ACIT, Range II, V. NHPC Ltd.,

ITA 2449/DEL/2008

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81787 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 27-08-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 03-07-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNIL BAJPAI
• Assessee Lawyers: RANO JAIN CAS
• Keywords: Depreciation; Retrospective amendment; Bad and doubtful debts
• Section: 43B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NO.2449/DEL./2008 (ASSESSMENT YEAR : 2004-05) ACIT, RANGE II, VS. M/S. NHPC LIMITED, FARIDABAD. SECTOR 33, NHPC COMPLEX, FARIDABAD. (PAN : AAACN0149C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN & MS. RANO JAIN, CAS REVENUE BY : SHRI SUNIL BAJPAI, CIT DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF CIT (APPEALS), FARIDABAD DATED 25.04.2008 FOR THE ASSES SMENT YEAR 2003-05. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPE AL :- 1. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.24,29,89,211/- MADE BY THE ASSESSING OFFICER IN COMPUTING THE BOOK PROFIT U/S 115JB IN RESPECT OF PROVISIONS MADE FOR GRATUITY, LEAVE ENCA SHMENT AND POST- RETIREMENT MEDICAL BENEFITS. 2. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN APPLYING SECTION 43B UNNECESSARILY AS THE SECTION 4 3B(A) TO (F) WOULD NOT RELATE TO SECTION 115JB OF THE INCOME TAX ACT, 1961, MORE SO WHEN SUB-CLAUSES IV & V OF SUB SECTIO N 1 OF SECTION 36 READ WITH SECTION 43B SPEAK OF PAYMENTS AND NOT PROVISIONS. ITA NO.2449/DEL/2008 2 3. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN TREATING THE DISALLOWANCE MADE IN COMPUTATION OF 11 5JB AS ALLOWABLE LIABILITIES U /S 43B WHEREAS IN THE NORMA L COMPUTATION MADE UNDER CHAPTER IV-D, THE ASSESSEE I TSELF HAD ADDED THESE SUMS BUT HAS NOT ADDED WHILE CALCUL ATING BOOK-PROFIT UNDER CHAPTER XIIB. 4. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 8,76,59,179/- MADE BY THE ASSESSING OFFICER IN COMPUTING THE BOOK-PROFIT U /S 115JB IN RESPECT OF PROVISIONS FOR DOUBTFUL DEBTS CLAIMED BY THE ASSESSEE. 5. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING DISALLOWANCE OF RS. 6,12,00,000/- MADE BY THE ASSESSING OFFICER IN COMPUTING THE BOOK-PROFIT U /S 115JB IN RESPECT OF DEPRECIATION CLAIMED ON LAND AFTER AMORT IZATION OF LAND BY THE ASSESSEE BECAUSE THERE IS NO DEPRECIATI ON ALLOWABLE ON LAND UNDER COMPANIES ACT AND NO RATE O F DEPRECIATION IS PROVIDED IN SCHEDULE XIV OF COMPANI ES ACT. 6. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD, DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2. GROUND NO.1, 2 AND 3 ARE REGARDING ADJUSTMENT MA DE BY THE AO BY MAKING ADDITION TO THE BOOK-PROFIT IN RESPECT OF GR ATUITY, LEAVE ENCASHMENT AND POST-RETIREMENT MEDICAL BENEFITS. 3. THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE COMPANY BY THE ORDER OF THE ITAT IN ASSESSEES OWN CASE IN ASSESSMENT YE AR 2002-03 IN ITA NO. 1105/DEL/2006 WHERE IT WAS HELD AS UNDER:- 24. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THIS CASE THE ASS ESSEE HAS MADE PROVISION ON ACCOUNT OF GRATUITY, LEAVE ENCASH MENT AND POST RETIREMENT MEDICAL BENEFIT ON ACTUARIAL BASIS. UNDER SECTION 115-JB OF THE ACT WHERE IN THE CASE OF AN A SSESSEE, BEING A COMPANY, INCOME-TAX, PAYABLE ON THE TOTAL I NCOME AS COMPUTED UNDER THIS ACT IN RESPECT OF ANY PREVIOUS YEAR IN RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AF TER 1 ST APRIL, 2001 IS LESS THAN SEVEN AND ONE HALF PER CEN T OF ITS BOOK ITA NO.2449/DEL/2008 3 PROFIT, THE TAX PAYABLE FOR THE RELEVANT PREVIOUS Y EAR SHALL BE DEEMED TO BE SEVEN AND ONE HALF PER CENT OF SUCH BO OK PROFIT. EXPLANATION TO SECTION 115-JB OF THE ACT DEFINES TH E TERM BOOK PROFIT AND MEANS THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR PRE PARED IN ACCORDANCE WITH THE PROVISIONS OF PART II AND III O F SCHEDULE VI OF THE COMPANIES ACT, 1956, AS INCREASED BY THE AMO UNTS MENTIONED IN CLAUSE (A) TO (G), IF ANY SUCH AMOUNT REFERRED TO IN CLAUSES (A) TO (G) IS DEBITED TO THE PROFIT AND LOSS ACCOUNT AND REDUCED BY THE AMOUNT SPECIFIED IN CLAUSE (I) T O (VII) OF THE EXPLANATION. CLAUSE (C) OF THE EXPLANATION TALKS A BOUT THE AMOUNT OR AMOUNTS SET ASIDE TO PROVISIONS MADE FOR MEETING LIABILITIES, OTHER THAN ASCERTAINED LIABILITIES. T HE ASSESSEE HAD MADE PROVISIONS IN RESPECT OF GRATUITY, LEAVE ENCAS HMENT AND POST RETIREMENT MEDICAL BENEFITS BASED ON ACTUARIAL VALUATION. HONBLE SUPREME COURT IN THE CASE OF BHARAT EARTH M OVERS (SUPRA) HAS HELD THAT IF A BUSINESS LIABILITY HAS D EFINITELY ARISEN IN THE ACCOUNTING YEAR, THE DEDUCTION SHOULD BE ALL OWED ALTHOUGH THE LIABILITY MAY HAVE TO BE QUANTIFIED AN D DISCHARGED AT A FUTURE DATE. WHAT SHOULD BE CERTAIN IS THE IN CURRING OF THE LIABILITY. IT SHOULD ALSO BE CAPABLE OF BEING ESTI MATED WITH REASONABLE CERTAINTY THOUGH THE ACTUAL QUANTIFICATI ON MAY NOT BE POSSIBLE. IF THESE REQUIREMENTS ARE SATISFIED T HE LIABILITY IS NOT A CONTINGENT ONE. THE LIABILITY IS IN PRESENT THOUGH IT WILL BE DISCHARGED AT A FUTURE DATE. IT DOES NOT MAKE ANY DIFFERENCE IF THE FUTURE DATE ON WHICH THE LIABILITY SHALL HAVE T O BE DISCHARGED IS NOT CERTAIN. IN THE CASE BEFORE US T HE LIABILITY ON ACCOUNT OF GRATUITY, LEAVE ENCASHMENT POST RETIREME NT MEDICAL BENEFIT HAVE BEEN ESTIMATED ON ACTUARIAL BASIS. TH EREFORE, THE LIABILITY SO ESTIMATED CAN BE SAID TO HAVE BEEN EST IMATED WITH REASONABLE CERTAINTY AND, THEREFORE, SUCH AN ESTIMA TE IS NOT A CONTINGENT ONE. 25. HONBLE BOMBAY HIGH COURT IN THE CASE OF ECHJAY FORGINGS P. LTD. (SUPRA) HAS HELD THAT WHERE THE AS SESSEE HAS MADE A PROVISION FOR GRATUITY ON THE BASIS OF ACTUA RIAL CALCULATIONS, IT CANNOT BE SAID THAT PROVISION FOR GRATUITY WAS NOT ASCERTAINED LIABILITY. LIKEWISE IN THE CASE OF VINITECH CORP. P. LTD. (SUPRA) HONBLE JURISDICTIONAL HIGH COURT H AS HELD THAT WHERE A LIABILITY WHICH WAS CAPABLE OF BEING CONSTR UED IN DEFINITE TERMS, WHICH HAD ARISEN IN THE ACCOUNTING YEAR, ALTHOUGH ITS ACTUAL QUANTIFICATION AND DISCHARGE MI GHT BE DEFERRED TO A FUTURE DATE. ONCE THE ASSESSEE IS MA INTAINING HIS ACCOUNTS ON MERCANTILE SYSTEM, A LIABILITY ACCR UED THOUGH TO BE DISCHARGED AT A FUTURE DATE WOULD BE A PROPER DEDUCTION WHILE WORKING OUT THE PROFITS AND GAINS OF BUSINESS , REGARD BEING HAD TO BE ACCEPTED PRINCIPLES OF COMMERCIAL P RACTICE AND ACCOUNTANCY. IF THE FACTS OF THE CASE ARE VIEW ED IN THE LIGHT OF THE DECISIONS REFERRED TO ABOVE, WE FIND T HAT THE PROVISION MADE BY THE ASSESSEE IN RESPECT OF GRATUI TY, LEAVE ITA NO.2449/DEL/2008 4 ENCASHMENT AND POST RETIREMENT MEDICAL BENEFIT ON A CTUARIAL BASIS CANNOT BE SAID PROVISIONS FOR UNASCERTAINED L IABILITY SO AS TO FALL IN CLAUSE (C) OF THE EXPLANATION TO SECT ION 115-JB (2) OF THE ACT. ACCORDINGLY THE LD. CIT (APPEALS) AND THE ASSESSING OFFICER ERRED IN HOLDING THE PROVISIONS M ADE BY THE ASSESSEE WERE ON ACCOUNT OF UN-ASCERTAINED LIABILIT Y TO BE ADDED BACK UNDER CLAUSE (C) OF THE EXPLANATION TO S ECTION 115- JB (2) OF THE ACT. ACCORDINGLY, WE SET ASIDE THE O RDER OF THE AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE. THE FACTS ARE IDENTICAL, THEREFORE, RESPECTFULLY FO LLOWING THE ABOVE SAID DECISION, THESE GROUNDS OF REVENUES APPEAL ARE DIS MISSED. 3. GROUND NO.4 IS REGARDING PROVISIONS MADE FOR THE BAD AND DOUBTFUL DEBTS. THE LD. AR FAIRLY CONCEDED THAT IN VIEW OF T HE RETROSPECTIVE AMENDMENT MADE BY THE FINANCE (NO.2) ACT, 2009 THIS ISSUE IS COVERED AGAINST THE ASSESSEE. THIS GROUND OF THE REVENUES APPEAL FOR MAKING ADDITION ON ACCOUNT OF THE PROVISIONS FOR BAD AND D OUBTFUL DEBTS IS ALLOWED. 4. GROUND NO.5 IS REGARDING ADDITION OF RS.6,12,00, 000/- MADE BY THE AO IN COMPUTING THE BOOK PROFIT IN RESPECT OF THE EXPE NDITURE ON ACCOUNT OF THE AMORTIZATION OF THE LAND ON THE REASONING THAT NO D EPRECIATION IS ALLOWABLE ON LAND UNDER THE COMPANIES ACT AS NO RATE OF DEPRECIA TION IS PROVIDED IN SCHEDULE XIV OF COMPANIES ACT. 5. IT WAS SUBMITTED BY THE LD. DR THAT THE ADDITION MADE BY THE AO IS CORRECT. NO DEPRECIATION IS PERMISSIBLE UNDER THE COMPANIES ACT IN RESPECT OF THE LAND AND ACCORDINGLY THE DEBIT MADE TO THE PROF IT AND LOSS ACCOUNT BY THE ASSESSEE COMPANY ON ACCOUNT OF AMORTIZATION OF LAND IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT AND HENCE THE AO WAS CORRECT IN COMPUTING THE PROFIT AND LOSS ACCOUNT STRICTLY IN A CCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT. A REFERENCE WAS A LSO MADE TO THE ITA NO.2449/DEL/2008 5 ACCOUNTING STANDARDS 6 ISSUED BY THE INSTITUTE OF C HARTERED ACCOUNTANTS OF INDIA TO POINT OUT THAT DEPRECIABLE ASSETS ARE ASSE TS WHICH HAVE A LIMITED USEFUL LIFE. IT WAS ARGUED THAT SINCE LAND DOES NO T HAVE A LIMITED USEFUL LIFE THE SAME CANNOT BE CONSIDERED TO BE A DEPRECIABLE ASSET AND HENCE DEBIT MADE TO THE PROFIT AND LOSS ACCOUNT BY THE ASSESSEE COMP ANY IS NOT IN ACCORDANCE WITH LAW AS WELL AS ACCOUNTING STANDARDS AND THE AD DITION MADE BY THE AO IS CORRECT. 6. AS AGAINST THIS THE LD. AR SUBMITTED THAT THE CO NTENTION OF THE REVENUE IS NOT IN ACCORDANCE WITH THE FACTS. IN TH IS REGARD, LD. AR INVITED OUR ATTENTION TO THE LETTER DATED 28 TH DECEMBER, 2006 SUBMITTED TO THE AO WHEREBY A NOTE WAS APPENDED. PARA 2.4 OF THE NOTES TO ACCOUNTS CLARIFY THE NATURE OF THE LAND WHICH READS AS UNDER:- LAND TAKEN FOR USE FROM STATE GOVERNMENT (WITHOUT TRANSFER OF TITLE) AND EXPENSES ON RELIEF AND REHABILITATION AS ALSO ON CREATION OF ALTERNATE FACILITIES FOR LAND EVACUATES OR IN LIEU OF EXISTING FACILITIES COMING UNDER SUBMERGENCE AND WH ERE CONSTRUCTION OF SUCH ALTERNATE FACILITIES IS A SPEC IFIED PRE CONDITION FOR THE ACQUISITION OF LAND FOR THE PURPO SE OF THE PROJECT, ARE ACCOUNTED FOR AS LAND-UNCLASSIFIED T O BE AMORTIZED OVER THE USEFUL LIFE OF THE PROJECT, WHIC H IS TAKEN AS 35 YEARS FROM THE DATE OF COMMERCIAL OPERATION OF T HE PROJECT. AMOUNT OF RS.6.2 CRORES HAS BEEN CALCULATED AS PER ACCOUNTING POLICY STATED AT PARA 2.4 (AS PRODUCED A BOVE). THE ABOVE ACCOUNTING POLICY IS IN LINE WITH ACCOUNT ING STANDARD 6 OF ICAI. THUS AMOUNT AMORTIZED IS NEC ESSARY REQUIREMENT OF COMPANIES ACT, 1956. THE ASSESSEE C OMPANY HAS PREPARED THE AUDITED ANNUAL ACCOUNTS FOR THE A. Y. 2004- 05 AS PER THE REQUIREMENT OF ACCOUNTING POLICIES, A CCOUNTING STANDARDS AND OTHER APPLICABLE PROVISIONS OF COMPAN IES ACT AND ANY DEVIATION THERE FROM WOULD HAVE ATTRACTED A DVERSE REMARKS OF AUDITORS.' THAT ASSESSEES ANNUAL ACCOUNTS HAS BEEN DULY ADOP TED BY THE SHAREHOLDERS AND AMOUNT CHARGED IN DEPRECIATION CHART IS THE SAME AS REQUIRED BY ACCOUNTING STANDARD AND DEC LARED ACCOUNTING POLICY. ITA NO.2449/DEL/2008 6 - THAT SECTION 115JB REQUIRED THAT COMPANY TO PREPA RE ACCOUNTS AS PER REQUIREMENT OF COMPANIES ACT (I.E. TO OBSERVE ACCOUNTING STANDARD OF ICAI WHERE EVER APPLICABLE A ND THAT SPECIFICALLY PROVIDES THAT METHOD AND RATE ADOPTED FOR CALCULATING DEPRECIATION SHALL CORRESPOND TO THE AC COUNTING POLICIES, ACCOUNTING STANDARDS AND THE METHOD AND R ATES FOR CALCULATING THE DEPRECIATION WHICH HAVE BEEN ADOPTE D FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS A CCOUNT FOR SUCH FINANCIAL YEAR OR PART OF SUCH FINANCIAL YEAR FALLING WITHIN THE RELEVANT PREVIOUS YEAR. - THE ASSESSEE HAS ALSO FILED FORM NO.29B IN RESPEC T OF BOOK PROFIT AS CERTIFIED BY THE AUDITORS. - THAT NO ADJUSTMENT CAN BE MADE TO THE PROFIT COMP UTED UNDER THE COMPANIES ACT, 1956 EXCEPT THOSE WHICH AR E PERMITTED BY EXPLANATION TO SUB SECTION (2) OF SECT ION 115JA, AS IT HAS BEEN HELD BY THE HONBLESUPREME COURT IN THE CASE OF APOLLO TYRES LTD. VS CIT (2002) 255 ITR 273 (SC) . THE USE OF THE WORDS IN ACCORDANCE WITH THE PROVISION OF P ART II & III OF SCHEDULE VI TO THE COMPANIES ACT WAS MADE FOR THE LIMITED PURPOSE OF EMPOWERING THE ASSESSING AUTHORITY TO RE LY UPON THE AUTHENTIC STATEMENT OF ACCOUNTS OF THE COMPANY. WHILE SO LOOKING INTO THE ACCOUNTS OF THE COMPANY THE A.O . HAS TO ACCEPT THE AUTHENTICITY OF THE ACCOUNTS WITH REFERE NCE TO THE PROVISION OF THE COMPANIES ACT. IT IS NOT OPEN TO THE A.O. TO RE-SCRUTINIZE WITH ACCOUNTS TO SATISFY WHETHER THE ACCOUNTS HAVE BEEN MAINTAINED IN ACCORDANCE WITH THE PROVISI ON OF THE COMPANIES ACT. THUS, THE ASSESSEE HAS RIGHTLY CHARGED RS.6.12 CROR ES IN THE BOOKS AND REQUIRES TO NO FURTHER ADJUSTMENT IN BOOK PROFIT. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT THIS IS SUE IS ALSO COVERED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F APOLLO TYRES LTD. VS CIT 255 ITR 273 (SC) WHEREBY THE COURT HAS HELD THA T SECTION 115J DOES NOT EMPOWER THE AO TO EMBARK UPON A FRESH ENQUIRY IN RE GARD TO THE ENTRIES MADE IN THE BOOKS OF ACCOUNT. 7. WE HAVE HEARD BOTH THE PARTIES. FROM THE FACTS WE NOTICE, AS POINTED OUT BY THE LD. AR THAT THIS LAND IS NOT A LAND WHIC H IS OWNED BY THE ASSESSEE COMPANY. THIS IS A LAND TAKEN FOR USE FROM THE STA TE GOVERNMENT WITHOUT ITA NO.2449/DEL/2008 7 TRANSFERRING THE TITLE FOR RELIEF AND REHABILITATIO N FOR LAND EVACUEES BECAUSE OF SUBMERGES AND WHERE CONSTRUCTION OF SUCH ALTERNATIV E FACILITY IS A CONDITION FOR SETTING UP A PROJECT. THE COST SO INCURRED BY THE ASSESSEE COMPANY IS AMORTIZED OVER USEFUL LIFE OF THE PROJECT. THE ABO VE POLICIES HAVE BEEN APPROVED BY THE AUDITORS OF THE COMPANY AS WELL AS THE C&AG. THE ACCOUNTS OF THE ASSESSEE COMPANY ARE SUBJECT TO AUDIT NOT ON LY BY THE STATUTORY AUDITORS BUT ALSO BY THE C&AG ALSO. FURTHER THE AC COUNTS SO PREPARED HAS BEEN APPROVED AND ADOPTED BY THE COMPANY IN THE ANN UAL GENERAL MEETING AND FILED WITH THE REGISTRAR OF COMPANIES. 8. THE SUPREME COURT IN THE CASE OF APOLLO TYRES LT D. (SUPRA) HAS HELD THAT THE AO UNDER THE INCOME-TAX ACT HAS TO ACCEPT THE AUTHENTICITY OF THE ACCOUNTS WITH REFERENCE TO THE PROVISIONS OF THE CO MPANIES ACT WHICH OBLIGATES THE COMPANY TO MAINTAIN ITS ACCOUNT IN A MANNER PROVIDED BY THE COMPANIES ACT AND THE SAME TO BE SCRUTINISED AND CE RTIFIED BY THE STATUTORY AUDITORS AND WILL HAVE TO BE APPROVED BY THE COMPAN Y IN ITS GENERAL MEETING AND THEREAFTER TO BE FILED BEFORE THE REGISTRAR OF COMPANIES WHO HAS A STATUTORY OBLIGATION ALSO TO EXAMINE AND SATISFY TH AT THE ACCOUNTS OF THE COMPANY ARE MAINTAINED IN ACCORDANCE WITH THE REQUI REMENTS OF THE COMPANIES ACT. THE SUPREME COURT HAS FURTHER HELD THAT THE AO WHILE COMPUTING THE INCOME UNDER SECTION 115J HAS ONLY TH E POWER OF EXAMINING WHETHER THE BOOKS OF ACCOUNT ARE CERTIFIED BY THE A UTHORITIES UNDER THE COMPANIES ACT AS HAVING BEEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE COMPANIES ACT. THE ASSESSING OFFICER THEREAFTER HAS THE LIMITED POWER OF MAKING INCREASES AND REDUCTIONS AS PROVIDED FOR IN THE EXPLANATION TO THE SAID SECTION (115J). THE SUPREME COURT HAS FURTHER WENT ON TO HOLD TO PUT IT ITA NO.2449/DEL/2008 8 DIFFERENTLY, THE ASSESSING OFFICER DOES NOT HAVE TH E JURISDICTION TO GO BEHIND THE NET PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT EXCEPT TO THE EXTENT PROVIDED IN THE EXPLANATION TO SECTION 115J. 9. IT IS NOT THE CASE OF THE REVENUE HERE THAT THE ADJUSTMENT MADE BY THE AO IS UNDER EXPLANATION TO SECTION 115J. THE CONTE NTION OF THE REVENUE HERE IS THAT LAND IS NOT A DEPRECIABLE ASSET AND DEPRECI ATION CHARGED IN THE PROFIT AND LOSS ACCOUNT WHICH IS NOT IN ACCORDANCE WITH TH E PROVISIONS OF THE COMPANIES ACT READ WITH ACCOUNTING STANDARD 6. AS STATED HEREINABOVE, THE CONTENTION OF THE REVENUE THAT THE LAND IN QUESTION OF THE ASSESSEE COMPANY IS NOT A DEPRECIABLE ASSET IS FACTUALLY INCORRECT A ND FURTHER AS HELD BY THE SUPREME COURT NO ADJUSTMENT CAN BE MADE TO NET PROF IT AS CERTIFIED BY THE STATUTORY AUDITORS. 10. ACCORDINGLY WE UPHOLD THE ORDER OF CIT(A) DELET ING THIS ADDITION AND THIS GROUND OF APPEAL OF THE REVENUE IS REJECTED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER, 2014. SD/- SD/- (C.M. GARG) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 30 TH DAY OF SEPTEMBER, 2014 TS ITA NO.2449/DEL/2008 9 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), FARIDABAD. 5.CIT(ITAT), NEW DELHI. AR/ITAT