE AO AND THE SAME CAN BE EXAMINED AT ANY TIME BECAUSE THE BOOK PROFIT WAS RS.8,37,516/- AS PER THE MEMORANDUM. THE BOOK P ROFIT AS PER THE PRINTED ACCOUNTS WAS RS.1,35,46,000/-. THIS IS A QU ESTION OF VERIFICATION OF FACTS FROM THE ACCOUNTS OF THE ASSESSEE WHICH CA N BE DECIDED BY THE AO WHILE GIVING THE EFFECT OF THIS ORDER OF THE TRI BUNAL. FURTHER, WE HAVE ALSO MAKE IT CLEAR THAT WHATEVER WILL BE THE OUTCOM E OF THE JUDGMENT OF THE LARGER BENCH CONSTITUTED IN THE CASE OF DYNAMIC ORTHOPEDIC (SUPRA) SHALL BE APPLICABLE ON THIS ASSESSEE AS WELL BEING A BINDING PRECEDENT. RESULTANTLY, WE HEREBY UPHOLD THE VIEW OF LEARNED C IT(A) AND DISMISS THIS GROUND OF THE REVENUE. 7. AS FAR AS THE OVER ALL RESULT OF THIS APPEAL OF THE REVENUE IS CONCERNED, THE SAME SHALL NOT CHANGE AS HELD EARLIE R BY THE RESPECTED CO-ORDINATE BENCH THAT, QUOTE IN THE RESULT, THE APPEAL BY THE REVENUE IS DISMISSED UNQUOTE. SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 30/05/2014 PRABHAT KR. KESARWANI, SR. P.S. ITA NO.1851/AHD/1993 ACIT, CO. CIRCLE -2, BARODA VS. BELL CERAMICS LIMIT ED. A.Y.1990-91 - 11 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD