Allowability of reduction of depreciation as per Income-tax Rules while computing book profit under section 115J

The assessee, a private limited company, provided for depreciation in its Profit & loss account by adopting the rates specified in the Income Tax Rules and computed its “book profits” u/s 115J on that basis. The AO recomputed the book profits by adopting the depreciation rates as per Schedule XIV to the Companies Act as those were lower than the income-tax rates.

The CIT (A) & Tribunal upheld the stand of the assessee on the ground that Schedule XIV was not applicable to a private

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