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1 - 4 of 4 (0.35 seconds)Mcdowell And Company Limited vs Commercial Tax Officer, Nacharam ... on 14 March, 1996
"It may be clarified that the rates as contained in Schedule
XIV should be viewed as the minimum rates, and, therefore, a
company shall not be permitted to charge depreciation at rates
lower than those specified in the schedule in relation to assets
purchases after the date of applicability of the schedule.
However, if on the basis of a bona fide technological
evaluation, higher rates of depreciation are justified, they may
be provided with proper disclosures by way of a note forming
part of annual account." [Emphasis added by us.]
3.4.2.1) It is, therefore, obvious that under AS-6, higher rates
of depreciation for assets have to be based on bona fide
technological evaluation of the useful life of the depreciable
assets. For a bona fide technical evaluation, it is necessary
that the evaluation should be made by a competent person or
body having the requisite technical knowledge and expertise.
It is further necessary that such an evaluation leading to
I.T.A. No.1472/Del/2018 4
higher rate of depreciation is a bona fide evaluation,
especially when such an evaluation results in tax benefit for
the company. A self serving evaluation, which is not bona fide,
leading to claim of reduced tax burden for the Assessee will be
a colourable device within the meaning of the landmark
decision of Hon'ble Supreme Court in the case of McDowell
and Co. Ltd. vs. Commercial Tax Officer 154 ITR 148 (SC). A
colourable device to evade tax has to be rejected.
Section 115JB in The Income Tax Act, 1961 [Entire Act]
Dcit, Rewari vs M/S Nkb Infrastructure Pvt. Ltd.,, ... on 11 July, 2019
9. On perusal of the audit report of the Assessee-company, we
observe that the Independent Statutory Auditor has expressed
'qualified' opinion on the financial statement and one of the
qualifications relates to claim of loss on revaluation of assets in
question. The qualification of Auditor has the effect of stating that
book profits declared by the Assessee do not bear the trappings of
true and fair expression of 'statement of profit and loss'. This
being so, it cannot be said that book profits disclosed in the
financial statement is sacrosanct and assessee acquires
indefeasible right in the matter of its declaration of book profits.
Secondly, we also find merit in the plea of the Revenue that
notwithstanding the fact that 'loss on account of revaluation of
fixed asset' does not arise by way of provision for diminution in
the value of asset but an actual loss, such capital loss is not a
deductible loss in nature nevertheless. The expression 'income
defined under Section 2(24) of the Act does not include such
capital losses. The capital loss claimed on account of impairment
of assets, in our view, is liable to be adjusted for the purposes of
determination of book profit similar to the adjustment available in
respect of capital receipts not taxable under the normal provisions
of the Act. This view is supported by the decision of the Co-
ordinate Bench of ITAT in ITO vs. Ganesh Sagar Infrastructure
(P.) Ltd., (2022) 135 taxmann.com 313 (Ahmedabad).
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