RISHIROOP RUBBER INTERNATIONAL LTD, MUMBAI V. DCIT CIR 3(3), MUMBAI

ITA 6689/MUM/2010

• Counselvise Citation: 668919914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 01-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: JAYESH WEDIA
• Keywords: Depreciation; Opportunity of being heard; Question of law; Wrong claim; Unabsorbed depreciation
• Section: 234B; 14A; 115JB; 32

Judgement Text

1 RISHIROOP RUBBER INTERNATIONAL LTD IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI D DD D BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI R K PANDA, R K PANDA, R K PANDA, R K PANDA, AM AM AM AM & SHRI & SHRI & SHRI & SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM ITA NO. ITA NO. ITA NO. ITA NO. 6689/MUM/2010 (ASSESSMENT YEAR 2006 6689/MUM/2010 (ASSESSMENT YEAR 2006 6689/MUM/2010 (ASSESSMENT YEAR 2006 6689/MUM/2010 (ASSESSMENT YEAR 2006- -- -07) 07) 07) 07) & && & ITAT NO. 471/MUM/2010 (ASST YEAR 2007 ITAT NO. 471/MUM/2010 (ASST YEAR 2007 ITAT NO. 471/MUM/2010 (ASST YEAR 2007 ITAT NO. 471/MUM/2010 (ASST YEAR 2007- -- -08) 08) 08) 08) RISHIROOP RUBBER INTERNATIONAL LTD 65 ATLANTA NARIMAN POINT MUMBAI 21 VS THE DY COMMR OF INCOME TAX CIR 3(3), MUMBAI (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO. AAACS 5758E AAACS 5758E AAACS 5758E AAACS 5758E ASSESSEE BY SH JAYESH WEDIA REVENUE BY SH C G K NAIR DT.OF HEARING 1 ST DEC 2011 DT OF PRONOUNCEMENT 20 TH , JAN 2012 ORDER ORDER ORDER ORDER PER PER PER PER VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO, , , , JM JMJM JM THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE TWO SEPARATE ORDERS DATED 24.5.2010 AND 31.12.2009 OF THE CIT(A) FOR THE ASSESSMENT YEARS 2006-07 AND 07-08 RESPECTIVELY. 2 FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS: (1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING RS.3,23,098 UNDER SECTION 14A READ WITH RULE 8D OF THE INCOME TAX ACT. THE ACTION IS U NJUSTIFIED AND UNWARRANTED. (2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING DEPRECIATION OF RS .24,66, 168 CLAIMED ON BUILDING AND PLANT & MACHINERY ON THE GROUND THA T THE ASSETS WERE NOT USED DURING THE YEAR ALTHOUGH IT REMAINS P ART OF BLOCK OF 2 RISHIROOP RUBBER INTERNATIONAL LTD ASSETS. THE ACTION IS UNJUSTIFIED AND UNWARRANTED A ND AGAINST THE DECISIONS OF VARIOUS TRIBUNALS AND HIGH COURTS. 3 GROUND NO.1 IS REGARDING THE DISALLOWANCE U/S 14A R.W.R 8D. 5 WE HAVE HEARD THE LD AR AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORDS. SINCE THE ASSESSMENT YEAR INV OLVED IN THE INSTANT CASE IS 2006-07 AND RULE 8D IS APPLICABLE ONLY PROSPECTIVEL Y I.E. FROM ASSESSMENT YEAR 2008-09 AS HELD BY THE HONBLE HIGH COURT; THEREFOR E, THE MATTER NEEDS TO GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN THE LIGHT OF THE LATEST DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ BOYCE MFG CO LTD VS DCIT REPORTED IN 328 ITR 81. WE , THEREFORE, RESTORE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER FOR FR ESH ADJUDICATION IN THE LIGHT OF THE DECISION CITED SUPRA AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6 GROUND NO.2 IS REGARDING DISALLOWANCE OF DEPRECIA TION ON PLANT AND MACHINERY. 6.1 THE BRIEF FACTS RELEVANT TO THE CONTROVERSY ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING CHLORINATE D RUBBER BY USING A SOLVENT CALLED CARBON TETRA CHLORIDE (CTC). IN PURSUANT TO THE INTERNATIONAL TREATY ON ENVIRONMENT NAMED MONTREAL PROTOCOL, THE MEMBER C OUNTRIES HAVE AGREED TO CONTROL AND CURTAIL USE OF CERTAIN OZONE DEPLETING SUBSTANCES (ODS). THE SOLVENT CALLED CARBON TETRA CHLORIDE (CTC) USED BY THE ASSESSEE WAS IDENTIFIED AS ODS AND ACCORDINGLY THE ASSESSEE ENTERED INTO AN AGREEMENT WITH IDBI, AN AGENCY APPOINTED BY THE WORLD BANK FOR DISBURSEMENT OF GRANT. 6.2 THE ASSESSEE STOPPED THE CHLORINATED RUBBER PRO DUCTION PERMANENTLY AND DISCARDED THE PLANT AND MACHINERY USED FOR MANUFACT URING OF CHLORINATED RUBBER AND IN LIEU RECEIVED A GRANT OF RS. 15.60 CRORES. T HE ASSESSEE CLAIMED 3 RISHIROOP RUBBER INTERNATIONAL LTD DEPRECIATION ON THE FACTORY BUILDING AND PLANT & MA CHINERY FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER OBSERVED IN P ARAS 5.1 TO 5.3 OF HIS ORDER AS UNDER: 5.1 FROM THE ACCOUNTS IT IS OBSERVED THAT DURING T HE YEAR THE ASSESSEE HAS DISCARDED THE ENTIRE FACTORY IN PURSUANCE OF I MPLEMENTATION OF MONTREAL PROTOCOL. FURTHER, THE ASSESSEE COMPANY AH S RECEIVED AN AMOUNT OF RS. 156.60 CRORES AS COMPENSATION FOR DISCARDING THE PLANT. AS THE ENTIRE PLANT WAS DISCARDED, THEREFORE, PRIMA FACIE IT APPEARED THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM DEPRECIATION ON T HE ASSETS DISCARDED.. 5.2 VIDE ORDER SHEET NOTING DT 8.10.2008 THE ASSESS EE WAS ASKED TO EXPLAIN AS TO WHY THE CLAIM OF DEPRECIATION ON FACT ORY BUILDING AND PLANT & MACHINERY SHOULD NOT BE DISALLOWED. 5.3 IN RESPONSE, THE ASSESSEE VIDE ITS LETTER DATED 13.10.2008 HAS ACCEPTED THAT THEY ARE NOT ENTITLED TO CLAIM THE DE PRECIATION ON THE FACTORY BUILDING AND FACTORY PLANT & MACHINERY. THE ASSESSEE HAS FURNISHED A FRESH COMPUTATION OF INCOME WHEREIN THE CLAIM OF DEPRECIATION HAS BEEN DISALLOWED. THE SAME IS ACCEPTED. 6.3 ON APPEAL, THE CIT(A) OBSERVED THAT WHEN THE AS SESSEE FILED A REVISED COMPUTATION OF INCOME AND ACCEPTED WRONG CLAIM OF DEPRECIATION, THEN APPEAL DOES NOT LIE AGAINST AN ACCEPTED ADDITION. 7 BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITTE D THAT THE ASSESSEE IS ENTITLED FOR THE DEPRECIATION AS THE ENTIRE BLOCK O F ASSETS HAS NOT BEEN REMOVED. HE HAS FURTHER SUBMITTED THAT THE PLANT & MACHINERY AND FACTORY BUILDING WERE VERY MUCH IN EXISTENCE; THOUGH WERE NOT ACTUALLY U SED DUE TO CLOSURE OF THE MANUFACTURING ACTIVITY. THE ASSESSEE HAS CLAIMED D EPRECIATION ON BOTH THESE ASSETS UNDER INCOME TAX ACT IN VIEW OF THE CONCEPT OF BLOCK OF ASSETS. HE HAS FURTHER CONTENDED THAT UNDER THE CONCEPT OF BLOCK O F ASSET, DEPRECIATION HAS TO BE ALLOWED ON THE OPENING WRITTEN DOWN VALUE OF THE ENTIRE BLOCK FOR A PARTICULAR ASSESSMENT YEAR. THE BLOCK CONTAINS PL ANT & MACHINERY HAVE ALSO VARIOUS OTHER ASSETS, WHICH WERE USED DURING THE YE AR AND ON WHICH DEPRECIATION HAS BEEN GRANTED BY THE ASSESSING OFFICER. ONCE TH E ASSETS ARE PART OF THE BLOCK OF ASSETS, IT LOOSES ITS INDIVIDUAL COST OR WRITTEN DOWN VALUE IN A WAY IT LOOSES ITS 4 RISHIROOP RUBBER INTERNATIONAL LTD IDENTITY. THEREAFTER, DEPRECIATION IS ALLOWABLE ON THE ENTIRE BLOCK OF ASSETS. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT WHEN BOTH THE PLANT AND MACHINERY ARE PART OF BLOCK OF ASSETS COMPRISING VARIOUS OTHER AS SETS. HE HAS RELIED UPON THE FOLLOWING DECISIONS: I) DECISION OF HONBLE BOMBAY HIGH COURT IN THE CAS E OF G R SHIPPING IN IT APPEAL NO.598 OF 2009 DT 28.7.2009 II) DECISION OF HONBLE GUJARAT HIGH COURT IN T HE CASED OF SONAL GUM INDUSTRIES (322 ITR 542) III) DECISION OF DELHI HIGH COURT IN THE CASE OF YA MAHA MOTOR INDIA P LTD (328 ITR 297) IV) DECISION OF THE ITAT MUMBAI IN THE CASE OF UNTE X PRODUCTS P LTD (22 SOT 429) V) DECISION OF THE ITAT MUMBAI IN THE CASED OF SWAT I SYNTHETICS LTD (38 SOT 208) 7.1 ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT WHEN THE ASSETS IN QUESTION WERE DISCARDED AND THE ASSESSEE HAD ALREAD Y RECEIVED AN AMOUNT OF RS. 15.60 CRORES AS COMPENSATION, THEN THE DEPRECIA TION IS NOT ALLOWABLE. HE HAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER AND TH E CIT(A) HAVE RECORDED THE FACT THAT THE ASSESSEE IN THE REVISED COMPUTATION OF INCOME HAS ACCEPTED THE WRONG CLAIM OF DEPRECIATION MADE IN THE ORIGINAL RE TURN OF INCOME. THEREFORE, THE ASSESSEE CANNOT RAISE THIS ISSUE. HE HAS RELIED UPO N THE ORDERS OF THE LOWER AUTHORITIES. 8 WE HAVE CONSIDERED THE RIVAL CONTENTION AS WELL A S THE RELEVANT MATERIAL ON RECORD. IT IS AN ADMITTED FACT THAT THE ASSESSEE DISCARDED THE ASSETS IN QUESTION IN PURSUANCE TO THE INTERNATIONAL TREATY C ALLED MONTREAL PROTOCOL AND RECEIVED THE COMPENSATION OF 15.60 CRORES. ONCE THE ASSETS HAVE BEEN DISCARDED AND THE ASSESSEE HAS RECEIVED THE COMPENS ATION, THEN CLAUSE III OF SEC, 32(1) WOULD APPLY. FOR READY REFERENCE, WE QUO TE CLAUSE III AS UNDER: 5 RISHIROOP RUBBER INTERNATIONAL LTD 32. 32. 32. 32. (1) [IN RESPECT OF DEPRECIATION OF ( III ) IN THE CASE OF ANY BUILDING, MACHINERY, PLANT OR FURNITURE IN RESPECT OF WHICH DEPRECIATION IS CLAIMED AND ALLOWED UNDER CLAUSE ( I ) AND WHICH IS SOLD, DISCARDED, DEMOLISHED OR DESTROYED IN THE PREVIOUS YEAR (OTHER THAN THE PREVIOUS YEAR IN WHICH IT IS FIRST BROUGHT INTO USE ), THE AMOUNT BY WHICH THE MONEYS PAYABLE IN RESPECT OF SUCH BUILDING, MACHINE RY, PLANT OR FURNITURE, TOGETHER WITH THE AMOUNT OF SCRAP VALUE, IF ANY, FA LL SHORT OF THE WRITTEN DOWN VALUE THEREOF : PROVIDED PROVIDED PROVIDED PROVIDED THAT SUCH DEFICIENCY IS ACTUALLY WRITTEN O FF IN THE BOOKS OF THE ASSESSEE. 8.1 IT IS CLEAR THAT THE PROVISIONS OF SEC. 32(1)(I II) STIPULATE THE DEPRECIATION IN CASE OF THE ASSETS WHICH IS SOLD, DISCARDED, DEMOLI SHED OR DESTROYED IS THE AMOUNT, WHICH IS DIFFERENT BETWEEN THE WRITTEN DOWN VALUE OF THE ASSET AND SCRAP VALUE. 8.2 IN THE CASE IN HAND, THE ASSESSEE HAS NOT CLAIM ED THAT THE COMPENSATION RECEIVED BY THE ASSESSEE IN LIEU OF THE DISCARDED A SSET IS SHORT OF ITS WRITTEN DOWN VALUE; THEREFORE, THE CLAIM OF THE ASSESSEE FO R DEPRECIATION ON THE WRITTEN DOWN VALUE OF THE DISCARDED ASSETS IS NOT PERMISSIB LE AS PER PROVISIONS OF SEC. 32 OF THE I T ACT. 8.3 THE DECISIONS RELIED UPON BY THE ASSESSEE ARE N OT APPLICABLE TO THE FACTS OF THE PRESENT CASE AND THEREFORE, IT WOULD NOT HEL P THE CASE OF THE ASSESSEE. FURTHER, THE ASSESSEE HAS WITHDRAWN THE CLAIM OF DE PRECIATION BY FILING REVISED COMPUTATION OF INCOME AS RECORDED BY THE CIT(A) IN PARA 6 OF HIS ORDER AS UNDER: 6. ON THIS ISSUE ALSO, THE DISALLOWANCE HAS BEEN A CCEPTED BY THE APPELLANT BY FILING REVISED COMPUTATION OF INCO9ME. AN APPEAL DOES NOT LIE AGAINST AN ACCEPTED ADDITION UNLESS THE APPELLANT C AN SHOW THAT THE ACCEPTANCE WAS ON THE BASIS OF WRONG INTERPRETATION OF LAW OF FACT. SUCH IS NOT THE CASE WITH THE APPELLANT. IN ITS WRITTEN SU BMISSION DT 20 TH MAY 2010, THE APPELLANT HAS ONLY DEALT ON THE MERITS OF THE DISALLOWANCE WITHOUT GIVING ANY EVIDENCE OF THE ACCEPTANCE AT TH E TIME OF ASSESSMENT PROCEEDINGS BEING MADE OUT OF WRONG APPRECIATION OF THE FACTS OR LAW. IN VIEW OF THE ABOVE, THE GROUND OF APPEAL IS DISMISSE D. 6 RISHIROOP RUBBER INTERNATIONAL LTD 9 IN VIEW OF THE ABOVE DISCUSSION AND THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY MERIT OR SUBSTANCE IN THE CLAIM OF THE ASSESSEE; ACCORDINGLY THE GROUND RAISED BY THE ASSESSEE IS DI SMISSED. 10 FOR THE AY 2007-08, THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS: (1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTI ON OF THE ASSESSING OFFICER IN DISALLOWING DEPRECIATION OF `.2,06,747 C LAIMED ON BUILDING AND PLANT & MACHINERY WHICH ARE FORMING PART OF BLOCK O F ASSETS. THE ACTION IS UNJUSTIFIED, ILLEGAL AND AGAINST THE PROVISIONS OF THE ACT AS WELL AS AGAINST THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE OF IN THE CASE OF G R SHIPPING AND HONBLE DELHI HIGH COURT I N THE CASE OF BHARAT ALUMUNIUM CO. LTD. (2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTI ON OF THE ASSESSING OFFICER IN DISALLOWING CLAIM OF `.4,82,2 13 BEING T HE OBSOLETE STOCK ACTUALLY WRITTEN-OFF. THE ACTION IS UNJUSTIFIED AND ILLEGAL. (3) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTI ON OF THE ASSESSING OFFICER IN RECASTING THE AUDITED PROFIT & LOSS ACCO UNT FOR THE PURPOSE OF CALCULATING MAT UNDER SECTION 1151B OF THE ACT. THE ACTION IS UNJUSTIFIED AND ILLEGAL AND AGAINST T HE RATIO LAID DOWN BY THE HONBLE APEX COURT AND JURISDICTIONAL HIGH COURT. (4) WITHOUT PREJUDICE TO GROUND NO. 3, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON THE FA CTS OF THE CASE IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN N OT CONSIDERING THE BOOK DEPRECATION OF ` 1,00,28,206 FOR CALCULATING BOOK PROFIT. THE ACTION IS ILLEGAL AND UNJUSTIFIED AS THE ACCOUNTS WERE PREPAR ED AS PER PART II & III OF SCHEDULE VI OF THE COMPANIES ACT AND DEPRECIATION H AS BEEN CLAIMED AS PER ACCOUNTING STANDARD AND PROVISIONS OF COMPANIES ACT AND THE ASSETS ARE OWNED AND IN EXISTENCE AS ON THE BALANCE SHEET DATE. (5) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTI ON OF THE ASSESSING OFFICER IN LEVYING INTEREST OF `.2,74,773 UNDER SEC TION 234B WHILE COMPUTING THE TAX LIABILITY UNDER MAT. 7 RISHIROOP RUBBER INTERNATIONAL LTD THE ACTION IS UNJUSTIFIED AND ILLEGAL AND AGAINST T HE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SNOWCHEM I NDIA LIMITED (313 ITR 170). (6) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN NOT CONSIDERING THE WRITTEN SUBMISSIONS DATED 19/12/2009 ALONG WITH VARIOUS DOCUMENTS, ATTA CHMENTS CONSISTING OF 132 PAGES FILED BEFORE HIM WHILE DISPOSING OFF T HE APPEAL. THE ACTION IS UNJUSTIFIED, ILLEGAL AND AGAINST THE PRINCIPAL OF N ATURAL JUSTICE. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S EVEN NOT CONSIDERED THE DIRECT DECISION OF JURISDICTIONAL HI GH COURT WHILE DISPOSING OFF GROUND NO. 1 AND 5 OF THE APPEAL. 11 GROUND NO.1 IS REGARDING DEPRECIATION ON FACTOR Y AND PLANT & MACHINERY. 12 THIS GROUND IS COMMON AS IN THE AY 2006-07. THER EFORE, IN VIEW OF OUR FINDINGS FOR THE AY 2006-07, THIS GROUND OF THE ASS ESSEE IS DISMISSED. 13 GROUND NO.2 IS REGARDING DISALLOWANCE OF CLAIM O F OBSOLETE STOCK. 13.1 DURING THE YEAR THE ASSESSEE HAS WRITTEN OFF T HE STOCK VALUE OF `. 4,82,213/- DECLARING THE SAME AS OBSOLETE STOCK. THE ASSESSING OFFICER FOUND THAT THE INVENTORY WAS NOT ACTUALLY TAKEN OUT AND THE SAME WAS CONTINUED IN THE POSSESSION OF THE ASSESSEE DURING THE YEAR. THE ASSESSING OFFICER FURTHER NOTED THAT THE BOARD RESOLUTION DECLARING THE SAID ASSET AS OBSOLETE WAS PASSED ON 29 TH JUNE 2007 WHICH IS AFTER THE CLOSING OF THE ACCOUN TING PERIOD. THE ASSESSING OFFICER HAS ALSO TAKEN NOTE OF THE FACT THAT THE PERMISSION OF THE EXERCISE AUTHORITY TO DISPOSES OFF WAS NOT TAKEN UP TO THE END OF THE PREVIOUS YEAR. ACCORDINGLY, BY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS HERDILLA CHEMICALS LTD REPORTED IN 225 ITR 532, THE ASSESSING OFFICER HELD THAT THE CONCERNED STOCK NEI THER SOLD NOR OTHERWISE DISPOSED OFF BY THE ASSESSEE BUT WAS MERELY WRITTEN OFF IN THE BOOKS OF ACCOUNT WOULD NOT ENTITLED THE ASSESSEE TO CLAIM THE SAME A S WRITTEN OFF STOCK. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFF ICER BEFORE THE CIT(A). THE 8 RISHIROOP RUBBER INTERNATIONAL LTD CIT(A) DID NOT FIND ANY MERIT IN THE CLAIM OF THE A SSESSEE AND CONCURRED WITH THE VIEW TAKEN BY THE ASSESSING OFFICER . 14 WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. NOTHIN G HAS BEEN BROUGHT BEFORE US TO NEGATE THE FINDING OF THE FACT BY THE ASSESSING OFFICER THAT THE CLAIM OF THE ASSESSEE IS BASED ON MERELY ON THE BOOK ENTRIES AND THE ACTUAL STOCK WAS NOT DISPOSED OFF AND REMOVED FROM THE INVENTORY OF STOC K. FURTHER, WHEN THE DECISION TO DECLARE THE STOCK AS OBSOLETE AND WRITT EN OFF WAS TAKEN VIDE BOARD RESOLUTION DT 29.6.2007, THEN FOR THE AY UNDER CONS IDERATION THE CLAIM IS NOT MAINTAINABLE. 14.1 HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE FINDINGS OF THE LOWE R AUTHORITIES, QUA THIS ISSUE. 15 GROUND NOS 3 & 4 REGARDING MAKING ADJUSTMENTS OF DEPRECIATION FOR CALCULATING BOOK PROFIT. 15.1 THE FACTS RELATING TO THIS ISSUE IS COMMON AS TO THE DEPRECIATION CLAIMED BY THE ASSESSEE ON DISCARDED ASSETS AS RECORDED IN PARA 6 OF THIS ORDER; THEREFORE, THE SAME ARE NOT REPRODUCED FOR THE SAKE OF BREVITY. WHILE COMPUTING THE BOOK PROFIT, THE ASSESSEE HAS CLAIMED THE DEPRE CIATION ON THE BUILDING, PLANT & MACHINERY, WHICH WERE DISCARDED AS PER THE AGREEM ENT WITH IDBI ON IMPLEMENTATION OF MONTREAL PROTOCOL. THE ASSESSING OFFICER MADE AN ADJUSTMENT OF THE AMOUNT OF BOOK DEPRECIATION SHOWN BY THE ASS ESSEE WHILE COMPUTING THE BOOK PROFIT U/S 115JB. 15.2 THE ASSESSEE CHALLENGED THE ACTION OF THE AO B EFORE THE CIT(A). THE CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND C ONFIRMED THE ACTION OF THE ASSESSING OFFICER. 9 RISHIROOP RUBBER INTERNATIONAL LTD 16 BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT AS PER THE ACCOUNTING STANDARD 6 (AS-6) OF DEPRECIATION ACCOUN TING, THE DEPRECIATION HAS BEEN DEFINED AS MEASURE OF WEARING OUT, CONSUMPTION OR OTHER LOSSES OF VALUE OF A DEPRECIABLE ASSET ARISING FROM USE, EFFLUXION OF TIME OR OBSOLESCENCE THROUGH TECHNOLOGY AND MARKET CHANGES. THUS, THE LD AR HAS SUBMITTED THAT DEPRECIATION AS PROVIDED UNDER AS-6, THE DEPRECIATION INCLUDES P ROPORTIONATE AMOUNT OF COST OF THE ASSET DUE TO WEARING OUT BY EFFLUXION OF TIM E AND EVEN IF THE ASSET IS NOT USED, THE DEPRECIATION IS REQUIRED TO BE PROVIDED F OR WEARING OUT OF THE ASSET DUE TO EFFLUXION OF TIME. HE HAS FURTHER CONTENDED TH AT WHEN THE DEPRECIATION WRITTEN DOWN IN ACCORDANCE WITH THE PROVISIONS OF P ART II & III OF SCHEDULE VI OF THE COMPANIES ACT AND AS-6, THEN, THE ACCOUNTS SO PREPARED IN ACCORDANCE WITH PARTS II & III OF SCHEDULE VI OF COMPANIES ACT AND CERTIFIED BY THE AUDITORS AND ADOPTED BY THE SHAREHOLDERS AT THE ANNUAL GENERAL M EETING, THE ASSESSING OFFICER CANNOT MAKE ANY ADJUSTMENT IN THE COMPUTA TION OF BOOK PROFITS U/S 115JB EXCEPT FOR THE ITEMS LISTED IN EXPLANATION (1 ) OF SEC.115JB-II OF THE ACT AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF AP OLLO TYRES LTD VS CIT REPORTED IN 255 ITR 273. HE HAS ALSO RELIED UPON T HE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KINETIC MO TORS CO LTD REPORTED IN 262 ITR 330 AND SUBMITTED THAT WHEN THE DEPRECATION WAS ACT UALLY DEBITED TO THE P&L ACCOUNT AND CERTIFIED BY THE AUDITORS, IT WAS NOT P ERMISSIBLE FOR THE ASSESSING OFFICER TO MAKE ANY ADJUSTMENT WHILE COMPUTING THE BOOK PROFITS U/S 115JB. 16.1 ON THE OTHER HAND, THE LD DR HAS SUBMITTED THA T WHEN THE ASSET IS NO MORE IN EXISTENCE AND THE CLAIM OF THE ASSESSEE IS BOGUS, THEN IT CANNOT BE SAID THAT THE DEPRECIATION ACCOUNTED BY THE ASSESSEE IS AS PER PART II & III OF SCHEDULE VI OF THE COMPANIES ACT. HE HAS RELIED UPON THE ORD ERS OF THE LOWER AUTHORITIES. 10 RISHIROOP RUBBER INTERNATIONAL LTD 17 WE HAVE CONSIDERED THE RIVAL CONTENTION AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE MOOT QUESTION ARISES IS WHETHER THE ASSESSING OFFICER WHILE COMPUTATION BOOK PROFIT U/S 115JB CAN LOOK INTO DE PRECIATION PROVIDED IN THE BOOKS OF ACCOUNT ON THE ASSETS WHICH HAVE ALREADY B EEN DISCARDED AND NOT IN USE BECAUSE OF THE ACTIVITY PERMANENTLY CLOSED, IS PERMITTED AS PER THE AS-6 AS WELL AS UNDER THE PROVISIONS OF COMPANIES ACT. THE CIT(A) HAS DEALT WITH THE ISSUE IN PAGES 5 & 6 AS UNDER IN THE ASSESSMENT ORDER THE AO HAS CLEARLY MENTION ED THAT AS PER THE AGREEMENT DATED 14/07/2005 ENTERED BETWEEN THE ASSE SSEE AND THE IDBI FOR IMPLEMENTATION OF MONTREAL PROTOCOL THE ASSESSE E IS UNDER OBLIGATION TO DESTROY THE ENTIRE SET UP BEFORE 3 1/12/2005 OR BY THE EXTENDED DATE. HENCE THE ASSETS CANNOT BE USED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS AND IN CASE THE ASSETS ARE USED, THE ASSES SEE WOULD BE LIABLE TO BE PENALIZED. TO COMPENSATE THE ASSESSEE A COMPENSA TION OF `. 15.60 CRORES HAVE BEEN PAID TO THE COMPANY. AS DISCUSSED IN THE GROUND NO.1 ABOVE THAT THE ASSETS HAVE BEEN PUT TO USE FOR THE PURPOSE OF BUSINESS DURING THE YEAR UNDER CONSIDERATION, THEREFORE NO D EPRECIATION CLAIM OF FACTORY BUILDING AND PLANT D MACHINERY CAN BE ALLOW ED TO THE APPELLANT. SINCE, THE CLAIM OF DEPRECIATION WAS A WRONG CLAIM MADE BY THE APPELLANT HENCE, PROFITS WERE WRONGLY CALCULATED TO THAT EXTE NT IN THE ACCOUNTS OF THE APPELLANT. AS THE PROFITS WERE NOT CORRECTLY CO MPUTED AS PER LAW THEREFORE I HOLD THAT THE AC WAS JUSTIFIED IN MAKIN G ADJUSTMENTS TO THAT EXTENT IN THE NET PROFIT DECLARED BY THE APPELLANT FOR THE PURPOSE OF COMPUTING BOOK PROFIT U/S. 115JB OF THE ACT. AS REGARDING THE CLAIM OF THE APPELLANT THAT THE NE T PROFIT AS PER THE P&L ACCOUNT ONCE ADOPTED BY THE SHARE-HOLDERS CANNOT BE DISTURBED IN VIEW OF THE HONBLE APEX COURT DECISION GIVEN IN THE CASE O F APOLLO TYRES LTD. 255 ITR 273. IN THIS REGARD I WOULD LIKE TO OBSERVE THA T IF THIS ANALOGY OF THE APPELLANT IS FOLLOWED IN EVERY CASE THEN IT WILL RE NDER THE PROVISIONS OF THE I.T. ACT INFRUCTUOUS. FURTHER, I WOULD LIKE TO OBSE RVE THAT THE DECISION OF THE HONBLE APEX COURT WAS BASED ON DIFFERENT FACTS WHE RE THERE WAS NO SUCH ISSUE OF ANY PRIMA FADE WRONG CLAIM OF ANY DEDUCTIO N, MORE SO OF ANY SUCH WRONG CLAIM OF DEPRECIATION U/S. 32 WHERE THE COMPA NY UNDER MANDATORY LAW WAS FORCED TO SHUT DOWN ITS MANUFACTURING ESTAB LISHMENT. FURTHER, WITH THE PASSAGE OF TIME THERE IS ALSO DIMINUTION I N THE VALUE OF THE SAID ASSETS EVEN THOUGH THEY ARE NOT USED FOR THE PURPOS E OF BUSINESS OF THE ASSESSEE DURING THE YEAR AND AS SUCH THE SAID ADDIT ION WOULD ALSO BE COVERED BY CLAUSE (I) INSERTED UNDER EXPLANATION -1 OF SECTION 115JB AFTER THE DECISION OF THE HONBLE APEX COURT GIVEN IN THE CASE OF APOLLO TYRES LTD. 255 ITR 273. HENCE, THE ASSESSING OFFICER WAS FULLY JUSTIFIED IN ADDING BACK THE DEPRECIATION CLAIMED ON THE FACTORY BUILDI NG AND ON PLANT & MACHINERY. ACCORDINGLY, THE CONTENTIONS RAISED BY T HE APPELLANT IN THIS REGARD ARE REJECTED. 11 RISHIROOP RUBBER INTERNATIONAL LTD 17.1 ONCE THE ASSESSEE CLOSED THE FACTORY THEN THE DECISION OF THE ASSESSEE TO BOOK THE DEPRECIATION OF DISMANTLED ASSETS HAS TO B E DECIDED AS PER THE PROVISIONS OF COMPANIES ACT AS WELL AS AS-6. THE FU NDAMENTAL PRINCIPLE FOR PROVIDING DEPRECATION ON ASSET IS DIMINUTION IN THE VALUE OF THE ASSETS DUE TO WEAR AND TEAR AS A RESULT OF USE OR RETAIN FOR B USINESS OF THE ASSESSEE. THUS, UNDERLINE RULE FOR DEPRECIATION IS USE OR RETAIN OF ASSETS FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. WHEN THE ASSET HAS BEEN D ISCARDED AND DISMANTLED, THEN IN THE ABSENCE OF PHYSICAL EXISTENCE OF THE US EFUL ASSETS, MERE RETENTION OF THE ASSETS IN THE BOOKS OF ACCOUNT WOULD NOT ENTITL ED FOR ANY DEPRECIATION EVEN UNDER THE PROVISIONS OF COMPANIES ACT. 17.2 EVEN, AS PER AS-6, THE DEPRECIATION HAS BEEN D EFINED AS MEASURE OF WEARING OUT, CONSUMPTION OR OTHER LOSS OF VALUE OF A DEPRECIABLE ASSET. THE SAID LOSS IS ARISING DUE TO USE, EFFLUX OF TIME OR OBSOL ESCENCE THROUGH TECHNOLOGY AND MARKET CHANGES. THEREFORE, AS-6 ALSO TALKS ABOUT TH E ALLOCATION OF THE VALUE OF THE ASSET DURING THE EXPECTED USEFUL LIFE OF THE AS SET. WHEN THE ASSET IS NO MORE IN USE OR IN EXISTENCE, THEN THE DEPRECIATION IS NO T REQUIRED TO BE BOOKED. THEREFORE, PRIMA FACIE BOOKING THE DEPRECIATION ON THE ASSETS, WHICH HAVE ALREADY BEEN DISCARDED AND DISMANTLED, IS NOT AS PE R THE PROVISIONS OF COMPANIES ACT OR AS PER AS-6. THERE IS NO DOUBT TH AT, IF THE ACCOUNTS ARE MAINTAINED AS PER THE COMPANIES ACT AND CERTIFICATE D BY THE AUDITORS AND ACCEPTED OR APPROVED BY THE COMPANY IN THE ANNUAL G ENERAL MEETING, THEN THE ASSESSING OFFICER CANNOT TINKER WITH THE ACCOUNTS FOR COMPUTING BOOK PROFIT U/S 115JB EXCEPT THE ADJUSTMENTS AS PROVIDED UNDER THE PROVISIONS ITSELF. HOWEVER, WHEN IT IS APPARENT AND MANIFEST FROM THE FACTS THA T THE ACCOUNTS AND PARTICULARLY ON THE POINT OF DEPRECATION ARE NOT AS PER PART 1I & III OF SCHEDULE VI 12 RISHIROOP RUBBER INTERNATIONAL LTD OF THE COMPANIES ACT AS WELL AS AS-6 THE SAID ILLEG ALITY CANNOT BE ALLOWED IN THE GRAB OF LIMITED POWERS OF THE AO U/S 115JB. 17.3 SUB.SEC. (2) OF SEC. 115JB MANDATES THAT EVER Y ASSESSEE, BEING A COMPANY, SHALL FOR THE PURPOSES OF THIS SECTION PR EPARE ITS P&L ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE PROVI SIONS OF PARTS II & III OF SCHEDULE VI TO THE COMPANIES ACT, 1956. WE QUOTE SU B.SEC. (2) OF SEC. 115JB AS UNDER: (2) EVERY ASSESSEE, BEING A COMPANY, SHALL, FOR THE PURPOSES OF THIS SECTION, PREPARE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVAN T PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF PARTS II AND III OF SCHEDULE VI22 TO THE COMPANIES ACT, 1956 (1 OF 1956) : PROVIDED PROVIDED PROVIDED PROVIDED THAT WHILE PREPARING THE ANNUAL ACCOUNTS I NCLUDING PROFIT AND LOSS ACCOUNT, (I) THE ACCOUNTING POLICIES; (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT; (III) THE METHOD AND RATES ADOPTED FOR CALCULATING THE DEPRECIATION, SHALL BE THE SAME AS HAVE BEEN ADOPTED FOR THE PURP OSE OF PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT AND LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETING IN ACCORDANCE WITH THE PROVI SIONS OF SECTION 210 OF THE COMPANIES ACT, 1956 (1 OF 1956) : PROVIDED FURTHER PROVIDED FURTHER PROVIDED FURTHER PROVIDED FURTHER THAT WHERE THE COMPANY HAS ADOPTED OR ADOPTS THE FINANCIAL YEAR UNDER THE COMPANIES ACT, 1956 (1 OF 1956), WHICH IS DIFFERENT FROM THE PREVIOUS YEAR UNDER THIS ACT, (I) THE ACCOUNTING POLICIES; (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT; (III) THE METHOD AND RATES ADOPTED FOR CALCULATING THE DEPRECIATION, SHALL CORRESPOND TO THE ACCOUNTING POLICIES, ACCOUNTING S TANDARDS AND THE METHOD AND RATES FOR CALCULATING THE DEPRECIATION WHICH HAVE B EEN ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT FOR SUCH FINANCIAL YEAR OR PART OF SUCH FINANCIAL YEAR FALLING WITHIN THE RELEVANT PREVIOUS YEAR. 13 RISHIROOP RUBBER INTERNATIONAL LTD 17.4 IN COMPARISON TO SEC. 115J WHERE THE REQUIR EMENT OF PREPARATION OF THE ACCOUNTS WAS LIMITED AS TO PREPARE IN ACCORDANCE WI TH THE PROVISIONS OF PARTS II & III OF SCHEDULE VI OF THE COMPANIES ACT, THE REQU IREMENT U/S 11JB IS APART FROM PREPARATION OF ACCOUNTS AS PER PART II & III OF SCH EDULE VI OF THE COMPANIES ACT ALSO REQUIRES THAT ACCOUNTING POLICIES AND ACCOUNTI NG STANDARD ETC., ADOPTED FOR PREPARING THE ACCOUNTS SHALL BE THE SAME AS PER THE ACCOUNTING STANDARD LAID DOWN BEFORE THE COMPANY IN ITS ANNUAL GENERAL MEETI NG. WHEN THERE IS AN APPARENT AND TOTAL DEPARTURE FROM THE ACCOUNTING ST ANDARDS AS WELL AS PROVISIONS OF COMPANIES ACT WHILE PREPARING THE AC COUNTS INCLUDING P&L ACCOUNT, THEN IN THE MATTER OF TAXATION NOBODY EL SE THAN THE ASSESSING OFFICER HAS THE POWER TO EXAMINE THE SAME UNDER THE PROVIS IONS OF SEC. 115JB OF THE ACT. THIS VIEW OF OURS HAS BEEN FORTIFIED BY THE D ECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF RAIN COMMODITIES LTD. V . DEPUTY COMMISSIONER OF INCOME-TAX REPORTED IN 40 SOT 264 WHEREIN THE SPE CIAL BENCH HAS HELD AS UNDER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD AND THE CASE LAWS RELIED UPON B Y BOTH THE PARTIES. WE HAVE TAKEN INTO CONSIDERATION THE RATIO DECIDED OF ALL THE DECISIONS RELIED UPON BY THE RIVAL PARTIES. THE OMISSION OF REFERENC E TO SOME OF THE CASES IN THE ORDER IS EITHER DUE TO THEIR IRRELEVANCE OR TO RELIEVE THE ORDER FROM THE REPETITIVE NATURE OF THE DECISIONS. UNDER MINIM UM ALTERNATE TAX (MAT) PROVISIONS, THE ASSESSING OFFICER IS CONCERNED WITH THE ADJUSTMENTS TO BE MADE WITH THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT. ONE OF THE MOOT QUESTION RELEVANCE TO THE ISSUE BEFORE US IS WHETHER THE ASSESSING OFFICER HAS POWER TO ALTER THE NET PROFIT ? IN OUR CONSIDERED OPINION, YES. WE AGREE THAT IT IS SETTLED LAW THAT ASSESSING OFFICER HAS THE POWER TO ALTERNATE, THE NET PROFIT. IN THE FOLLOWIN G TWO CASES, THE ASSESSING OFFICER CAN REWRITE THE PROFIT AND LOSS ACCOUNT, I. E., TO SAY THAT ASSESSING OFFICER SHOULD RECALCULATE THE NET PROFIT AND THEN FOLLOW THE ADJUSTMENTS OF MAT AS USUAL: (1) IF IT IS DISCOVERED THAT PROFIT A ND LOSS ACCOUNT IS NOT DRAWN UP IN ACCORDANCE WITH PART II AND PART III OF SCHEDULE VI TO THE2 COMPANIES ACT. HOWEVER, THE ASSESSING OFFICER CANNO T DISTURB THE NET PROFIT AS SHOWN BY THE ASSESSEE WHERE THERE ARE NO SUCH ALLEGATIONS, FRAUD OR MISREPRESENTATION BUT ONLY A DIFFERENCE OF OPINI ON AS TO WHETHER A PARTICULAR AMOUNT SHOULD BE PROPERLY SHOWN IN THE P ROFIT AND LOSS ACCOUNT 14 RISHIROOP RUBBER INTERNATIONAL LTD OR IN THE BALANCE SHEET. (2) IF ACCOUNTING POLICIES , ACCOUNTING STANDARDS NOT ADOPTED FOR PREPARING SUCH ACCOUNTS AND METHOD, RATE OF DEPRECIATION WHICH HAVE BEEN INCORRECTLY ADOPTED FOR PREPARATION OF PROFIT AND 1059 ACCOUNT LAID BEFORE THE ANNUAL GENERAL MEETING. EXC EPT FOR THE ABOVE TWO CASES, THE ASSESSING OFFICER HAS NO POWER TO ALTER THE NET PROFIT SHOWN L THE COMPANIES FOR THE PURPOSE OF COMPUTING THE BOOK PROFIT. THUS, IT IS CLEAR THAT UNDER MAT, THE ASSESSING OFFICER SHOULD TAKE THE NET PROFIT AS COMPUTED BY THE ASSESSEE AND THEN MAKE THE ADJUSTME NTS UNDER SECTION 11 5JB OF THE ACT. IT IS COMMON THAT SOME COMPANIES FOLLOW AN ACCOUNTING YEAR UNDER THE COMPANIES ACT, 1956 WHICH IS DIFFERE NT FROM THE FINANCIAL YEAR UNDER INCOME-TAX ACT, 1961. THESE COMPANIES GE NERALLY PREPARE TWO SETS OF ACCOUNTS - ONE FOR COMPANIES ACT AND ANOTHE R FOR INCOME-TAX ACT. THE REASON BEING DIFFERENT ACCOUNTING POLICIES, STA NDARDS, DEPRECIATION METHODS AND RATES ARE ADOPTED IN TWO SETS OF ACCOUN T SO THAT HIGHER PROFIT IS REPORTED TO SHAREHOLDERS AND LOWER PROFIT FOR TH E INCOME-TAX AUTHORITIES. TO CURB THE ABOVE PRACTICE ONLY THIS RECALCULATION OF NET PROFIT UNDER MAT WAS INCORPORATED SO THAT THERE SHOULD BE A CONSISTE NCY IN ACCOUNTING POLICIES, STANDARDS, METHODS AND RATES OF DEPRECIAT ION WITHIN THE KNOWLEDGE OF INCOME-TAX AUTHORITIES. THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE O F CIT V. AKSHAY TRADING & AGENCIES (P.) LTD [2008] 304 ITR 401 THE QUESTION REFERRED TO THE HIGH COURT AND THE DECISION OF THE HIGH COURT, AS REPORTED ARE AS UNDER: C. WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE HONBLE INCOME-TAX APPELLATE TRIBUNAL WAS CORRECT I N UPHOLDING THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IN HOLD ING THAT THE CAPITAL GAINS OF RS. 19,74,489 ARE NOT TO BE TAKEN INTO ACC OUNT WHILE COMPUTING THE PROFITS LIABLE TO BE TAXED UNDER SECTION 11 5JA OF THE INCOME-TAX ACT, 1961 AND THAT THE DECISION OF THE HONBLE BOMBAY HI GH COURT IN CIT V. VEEKAYLAL LNVESTMENT CO. (P.) LTD. 249 ITR 597 WAS NOT APPLICABLE? INSOFAR AS QUESTION NO. OUR ATTENTION IS INVITED TO THE JUDGMENT OF THE SUPREME COURT IN APOLLO TYRES LTD V. C1T255 ITR 273 . THE QUESTION FRAMED THEREIN WHICH IS SIMILAR TO QUESTION NO. C HAS BEEN ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IN THE LIGHT OF THAT, THE QUESTION OF LAW AS FRAMED WOULD NOT ARISE. FROM THE ABOVE, IT IS DIFFICULT TO CONCLUDE THAT TH E DIVISION BENCH OF BOMBAY HIGH COURT IN THIS CASE HAS OVERRULED THE DE CISION OF ANOTHER DIVISION BENCH WITHOUT EVEN A LINE OF DISCUSSION. T HE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF VEEKAYLAL INVESTME NT CO. (P.) LTD. (SUPRA) HOLDING THAT THE BOOK PROFITS HAVE TO BE CO MPUTED IN ACCORDANCE WITH PARTS II AND IF OF SCHEDULE VI TO THE COMPANIE S ACT. THIS IS IN LINE WITH THE DECISION OF THE APEX COURT IN THE CASE OF APOLL O TYRES LTD. (SUPRA). THE MUMBAI HIGH COURT IN THE CASE OF AKSHAY TEXTILES TR ADING & AGENCIES (P.) LTD. (SUPRA) HAS HELD THAT THERE IS NO QUESTION OF LAW IN VIEW OF THE DECISION OF THE APEX COURT IN THE CASE OF APOLLO TY RES LTD. (SUPRA). FROM THIS WE ARE NOT ABLE TO INFER THAT THE DECISION OF THE BOMBAY HIGH COURT IN 15 RISHIROOP RUBBER INTERNATIONAL LTD THE CASE OF VEEKAYLAL INVESTMENT CO. (P.) LTD. (SUP RA), IS NO LONGER GOOD IN LAW. THEREFORE, THIS CASE DOES NOT HELP THE ASSESSE E. 17.5 A SIMILAR VIEW HAS BEEN TAKEN BY THE COORDINAT E BENCH OF THE TRIBUNAL IN THE CASE OF CIT VS BOMBAY DIAMOND REPORTED IN 33 DTR MUM(TRIB) 59 VIDE ORDER DATED 30.11.2009. 17.6 IT IS CLEAR FROM THE ABOVE DECISION THAT THE A SSESSING OFFICER HAS POWER TO EXAMINE WHETHER THE ACCOUNTS ARE MAINTAINED AS PER THE ACCOUNTING STANDARD AND POLICIES AS PROVIDED UNDER THE COMPANIES ACT. T HE SPECIAL BENCH OF THE TRIBUNAL, AFTER CONSIDERING THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. (SUPRA) AS WELL AS THE DECISIO N OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AKSHAY TEXTILES TRADING & AGENCIES (P.) LTD. REPORTED IN 304 ITR 401 & THE DECISION OF THE BOMBAY HIGH CO URT IN THE CASE OF VEEKAYLAL INVESTMENT CO. (P.) LTD. REPORTED IN 249 ITR 597 H AS TAKEN A VIEW THAT THE DECISION IN THE CASE OF VEEKAYLAL INVESTMENT CO. P. LTD. [SUPRA] HAS NOT BEEN OVERRULED BY THE DECISION IN THE CASE OF AKSHAY TEX TILE TRADING & AGENCIES PVT. [SUPRA]. ACCORDINGLY, WE DO NOT FIND ANY ERROR OR I LLEGALITY IN THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE. 18 THE LAST GROUND IS REGARDING LEVY OF INTEREST U/ S 234B ON MAT. 19 WE HAVE HEARD THE LD AR AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE FIND THAT TH IS ISSUE IS NOW COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF JOINT COMMISSIONER OF INCOME-TAX V. ROLTA INDIA LTD. REPO RTED IN 330 ITR 470(SC). ACCORDINGLY, THIS ISSUE IS DECIDED AGAINST THE ASSE SSEE AND IN FAVOUR OF THE REVENUE. 20 THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUN D AS UNDER: 16 RISHIROOP RUBBER INTERNATIONAL LTD WITHOUT PREJUDICE TO THE GROUND NUMBERS 3 & 4, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DETERMINING THE BOOK PROFIT OF RS.84,44,683 UNDER SECTION 11 5JB WITHOUT REDUCING THE FIGURE OF UNABSORBED DEPRECIATION OR UNABSORBED LOSS WHICHEVE R IS LOWER. THE ACTION IS UNJUSTIFIED AND CONTRARY TO THE PROVISION S OF THE ACT AS YOUR PETITIONERS HAS UNABSORBED DEPRECIATION AS PER BOOK S AS ON 31ST MARCH, 2007. 21 WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. SINCE THE ADDITIONAL GROUND HAS BEEN RAISED FOR THE FIRST TIME BEFORE US AND IT REQ UIRES VERIFICATION AND EXAMINATION AT THE LEVEL OF THE ASSESSING OFFICER; ACCORDINGLY, IN THE INTEREST OF JUSTICE, WE REMIT THIS ISSUE TO THE RECORD OF THE A SSESSING OFFICER FOR VERIFICATION AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER G IVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 20 IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THE 20 TH ,DAY OF JAN 2012. SD/ SD/- ( (( ( R K PANDA R K PANDA R K PANDA R K PANDA ) )) ) ACCOUNTANT MEMBER ( (( ( VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO ) )) ) JUDICIAL MEMBER PLACE: MUMBAI : DATED:20 TH , JAN 2012 RAJ* RAJ* RAJ* RAJ* 17 RISHIROOP RUBBER INTERNATIONAL LTD COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI