DCIT CC 3(2), CENTRAL RANGE-3,MUMBAI, AIR INDIA BUILDING, NARIMAN POINT vs. AARTI DURGS LIMITED, SION (E)

Assessee by : Shri S. S. Nagar & Shri Vipul Jain Revenue by : Dr. K. R. Subash & Shri Ram Krishn Kedia Date of Hearing 31.12.2024 Date of Pronouncement 29.01.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- These appeals are filed by the revenue against the orders of the Learned Commissioner of Income-tax (Appeals), Mumbai-51/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 21.08.2023 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2013-14, 2014-15 & 2015-16.

3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai 2. The revenue has raised following grounds of appeal: AY 2013-14

1. "On the facts and circumstances of the case, the Ld. CIT(A) erred in restricting the disallowance u/s 14A of the Income Tax Act r.w.r. 8D(2) (iii), to the extent of exempt income received by the assessee during the year under consideration without appreciating the Circular No.5 of 2014 dated 11.02.2014 of CBDT and to this effect even an amendment was made by Finance Act, 2022 by way of insertion of Explanation to Section 14A of the Income Tax Act, 1961.

2. "On the facts and circumstances of the case, the Ld. CIT(A) erred in holding that the assessee is entitled to claim 10% additional depreciation in the year under consideration ignoring that there is nothing in the statute which allows carry forward of additional depreciation and thus there cannot be any presumption that unless it is specifically denied, carry forward has to be allowed ". 3. "On the facts and circumstances of the case, the Ld. CITIA) erred in holding that the expenditure incurred by the assessee was a normal business expenditure towards sale of products and hence it is allowable as revenue expenditure ignoring the fact that the expenditure incurred towards obtaining "Certificate of Suitability (COS)" and filing of "Drug Master File (DMF)" are capital in nature as these expenses give enduring benefit to the business of the assessee spread over several years and therefore the Ld CIT(A) ought to have held it as capital in nature". 4. "On the facts and circumstances of the case, the Ld.CIT(A) erred in Scheme (FMS)" and "Focus Product Scheme (FPS)" as capital receipts, claims of which have been made in appellate stage by way of filing a letter, ignoring the fact that the assessee has never made the claim in the return of income filed u/s 139 for the year under consideration".

5. On the facts and circumstances of the case, the Ld. CIT(A) erred in treated the 2,54,28,863/-. 6. "On the facts and circumstances of the case, the Ld CIT(A) erred in treating the SHIS, FMS and FPS as capital receipts ignoring the findings of the Assessing Officer in the remand report, wherein the AO has strongly objected the admission of fresh claims". 7. "On the facts and circumstances of the case, the Ld CIT(A) erred in treating the SHIS, FMS and FPS as capital receipts ignoring the ratio laid down in the decision of the Hon'ble Supreme Court in the case of M/s Goetze India Ltd". 8. "On the facts and circumstances of the case, the Ld.CIT(A) erred in ignoring the amendment in Finance Act, 2015 w.e.f. 01.04.2016 which ultimately culminated into the taxing belt with the due insertion of sub-clause (xviii) in Section 2(24) of the IT Act, 1961 providing an inclusive definition of the expression income' under the tax law, which includes assistance in the form of a subsidy by the Central Government". 9. "On the facts and circumstances of the case, the Ld.CIT(A) erred in ignoring the fact that the consequential amendment in the statutory provisions calls for enforcing the very taxability of the subsidy or concessional grants received from the Government or any other constituted body".

3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai AY 2014-15 “1. On the facts and circumstances of the case, the Ld. CIT(A) erred in restricting the disallowance u/s 14A of the Income Tax Act r.w.r. 8D(2) (iii), to the extent of exempt income received by the assessee during the year under consideration without appreciating the Circular No.5 of 2014 dated 11.02.2014 of CBDT and to this effect even an amendment was made by Finance Act, 2022 by way of insertion of Explanation to Section 14A of the Income Tax Act, 1961." 2. "On the facts and circumstances of the case, the Ld. CIT(A) erred in holding that the assessee is entitled to claim 10% additional depreciation in the year under consideration ignoring that there is nothing in the statute which allows carry forward of additional depreciation and thus there cannot be any presumption that unless it is specifically denied, carry forward has to be allowed". 3. "On the facts and circumstances of the case, the Ld.CIT(A) is erred in holding that the expenditure incurred by the assessee was a normal business expenditure towards sale of products and hence it is allowable as revenue expenditure ignoring the fact that the expenditure incurred towards obtaining "Certificate of Suitability (COS)" and filing of "Drug Master File (DMF)" are capital in nature as these expenses give enduring benefit to the business of the assessee spread over several years and therefore the Ld CIT(A) ought to have held it as capital in nature". 4. "On the facts and circumstances of the case, the Ld.CIT(A) is erred in ignoring the ratio laid down by the Hon'ble Supreme Court in the case of Ballimal Navi Kishore Vs CIT reported in 224 ITR 414 (SC) in allowing the expenditure incurred towards obtaining COS and DMS as revenue expenditure". 5. "On the facts and circumstances of the case, the Ld.CIT(A) is erred in treating the "Focus Market Scheme (FMS)" and "Focus Product Scheme (FPS)"as capital receipts, claims of which have been made in appellate stage by way of filing a letter and ignoring the fact that the assessee has 7. "On the facts and circumstances of the case, the Ld CIT(A) is erred in treating the FMS and FPS as capital receipts ignoring the decision of the Hon'ble Supreme Court in the case of M/s Goetze India Ltd". 8. "On the facts and circumstances of the case, the Ld.CIT(A) is erred in ignoring the amendment in Finance Act, 2015 w.e.f 01.04.2016 which ultimately culminated into the taxing belt with the due insertion of sub- clause (xviii) in Section 2(24) of the IT Act, 1961 providing an inclusive definition of the expression 'income' under the tax law, which includes assistance in the form of a subsidy by the Central Government". 9. "On the facts and circumstances of the case, the Ld.CIT(A) erred in ignoring the fact that the consequential amendment in the statutory provisions calls for enforcing the very taxability of the subsidy or concessional grants received from the Government or any other constituted body".” AY 2015-16 “1. "On the facts and circumstances of the case, the Ld. CIT(A) erred in restricting the disallowance u/s 14A of the Income Tax Act r.w.r. 8D(2) (iii), to the extent of exempt income received by the assessee during the year under consideration without appreciating the Circular No.5 of 2014 dated 11.02.2014 3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai of CBDT and to this effect even an amendment was made by Finance Act, 2022 by way of insertion of Explanation to Section 14A of the Income Tax Act, 1961." 2. "On the facts and circumstances of the case, the Ld. CIT(A) erred in holding that the assessee is entitled to claim 10% additional depreciation in the year under consideration ignoring that there is nothing in the statute which allows carry forward of additional depreciation and thus there cannot be any presumption that unless it is specifically denied, carry forward has to be allowed". 3. "On the facts and circumstances of the case, the Ld.CIT(A) is erred in holding that the expenditure incurred by the assessee was a normal business expenditure towards sale of products and hence it is allowable as revenue expenditure ignoring the fact that the expenditure incurred towards obtaining "Certificate of Suitability(COS)" and filing of "Drug Master File (DMF)" are capital in nature as these expenses give enduring benefit to the business of the assessee spread over several years and therefore the Ld CIT(A) ought to have held it as capital in nature". 4. "On the facts and circumstances of the case, the Ld. CIT(A) is erred in ignoring the ratio laid down by the Hon'ble Supreme Court in the case of Ballimal Navi Kishore Vs CIT reported in 224 ITR 414 (SC) in allowing the expenditure incurred towards obtaining COS and DMS as revenue expenditure". 5. "On the facts and circumstances of the case, the Ld.CIT(A) is erred in treating the "Focus Market Scheme (FMS)" and "Focus Product Scheme (FPS)"as capital receipts, claims of which have been made in appellate stage by way of filing a letter and ignoring the fact that the assessee has never made the claim in the return of income filed u/s 139 for the year under consideration".

6. On the facts and circumstances of the case, the Ld CIT(A) erred in treating the SHIS, FMS and FPS as capital receipts ignoring the findings of the Assessing Officer in the remand report, wherein the AO has strongly objected the admission of fresh claims”

As identical issues are involved in these appeals, all three years are being disposed of by a common order. For this purpose, AY 2013-14 is taken up as the lead case.

AY 2013-14 3. Brief facts of the case are that the return declaring total income of Rs. 52,22,45,480/- was filed on 29.11.2024. The assessee is engaged in the business of manufacturing speciality chemicals and bulk drugs. The assessment was finalised u/s 143(3) on 21.09.2015 at an income of Rs. 53,97,69,010/- after making various disallowances.

3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai i. South Indian Bank Ltd. 130 taxman.com 178 (SC) ii. Reliance Utilities Ltd. 313 ITR 340 (Bom.) iii. HDFC Bank Ltd. 363 ITR 505 (Bom.) iv. PTC India Financial Services Ltd. 146 taxman.com 174 (Delhi) In the light of the above judicial pronouncements, Ld. AR argued that the decision of Ld. CIT(A) deserves to be upheld as it is in line with the settled legal position on the issue. On the other hand, Ld. DR has strongly relied on the order of Ld. AO. 5.3 We have heard the rival submissions and perused the material placed before us. It is an admitted fact that the assessee had earned dividend income of Rs. 81,792/- during the year which was claimed as exempt from tax. However, a suo moto disallowance of Rs. 43,756/- has also been made u/s 14A of the Act by the assessee. Further, the assessee has shown a total share capital of Rs. 12.10 cr. and general reserves of Rs. 195 crore as on 31.03.2013 in the audited balance sheet in support of its claim that investments were made out of own funds and not borrowed funds. On similar facts in earlier years, the issue has been decided in favour of the assessee by the co-ordinate benches. Accordingly, Ld. CIT(A) restricted the disallowance u/s 14A r.w. Rule 8D to the extent of total dividend income earned during the year i.e. Rs. 81,792/-, following the order of the co- ordinate bench for AY 2012-13. We find that the same issue has been decided for AY 2012-13 in with the following observations: 8. We have considered the rival submissions and perused the material available on record. In the present case, it is an admitted position that the interest-free funds 3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai available with the assessee in the form of share capital and reserves are more than the investments from which the assessee earned exempt income. We find that the Hon'ble Jurisdictional High Court in CIT Vs. Reliance Utilities & Power Ltd., [2009] 313 ITR 340 (Bom.), held that if funds are available with the assessee, which are sufficient to meet the investment, then the presumption would arise that the investment is made out of funds so available with the assessee. We further find that the Co-ordinate Bench of the Tribunal in assesee's own case in Aarti Drugs Limited Vs. Addl. CIT, in ITA No. 6783-84/MUM/2014, vide order dated 10/02/2017, for the assessment years 2010-11 and 2011-12, following the principle laid down by the Hon'ble Jurisdictional High Court in aforesaid decision directed the deletion of addition made u/s 14A r.w.r 8D(2) (ii). We find that the Hon'ble Jurisdictional High Court in Nirved Traders (P.) Ltd. Vs. Dy. CIT, I.T. Appeal No.149 of 2017, vide judgement dated 23.04.2019, has held that disallowance under section 14A of the Act cannot be more than exempt income. Thus, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. As a result, ground no.1, raised in Revenue's appeal is dismissed.” As the facts for the present year are identical, respectfully following the decision of the co-ordinate bench, we uphold the order of Ld. CIT(A) and dismiss the appeal of the revenue on this issue. The disallowance u/s 14A r.w Rule 8D is accordingly restricted to Rs. 81,792/-.

3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai 6.2 In appeal, Ld. CIT(A) relying on the decision of the co-ordinate bench for the earlier year i.e. AY 2012-13 held that the assessee is eligible to claim the remaining amount of depreciation during the year under consideration. Accordingly, he deleted the disallowance made by Ld. AO on this account. Revenue is in appeal against the order of Ld. CIT(A) before the Tribunal. 6.3 We have heard the rival submissions and perused the material available on record. It is seen that this is a recurring issue and is squarely covered by the decisions of the co-ordinate benches in the assessee’s own case for AYs 2010-11, 2011-12 & 2012-13. Specifically, in for AY 2012-13, the co-ordinate bench has held as under on this issue: 13. We have considered the rival submissions and perused the material available on record. We find that the Co-ordinate Bench of the Tribunal in assessee's own case cited supra, for the assessment years 2010-11 and 2011- 12 decided a similar issue in favour of the assessee, by observing as under: "3.4. We have heard the rival submissions and perused the material before us. We find that the FAA had disallowed the claim made by the assessee u/s.32(1)(iia), that she was of the opinion that it was available for one year only Le in Initial year, that the assessee had claimed 50% of the deduction as the reach line was used for a period less than 180 days pipe the last and that it had machine the balance deduction in the year under appeal karatand that in the case of Rittal India Pvt. Ltd. -No. 1(supra) the Hon'ble Karnataka High Court has dealt the identical issue. Facts of the case were that the assessee was an existing industrial undertaking, when it had acquired and installed new plant and machinery in the FY.2006- 07, that it had claimed 50% of additional 20% depreciation (i.e., 10% additional depreciation) u/s.32(1)(lia) of the Act in the corresponding AY.2007-08, that the new machinery was acquired after 01/10/2006, that the machinery was put to use for the purpose of business for a period of less than 180 days, that u/s. 32(1)(iia), read with the second proviso to section 32(1)(ii) of the Act, for the AY. 2007-08, the assessee was granted benefit of 50% of the 20% of the amount of depreciation allowable. Dispute 6783-83/M/14910-11(11-12- Aarti Drug Limited 5 arose with regard to the allowance of the balance 10% depreciation in the next AY. i.e. for the AY.2008-09. The AO, as well as the FAA disallowed the claim of the assessee, whereas the Tribunal, allowed the appeal of the assessee. Challenging the same, the Revenue filed appeal before the Hon’ble court raising the following two substantial questions of law:

3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai "(1) Whether the Tribunal is correct in extending the benefit of section 32(1)(ila) of the Act to the next AY. When the Income tax Act does not provide for such carryover, thereby violating the legal principles of 'casus omissus' which states that the courts cannot compensate for what the Legislature has omitted to enact? (il) Whether the Tribunal was correct in holding that additional depreciation allowed u/s.32(1)(lia) is a one-time benefit to encourage industrialisation and the relevant provisions has been construed reasonably and purposive without appreciating that the additional depreciation is allowed in the year of purchase and if in the year of purchase the assessee is eligible only for 50 per cent depreciation the balance 50 per cent cannot be carried forward for the subsequent year on the claim cannot be allowed in any other year?" The Hon'ble Court after referring to the provisions of section 32(1) dealt with the Clause (ila) of the section and held as under: 7. Clause (ila) of section 32(1) of the Act, as it now stands, was substituted by the Finance Act, 2005, applicable with effect from April 1, 2006. Prior to that, a proviso to the said clause was there, which provided for the benefit to be given only to a new industrial undertaking, or only where a new industrial undertaking begins to manufacture or produce during any year previous to the relevant AY.

8. The aforesaid two conditions, i.e., the undertaking acquiring new plant and machinery should be a new industrial undertaking, or that it should be claimed in one year, have been done away by substituting clause (ila) with effect from April 1, 2006. The grant of additional depreciation, under the aforesaid provision, is for the benefit of the assessee and with the purpose of encouraging industrialization, by either setting up a new industrial unit or by expanding the existing unit by purchase of new plant and machinery, and putting it to use for the purpose of business. The proviso to clause (ii) of the said section makes it clear that only 50 per cent of the 20 per cent would be allowable, if the new plant and machinery so acquired is put to use for less than 180 days in a financial year. However, it nowhere restricts that the balance per cent would not be allowed to be claimed by the assessee in the next AY.

9. The language used in clause (iia) of the said section clearly provides that "a further sum equal to 20 per cent, of the actual cost of such machinery or plant shall be allowed as deduction under clause (II)". The word "shall" used in the said clause is very significant. The benefit which is to be granted is per cent additional depreciation. By virtue of the proviso referred to above, only per cent can be claimed in one year, if plant and machinery is put to use for less than 180 days in the said financial year.

3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai This would necessarily mean that the balance 10 per cent additional deduction can be avalled of in the subsequent AY., otherwise the very purpose of insertion of clause (ila) would be defeated because it provides for per cent deduction which shall be allowed.

in favor of the assessee."

14. The learned DR could not show us any reason to deviate from the aforesaid decision and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the order passed by the Co- ordinate Bench of the Tribunal in assessee's own case cited supra, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue, which has followed the judicial precedent in assessee's own case. As a result, ground no.2 raised in Revenue's appeal is dismissed. As there is no change in the facts and circumstances in the current year also, respectfully following the order of the co-ordinate bench in the assessee’s own case (supra), we dismiss the appeal of the revenue on this issue and hold that the assessee is entitled to claim the balance of additional depreciation of Rs. 1,59,80,258/-in this year.

3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai 7. Ground No. 3 & 4: Disallowance of expenses for obtaining certificate of suitability and drug master file – Rs. 3,63,329/- 7.1 Brief facts are that the assessee had debited, under the head ‘sales promotion/other export expenses’, a sum of Rs. 3,63,329/- on account of expenditure incurred in obtaining a certificate of suitability (COS) and drug master file (DMF). Ld. AO held that the expenditure was capital in nature, and therefore, disallowed the same vide order u/s 143(3) on 21.09.2015. However, Ld. CIT(A) deleted the addition in view of the decision of the co-ordinate benches in the assessee’s own case for earlier years and held that the expenditure of Rs. 3,63,329/- incurred towards obtaining COS and DMF in compliance to regulations was a regular business expenditure related to the process of sale of products and hence it should be treated as revenue expenditure. The revenue is in appeal before us on this ground.

7.2 We have heard the rival submissions and perused the judicial pronouncements placed before us. It is seen that the issue is squarely covered in favour of the assessee by the orders of the co-ordinate benches for AY 2010- 11 as well as for AY 2012-13. The relevant portion of the order of the co-ordinate bench in for AY 2012-13 is reproduced as under:

“20. We have considered rival submission and perused the material available on record. We find that the Co-ordinate Bench of the Tribunal in assessee's own case in ACIT Vs. Aarti Drugs Limited, in vide order dated 3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai 14/01/2015, for the assessment year 2009-10 decided a similar issue in favour of the assessee by observing as under: "7. We have carefully considered the rival submissions and perused the record. Admittedly the expenditure incurred is not preproduction expenditure. The assessee has been marketing products elsewhere and thus it can be said that the assessee is already in the business of manufacture and sale of drugs. To expand the business in certain countries it has to obtain certificate of suitability as per the FDA Regulations, which is a part of the process of sale of its products. Similar expenditure was considered by Hon'ble Gujarat High Court, wherein it was held that such payments should be considered in the revenue field. No decision of any other High Court, wherein contrary view taken, was placed before us by the Revenue. Having regard to the circumstances of the case, we respectfully follow the decision of Hon'ble Gujarat High Court and hold that the view taken by Hon'ble Gujarat High Court is in accordance with law. In the result, ground No.1 of the Revenue is dismissed."

by the assessee were forwarded to the Ld. AO for the remand report by Ld. CIT(A) with regard to the admissibility of the additional claims. The Ld. AO relied upon to the decision of the Hon’ble Supreme Court in the case Goetze India Ltd. v/s CIT (2006) 157 taxmann.com

1. (SC) in support of his proposition that the assessee could not make a fresh claim otherwise than by filing a return or a revised return of income. However, Ld. CIT(A) observed that the above decision applied to the assessing officer and there was no bar on the appellate authority to admit an additional claim raised for the first time during the appellate proceedings. Accordingly, after considering the remand report and the submissions made by the assessee, Ld. CIT(A) observed that the co-ordinate bench had already decided the issue in the previous year in in favour of the assessee. He, therefore, held that the incentives received by the assessee towards FMS, FPS & SHIS on export during the year under consideration should be treated as capital receipt.

3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us.

8.2 We have heard the rival submissions and perused the material placed before us. It is seen that the issue is squarely covered by the decision of the co- ordinate bench in the assessee’s own case for AY 2012-13 in ITA No. 2503/Mum/2021. Relevant portion of the order supra is reproduced below:

3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai Further, the objective of subsidy under Status Holder Incentive Scrip (SHIS) is laid down in the policy as under: "With an objective to promote investment in upgradation of technology of some specified sectors as listed in Para 3.16.4 below, Status Holders shall be entitled to Incentive scrip @ 1% the FOB Value of exports made during 2009-10 and during 2010-11 of these specified sectors in the form of duty credit. This shall be over and above the duty credit scrip claimed/availed under this chapter."

3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai "8. As far as the question with regard to Focus Marketing Scheme was concerned, apparently the Central Government gave the subsidy to enhance indian export potential in the international market. It was not granted to meet the cost of expenditure to meet the competition of the Indian textile market. The ITAT took note of judgment in Ponni Sugars & Chemicals Ltd. (supra) and held that the amount was not an export incentive, but rather capital receipt and therefore, not taxable. This court is of the opinion that there is no infirmity with the reason.”

- AY 2015-16 11. As ground Nos. 1 to 9 for this year are identical to AY 2013-14, decision for AY 2013-14 hereinbefore shall apply mutatis mutandis for this year also in respect of these grounds 3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai 12. Ground No. 10 & 11: Allowance of deduction in computing Book Profit u/s 115JB(2). 12.1 Brief facts of the issue are that the company had adopted transition provision as per Schedule II to the new Companies Act, 2013, of computing depreciation. The depreciation of assets was directly reduced from Reserves as specified in the Act, instead of debiting to the P&L Account. Thus, in the book profit u/s 115JB the amount of depreciation was not reduced. Accordingly, the same was raised in the form of additional grounds before Ld. CIT(A) who sought a remand report from the Ld. AO on this issue. Ld. CIT(A) admitted the additional ground and held that the depreciation which was not debited to the P&L account can be subsequently reduced from the book profit u/s 115JB(2) of the Act. The revenue is in appeal against the order of Ld. CIT(A) on this issue before the Tribunal. 12.2 Ld. AR has made the following written submissions in this regard: “Explanation to section 129 of Companies Act, 2013, which says that, "For the purpose of this section, except where the context otherwise requires any reference to a balance sheet or profit and loss account shall include any notes thereon or documents annexed thereto, giving information required by this Act and allowed by this Act to be given in the form of such notes under this Act, Hon'ble Delhi High Court in Sain processing & Weaving Mills (P) Ltd (325 ITR 565), "To our minds, as long as the depreciation which is not charged to profit and loss account but is otherwise disclosed in the notes of the accounts, it would come within the ambit of the expression "shown" in the profit and loss account, as notes to the account, form part of the profit and loss account by virtue of a sub-section (6) of Section 211 of the Companies Act, 1956... (Annexure -- 9). (Kindly refer page no. 95 to 102 of PB). Covered by the recent Jurisdictional Tribunal decision in Sangam India Ltd (ITA No. 1490/Mum/19, dt 26.07.21) wherein it was held that, depreciation allowable under the Act was adjusted against the general reserve as against charging the same 3071 & 3068/Mum/2023 A.Y. 2013-14, 2014-15 & 2015-16 Aarti Drugs Limited, Mumbai against the profits of the company and therefore, book-profits u/s 115JB ought to have been computed after taking into the account the depreciation so adjusted against the general reserves in the Balance Sheet. From the above direct decision on the said issue, Appellant humbly request your honour to kindly allow the depreciation amount in computing the Book Profit u/s 115JB of the Act.” 12.3 We have heard the rival submissions and perused the material placed before us. We are of the considered view that the depreciation allowable under the Act, if it is not debited to the P&L account, has to be taken into account while computing books profit u/s 115JB of the Act as has been held by the Ld. AO and also in the in the decisions cited supra. We are, therefore, of the view that the order of Ld. CIT(A), on this issue, deserves to be upheld and the assessee is entitled to reduce the depreciation in computing the book profits u/s 115JB of the Act. Accordingly, the appeal of the revenue is dismissed.