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CASE NO.: Appeal (civil)  5420-5423 of 2002

PETITIONER: Malayala Manorama Co. Ltd.

RESPONDENT: Commissioner of Income Tax,Trivandrum

DATE OF JUDGMENT: 10/04/2008

BENCH: Ashok Bhan & Dalveer Bhandari

JUDGMENT: J U D G M E N T

Dalveer Bhandari, J.

       These appeals are directed against the judgment  passed by a Division Bench of the Kerala High Court at  Ernakulam on 13th November, 2001 whereby the High  Court has decided Income Tax Reference Nos.245, 259,  289 and 293 of 1999 by a common judgment.

       The main question which arose for consideration  before the Court below was: \023Whether in respect of a company  consistently charging depreciation in its  books of account at the rates prescribed in  the Income-tax Rules, the Income Tax  Officer has jurisdiction under section 115J  of the Income Tax Act, 1961 to rework net  profits by substituting the rates prescribed  in Schedule XIV of the Companies Act,  1956?\024

       The concept of a minimum tax on zero tax  companies was introduced under section 80VVA of the  Income Tax Act, 1961 (hereinafter referred to as \023the  1961 Act\024)  when a ceiling was placed on allowances by  the Finance Act, 1983 with effect from the Assessment  Year 1984-85.  However, the allowances unabsorbed,  because of the restriction imposed by the ceiling, were  carried forward, so that they could be absorbed in a  later year, if adequate profits are available.  Section  80VVA was dropped from the statute by the Finance  Act, 1987, with effect from A.Y. 1988-89, when  replaced Book Profits Tax by section 115J of the 1961  Act.   But it was materially different in one respect that  no part of the tax on book profits could be adjusted  against tax on regular assessment at a future date.

       It may be pertinent to mention that the Book  Profit Tax  was  abandoned  with  effect from A.Y.  1990-91 by the Finance Act, 1990.  It was re- introduced with a new name \023Minimum Alternate Tax\024  with effect from A.Y. 1997-98 under section 115JA.   

    For ready reference, we deem it appropriate to  reproduce section 115J of the 1961 Act as under:  \023115-J. Special provisions relating to

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certain companies.\027 (1) Notwithstanding  anything contained in any other provision of  this Act, where in the case of an assessee  being a company other than a company  engaged in the business of generation or  distribution of electricity, the total income,  as computed under this Act in respect of  any previous year relevant to the  assessment year commencing on or after the  1st day of April, 1988 but before the 1st day  of April, 1991 (hereafter in this section  referred to as the relevant previous year) is  less than thirty per cent of its book profit,  the total income of such assessee chargeable  to tax for the relevant previous year shall be  deemed to be an amount equal to thirty per  cent of such book profit.

(1-A) Every assessee, being a company,  shall, for the purposes of this section,  prepare its profit and loss account for the  relevant previous year in accordance with  the provisions of Parts II and III of Schedule  VI to the Companies Act, 1956 (1 of 1956).                     Explanation.\027For the purposes of this  section, \021book profit\022 means the net profit as  shown in the profit and loss account for the  relevant previous year prepared under sub- section (1-A), as increased by\027 (a)     the amount of income tax paid or  payable, and the provision  therefor; or (b)     the amounts carried to any  reserves other than the reserves  specified in Section 80-HHD or  sub-section (1) of Section 33-AC,  by whatever name called; or (c)     the amount or amounts set aside  to provisions made for meeting  liabilities other than ascertained  liabilities; or (d)     the amount by way of provision  for losses of subsidiary  companies; or (e)     the amount or amounts of  dividends paid or proposed; or (f)     the amount or amounts of  expenditure relatable to any  income to which any of the  provisions of Chapter III applies;  or  (g)    the amount withdrawn from the  reserve account under Section  80-HHD, where it has been  utilised for any purpose other  than those referred to in sub- section (4) of that section; or (h)     the amount credited to the  reserve account under Section  80-HHD, to the extent that  amount has not been utilised  within the period specified in sub- section (4) of that section; (ha) the amount deemed to be the

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profits under sub-section (3) of  Section 33-AC; if any amount referred to in clauses (a) to (f)  is debited or, as the case may be, the  amount referred to in clauses (g) and (h) is  not credited to the profit and loss account,  and as reduced by,\027 (i)     the amount withdrawn from  reserves other than the reserves  specified in Section 80-HHD or  provisions, if any such amount is  credited to the profit and loss  account:      Provided that, where this  section is applicable to an  assessee in any previous year  (including the relevant previous  year), the amount withdrawn from  reserves created or provisions  made in a previous year relevant  to the assessment year  commencing on or after the 1st  day of April, 1988 shall not be  reduced from the book profit  unless the book profit of such  year has been increased by those  reserves or provisions (out of  which the said amount was  withdrawn) under this  Explanation; or (ii)    the amount of income to which  any of the provisions of Chapter  III applies, if any such amount is  credited to the profit and loss  account; or (iii)   the amounts as arrived at after  increasing the net profit by the  amounts referred to in clauses (a)  to (f) and reducing the net profit  by the amounts referred to in  clauses (i) and (ii) attributable to  the business, the profits from  which are eligible for deduction  under Section 80-HHC or Section  80-HHD; so, however, that such  amounts are computed in the  manner specified in sub-section  (3) or sub-section (3-A) of Section  80-HHC or sub-section (3) of  Section 80-HHD, as the case may  be; or  (iv)   the amount of the loss or the  amount of depreciation which  would be required to be set off  against the profit of the relevant  previous year as if the provisions  of clause (b) of the first proviso to  sub-section (1) of Section 205 of  the Companies Act, 1956 (1 of  1956), are applicable. (2)     Nothing contained in sub-section (1)  shall affect the determination of the  amounts in relation to the relevant previous  year to be carried forward to the subsequent  year or years under the provisions of sub-

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section (2) of Section 32 or sub-section (3) of  Section 32-A or clause (ii) of sub-section (1)  of Section 72 or Section 73 or Section 74 or  sub-section (3) of Section 74-A or sub- section (3) of Section 80-J.\024                      A new Chapter XII-B containing section 115J was  inserted by the Finance Act, 1987 with effect from Ist  April, 1988.  This new section made provisions for levy  of minimum tax on book profits of certain companies.   The scope and effect of these provisions have been  elaborated in the following portion of the departmental  circular No.495, dated 22nd September, 1987:- "New provisions to levy minimum tax on  "book profit" of certain companies:  36.1 It is an accepted cannon of taxation to  levy tax on the basis of ability to pay.  However, as a result of various tax  concessions and incentives certain  companies making huge profits and also  declaring substantial dividends, have been  managing their affairs in such a way as to  avoid payment of income-tax.  36.2 Accordingly, as a measure of equity,  section 115J has been introduced by the  Finance Act. By virtue of the new provisions,  in the case of a company whose total income  as computed under the provisions of the  Income-tax Act is less then 30% of the book  profit computed under the section, the total  income chargeable to tax will be 30 % of the  book profit as computed. For the purposes  of section 115J, book profits will be the net  profit as shown in the profit and loss  account prepared in accordance with the  provisions of Schedule VI to the Companies  Act, 1956, after certain adjustments. The  net profit as above will be increased by  income-tax paid or payable or the provisions  thereof, amount carried to any reserve,  provision made for liabilities other than  ascertained liabilities, provision for losses of  subsidiary companies, etc., if the amounts  are debited to the profit and loss account.  Liabilities relating to expenditure which has  been incurred or which has accrued in  respect of expenses which are otherwise  deductible in computing income will not be  added back. The amount so arrived at is to  be reduced by- (i)     amounts withdrawn from  reserves, if any such amount is  credited to the profit and loss  account; (ii)    the amount of income to which  any of the provisions of Chapter  III applies, if any such amount is  credited to the profit and loss  account; and (iii)   the amount of any brought  forward losses or unabsorbed  depreciation whichever is less as  computed under the provisions of  section 205(1)(b) of the

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Companies Act, 1956, for the  purposes of declaration of  dividends. Section 205 of the  Companies Act requires every  company desirous of declaring  dividend to provide for  depreciation for the relevant  accounting year. Further, the  company is required under  section 205 to set off against the  profit of the relevant accounting  year, the depreciation debited to  the profit and loss account of any  earlier year(s) or loss whichever is  less.   36.3 Section 115J, therefore, involves two  processes. Firstly, an assessing authority  has to determine the income of the company  under the provisions of the Income-tax Act.  Secondly, the book profit is to be worked out  in accordance with the Explanation to  section 115J(1) and it is to be seen whether  the income determined under the first  process is less than 30 per cent of the book  profit.  Section 115J would be invoked if the  income determined under the first process is  less than 30 per cent of the book profit.\024            The whole purpose of section 115J was to tax a  company which had no taxable income, but showed a  book profit. For instance, a company which adopted  the method of straight-line depreciation (as it is  entitled to do under the Companies Act, 1956  (hereinafter referred to as \023the 1956 Act\024), or a  company which had not debited to its profit and loss  account, the capital expenditure on scientific research  and development which is fully deductible under  section 35 of the 1961 Act would be assessed to tax  under this section.                  It was submitted on behalf of the appellant that  in the profit & loss account the assessee has debited  depreciation at the rates prescribed by the Income-tax  Rules, 1962.  This has been the consistent practice of  the assessee throughout.  Section 211(2) of the 1956  Act mandates that every profit and loss account of a  company shall give a true and fair view of the profit or  loss of the company for the financial year and shall  comply with the requirements of Parts-II of Schedule  VI so far as they are applicable thereto. The accounts  of the assessee for the relevant assessment years  1988-89 and 1989-90 are audited under section 227 of  the 1956 Act.  The audit report confirms that the  accounts of the assessee represent a \023true and fair  view\024.  The accounts have further been passed and  approved by the general body of shareholders at the  Annual General Meeting.  The said accounts have been  filed with the Registrar of Companies and no objections  have been raised in relation to them.      It was further submitted that under section 115J  the assessee has the obligation to prepare his profit  and loss account as per Parts-II and III of Schedule VI  to the 1956 Act.  No dispute has been raised at any  stage of the proceedings by the revenue that the profit

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& loss account of the assessee is not in compliance  with the provisions of the 1956 Act, particularly  Schedule VI, Parts II and III.  In Schedule VI, there is  no reference to sections 205 and 350 or Schedule XIV  to the 1956 Act.         The appellant referred to Note 3 (iv) to Part II  (Requirements as to profit and loss account) of  Schedule VI to the 1956 Act which reads as under: \023The amount provided for depreciation,  renewals or diminution in value of fixed  assets.       If such provision is not made by means of a  depreciation charge, the method adopted for  making such provision.

If no provision is made for depreciation, the  fact that no provision has been made shall  be stated and the quantum of arrears of  depreciation computed in accordance with  section 205(2) of the Act shall be disclosed  by way of a note.\024

This makes it clear that Schedule VI to the 1956 Act  does not create any obligation on a company to provide  for any depreciation much less provides for  depreciation as per Schedule XIV to the Act.       It was also submitted by the appellant that it is a  long-standing accepted position by the Company Law  department that the rates of depreciation prescribed in  Schedule XIV are the minimum rates (See: Circular  No.2 of 1989 dated 7th March, 1989).  Paragraph 1 of  the said Circular reads as under: \0231.  Can higher rates of depreciation be  charged?  - It is stated that Schedule XIV  clearly states that a company should  disclose depreciation rates if they are  different from the principal rates specified in  the Schedule.  On this basis, it is suggested  that a company can charge depreciation at  rates which are lower or higher than those  specified in Schedule XIV.

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 purchased after the date of  applicability of the Schedule\005.\024       Moreover, note 5 of Schedule XIV contemplates that  rates may be different from the rates specified in the  said Schedule. This note reads as under: \0235.  The following information should also  be disclosed in the accounts:

(i)     depreciation methods used; and

(ii)    depreciation rates or the useful lives of  the assets, if they are different from the  principal rates, specified in the  Schedule.\024               

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    It was submitted by the learned counsel on behalf  of the appellant that this case is squarely covered by a  three-Judge Bench decision of this Court in Apollo  Tyres Ltd. etc. v. Commissioner of Income Tax,  Kochi etc. (2002) 9 SCC 1.  In this view of the matter,  we deem it proper to examine the Apollo Tyres\022s case  in detail.              In Apollo Tyres (supra), this Court examined the  object of introducing section 115J in the 1961 Act.   The Court relied on the budget speech of the then  Hon\022ble Finance Minister of India made in the  Parliament while introducing the said section. The  relevant portion of the speech is reproduced as under:     \023It is only fair and proper that the  prosperous should pay at least some tax.  The phenomenon of so-called \021zero-tax\022  highly profitable companies deserves  attention. In 1983, a new Section 80-VVA  was inserted in the Act so that all profitable  companies pay some tax. This does not  seem to have helped and is being  withdrawn. I now propose to introduce a  provision whereby every company will have  to pay a \021minimum corporate tax\022 on the  profits declared by it in its own accounts.  Under this new provision, a company will  pay tax on at least 30% of its book profit. In  other words, a domestic widely held  company will pay tax of at least 15% of its  book profit. This measure will yield a  revenue gain of approximately Rs.75 crores.\024     

The Court held that the purpose of introducing this  section was that the Income Tax Authorities were  unable to bring certain companies within the net of  income tax because these companies were adjusting  their accounts in such a manner as to attract no tax or  very little tax.  It is with a view to bring such of these  companies within the tax net that section 115J was  introduced in the 1961 Act with a deeming provision  which makes the company liable to pay tax on at least  30% of its book profits as shown in its own account.   For the said purpose, section 115J makes the income  reflected in the companies\022 books of accounts as the  deemed income for the purpose of assessing the tax.  If  we examine the said provision in the above  background, we notice that the use of the words \023in  accordance with the provisions of Parts II and III of  Schedule VI to the Companies Act was made for the  limited purpose of empowering the assessing authority  to rely upon the authentic statement of accounts of the  company.  While so looking into the accounts of the  company, an Assessing Officer under the Income Tax  Act has to accept the authenticity of the accounts with  reference to the provisions of the Companies Act which  obligates the company to maintain its account in a  manner provided by the Companies Act and the same  to be scrutinized and certified by statutory auditors  and will have to be approved by the company in its  general meeting and thereafter to be filed before the  Registrar of Companies who has a statutory obligation  also to examine and satisfy that the accounts of the  company are maintained in accordance with the  requirements of the Companies Act.  In spite of all

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these procedures contemplated under the provisions of  the Companies Act, the Court observed that it is  difficult to accept the argument of the Revenue that it  is still open to the Assessing Officer to rescrutinize this  account and satisfy himself that these accounts have  been maintained in accordance with the provisions of  the Companies Act.  The Court categorically held that:            \023The Assessing Officer while computing  the income under Section 115-J has only  the power of examining whether the books of  account are certified by the authorities  under the Companies Act as having been  properly maintained in accordance with the  Companies Act. The Assessing Officer  thereafter has the limited power of making  increases and reductions as provided for in  the Explanation to the said section. To put it  differently, the Assessing Officer does not  have the jurisdiction to go behind the net  profit shown in the profit and loss account  except to the extent provided in the  Explanation to Section 115-J.\024     

    Mr. Joseph Vellapally, learned senior counsel  appearing on behalf of the appellant reiterated that  this case is fully covered by detailed reasoning given by  this Court in the case of Apollo Tyres.  He further  submitted that the reasoning of this case has been  accepted in a large number of judgments of the High  Courts.          Mr. Vellapally placed reliance on a division bench  judgment of the Punjab & Haryana High Court in  Commissioner of Income Tax v. Sona Woolen Mills  Pvt. Ltd. (2007) 160 Taxman 22 and submitted that in  this case also the assessee had provided for  depreciation in its profit & loss account by adopting  the rates prescribed in the Income-tax Rules.  The  Assessing Officer claimed that the depreciation for the  purposes of section 115J was permissible as per  Schedule XIV to the Companies Act.  The High Court  relying upon the decision in Apollo tyres rejected the  view taken inter alia by the Kerala High Court in  Malayala Manorama (2002) 253 ITR 378.      Mr. Vellapally also submitted that the respondent  revenue has accepted the judgment delivered by the  High Court of Punjab & Haryana in the aforesaid  judgment and did not challenge the same by filing  Special Leave Petition before this Court.            Mr. Vellapally has also drawn our attention to the  division bench judgment of the Bombay High Court in  Kinetic Motors v. Deputy Commissioner of Income  Tax (2003) 262 ITR 33 and submitted that in this case  the Bombay High Court relied on the said judgment of  Apollo Tyres and held the issue in favour of the  assessee.   In this case, the Division Bench of the  Bombay High Court observed as under:      \023The short question that arises for  consideration in this tax appeal is whether it  is open to the Assessing Officer to make  adjustment to the book profits beyond what

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is authorised by the definition given in  Explanation to Section 115J of the Income- tax Act, if the accounts are prepared and  certified to be in accordance with Parts II  and III of Schedule VI to the Companies Act,  1956. In the case of Apollo Tyres Ltd. [2002]  255 JTR 273, the apex court held that while  computing the income under Section 115J  of the Income-tax Act, the Assessing Officer  has only power to examine whether the  books of account were certified by the  authorities under the Companies Act as  having been properly maintained in  accordance with the Companies Act. It is  further held that the Assessing Officer  thereafter has limited powers of making  increases and reductions as provided for in  the Explanation to the said section. The  apex court further held that the Assessing  Officer does not have the jurisdiction to go  beyond the net profits shown in the profit  and loss account, except to the extent  provided in the Explanation to Section 115J  of the Income-tax Act. In the instant case,  the accounts maintained by the assessee are  certified by the auditors. Under the  circumstances, the book adjustment made  by the Assessing Officer being contrary to  the decision of the apex court, question No.  1 is answered in the negative and in favour  of the assessee.       In view of our answer to question No.  1, question No. 2 becomes academic. It is  not in dispute that under the Companies  Act, 1956, both straight line method and  written down value method are recognised.  Therefore, once the amount of depreciation  actually debited to the profit and loss  account is certified by the auditors, then, as  per the decision of the apex court in the  case of Apollo Tyres Ltd. [2002] 255 ITR 273,  question No. 2 has to be answered in the  negative and in favour of the assessee.\024            Mr. Vellapally further placed reliance on  Commissioner of Income Tax v. Loyal Textiles Mills  Ltd. (2003) 261 ITR 307 (Madras), Commissioner of  Income Tax v. Thiroo Arooran Sugars Ltd. (2006)  152 Taxman 344 (Madras), Cochin Cadalas (P) Ltd. v.  Commissioner of Income Tax (2002) 125 Taxman 47  (Kerala) and Rajasthan Spinning & Weaving Mills v.  Deputy Commissioner of Income Tax (2006) 281 ITR  177 (Rajasthan).  All these judgments have been  decided on the basis of the ratio of the decision of this  Court in Apollo Tyres (supra).  He further submitted  that the respondent revenue has accepted the  decisions of the High Courts in all these cases and did  not challenge the same by filing Special Leave Petitions  before this Court.            Mr. Vikram Gulati, learned counsel appearing on  behalf of the respondent-Revenue submitted that in  the instant case three questions were raised before the  High Court, one at the instance of the Revenue and  two questions at the instance of assessee.  

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          The question raised by the revenue was:   \023Whether on the facts and in the  circumstances of the case, the tribunal was  right in upholding the order of the CIT  (Appeals) directing the assessing officer to  allow the claim of depreciation as per the  Income Tax Rules for the purposes of  computing the book profit under section  115J of the Companies Act?\024

    The questions raised by the assessee are as under:       \0231.  Whether on the facts and in the  circumstances of the case, the tribunal  was justified in upholding the finding  of the CIT (Appeals) that the proceeding  of the assessing authority dated  09.10.2002, was a valid order under  section 154 of the Income Tax Act?

2.      Whether on the facts and in the  circumstances of the case, the tribunal  was justified in law in upholding the  computation under section 115J  through the order passed on  09.10.1992?\024          

    Mr. Gulati submitted that the facts of this case  are that for the assessment years 1988-89, the  assessee filed a return declaring loss of Rs.1,12,293/-  and claimed the refund of Rs.8,62,730/- pre paid as  tax.  The Deputy Commissioner of Income Tax (Asst.),  Special Range, Kottayam rejected the figures returned  by the assessee and assessed the total income at  Rs.47,26,270/- and imposed a tax of Rs.25,99,448/-  as well as a surcharge of Rs.1,29,972/- totaling  Rs.27,29,420/-.  After adjusting advance tax paid, as  well as the TDS deducted, the Assessing Officer  created a total demand of Rs.26,83,327/-.  It is  relevant to mention here that since the provision of  section 80VV stood deleted with effect from 01.4.1988  the claim made under that section was rejected.            It was submitted that Chapter XII-B containing  \023special provisions relating to certain companies\024 was  introduced in the Income Tax Act by the Finance Act  1987 with effect from 01.4.1988.  From the  assessment year 1988-89, section 115J was  introduced into the 1961 Act, which replaced section  80VV of the Act. Section 115J provided that where the  total income of a company as computed under the  Income Tax Act in respect of any accounting year was  less than 30% of its book profit, as defined in the  explanation, the total income of the company,  chargeable to tax, shall be deemed to be an amount  equal to 30% of such book profit.  The whole purpose  of this section was to tax a company, which has no  taxable income, merely because it shows book profit.   Book profit as explained in this section meant the net  profit as shown in the profit and loss account for the  relevant previous year prepared under sub section (1A)  of section 115J as increased by the amounts referred

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to in clauses (a) to (ha) of the Act.  It should be noted  that the words \023prepared under sub-section (1A)\024 were  introduced by the Finance Act, 1989, with effect from  01.4.1989.                  Sub-section (1A) to section 115J reads as follows:      \023Every assessee, being a company,  shall, for the purposes of this section,  prepare its profit and loss account for the  relevant previous year, in accordance with  the provisions of Part II, and III of Schedule  VI to the Companies Act, 1956 (1 of 1956).\024

    This sub-section (1A) to section 115J of the 1961  Act would have application for the A.Y. 1989-90, which  is the subject matter of ITR Nos.289 and 293 of 1999.   But would have no application to the A.Y. 1988-89,  which is the subject matter of ITR Nos.245 and 259 of  1999.

    Explanation (ha) (iv) to section 115J, which would  be relevant to both assessment years 1988-89, as well  as 1989-90 and introduced w.e.f. 01.4.1989 reads as  follows:  \023(ha). The amount deemed to be the profits  under sub-section (3) of section 33AC:            if any amount referred to in clauses (a)  to (f) is debited or, as the case may be, the  amount referred to in clauses (g) and (h) is  not credited to the profits and loss account,  as as reduced by. \026             (i)        xxx             xxx             xxx            (ii)       xxx             xxx             xxx            (iii)      xxx             xxx             xxx            (iv) the amount of the loss or the  amount of depreciation which would be  required to be set off against the profit of the  relevant previous year as if the provisions of  clause (b) of the first proviso to sub-section  (1) of section 205 of the Companies Act,  1956 (1 of 1956) are applicable.\024

    Mr. Gulati further submitted that before the High  Court, it was argued by counsel for the revenue that  section 205 of the Companies Act, 1956 has been  legislatively incorporated into the Income Tax Act for  the purposes of section 115J and since this is a  legislation by incorporation, the said provision of the  Companies Act, 1956 has to be applied as indicated by  that provision in the Companies Act.  It was also  pointed out that in section 205 of the Companies Act,  it has been provided that for the purposes of  calculating depreciation under section 205(1), the  same could be provided to the extent specified under  section 350 of the Companies Act.  A reference to  section 350 of the Companies Act would show that the  amount of depreciation to be deducted shall be the  amount, calculated with reference to the written down

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value of the assets, as shown by the books of the  company at the end of the financial year expiring at  the commencement of the Act or immediately  thereafter and at the end of each subsequent financial  year and the rates specified in Schedule XIV to the  Companies Act.  Therefore, according to the revenue,  the calculation of depreciation in terms of the  Companies Act and Schedule XIV thereof becomes a  must, while assessing an assessee under section 115J  of the Income Tax Act.             Mr. Gulati further submitted that the question  raised in the case of Sona Woolen Mills Pvt. Ltd.  (supra) shows that the assessee was trying to claim  depreciation as per Income Tax Rules on the ground  that the same was based on the views expressed by the  then chairman of the CBDT in a departmental  publication.   It is clear that the views expressed by the  Chairman of the CBDT cannot override the Act and  have clearly to be rejected in case they are not  consistent with the Act.  He submitted that the Kerala  High Court in Commissioner of Income Tax v.  Dynamic Orthopaedics Pvt. Ltd. (2002) 257 ITR 446  as well as Malayala Manorama (supra) and the M.P.  High Court in the case of Commissioner of Income  Tax v. Vandana Rolling Mills Ltd. (1998) 234 ITR  693 have all held that for the purposes of section 115J  of the Act, depreciation could not be calculated as per  provisions of the Income Tax Rules.  Only the Gujarat  High Court in the case of Deputy Commissioner of  Income Tax v. Vardhman Fabrics (P) Ltd. (2002) 254  ITR 431 has upheld the view that the circular of the  Company Law Board laid down only minimum  depreciation for the purposes of distribution of the  dividend and the company could decide to give a  higher depreciation.  Mr. Gulati also contended that  the Punjab & Haryana High Court has preferred to  follow the minority view and has ignored the majority  view taken by two High Courts, namely the Kerala  High Court as well as the M.P. High Court.                Mr. Gulati also relied upon the case of J.K.  Industries Ltd. v. Union of India (2008) 297 ITR 176  (SC).  On proper analysis of the said case, we find that  this case also does not help the Revenue.               We have heard the learned counsel for the parties  at length and carefully perused the written  submissions filed by them.  In our considered opinion,  the controversy involved in this case is no longer res  integra.  A three Judge Bench of this Court in Apollo  Tyres (supra) has clearly interpreted section 115J of  the 1961 Act.  There is no scope for any further  discussion.               Consequently, the appeals are allowed and the  impugned order of the High Court is accordingly set  aside.  In the facts and circumstances of the case, we  direct the parties to bear their own costs.