- (1.) THE present income -tax appeal filed under Section 260A of the Income -tax Act, 1961 (hereinafter referred to as 'the Act'), has been admitted on the following sole substantial question of law arising out of the Tribunal's order dated December 30, 1999: Whether, on the facts and in the circumstances of the case, the learned Income -tax Appellate Tribunal was legally justified in holding that the assessee has charged depreciation on the revaluation amounts on assets as per guidance note on treatment of reserve created on revaluation of fixed assets issued by the Institute of Chartered Accountants of India whereas the applicability of the provisions of Section 115J of the Income -tax Act, 1961, and clause 7(2) of Part III of Schedule VI to Companies Act is attracted as to ascertain book profit after deducting the amount of depreciation in view of Circular No. 495 dated September 22, 1987 of the Central Board of Direct Taxes reported in [1987] 168 ITR 87,110 and Explanation (b) to Section 115J(1) of the Income -tax Act ?
(2.) BRIEFLY stated the facts in a nutshell are as follows: The revaluation of the land and building was done by the valuer in the financial year 1984 -85 raising the cost of land by Rs. 4,12,08,935 and that of the building by Rs. 2,73,88,274. The excess depreciation charged to the profit and loss account due to such revaluation comes to Rs. 9,95,569 for the relevant year 1990 -91. The assessing authority by assessment order dated November 30, 1992, added this depreciation of Rs. 9,95,569 to the book profit in order to work out the assessee's income liable to tax within the meaning of Section 115J of the Act.
(3.) THE order of the assessing authority was confirmed by the Commissioner of Income -tax (Appeals), Muzzafarnagar by order dated June 16, 1993. The said order increasing the book profit to the extent of Rs. 9,95,569 on depreciation was set aside by the Tribunal in favour of the assessee. Hence, the present appeal by the Revenue.;