National Hydroelectric Power ... vs Commr.Of Income Tax

The Supreme Court ruled on the accounting treatment of Advance Against Depreciation (AAD) under Section 115JB of the Income-tax Act, 1961. The Court held that since AAD was not debited to the profit and loss account, it could not be treated as a reserve under clause (b) of Explanation-I, thus not requiring addition to book profit. The appeal was allowed, affirming that AAD does not constitute income for the purposes of net profit determination.