Wednesday, October 15, 2008


THE Gujarat High Court, in a recent ruling, has held that an assessing officer (AO) cannot make addition to the income while working out the book profit for the purpose of minimum Alternate Tax- under section 115J on the Income Tax Act – with regard to the difference arising due to change in the method of depreciation adopted by the assessee. The assessee has changed his method of providing depreciation from Straight Line Method (SLM) to Written Down Value (WDV) method during the year. The AO was of the view that assessee was required to provide depreciation in its books as per rates provided in schedule of the companies Act and could not the WDV method as per the I-T Act . The Gujarat High Court has held the AO has limited power of making changes in the net profit while working out the book profit in terms of section 115J, as provided for in explanation to the said section and has limited jurisdiction to the specific extend provided in the explanation. Accordingly the court rejected the contention of the A.O.


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