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Issues involved: Disallowance of deductions claimed by the assessee, including forfeiture of contributory provident fund and depreciation on spare engines.
Forfeiture of Contributory Provident Fund: The Assessing Officer disallowed the claim of the assessee for forfeiture of contributory provident fund, adding the amount to the income of the assessee. However, the Commissioner of Income-tax (Appeals) allowed the appeal, stating that the forfeited amount belonged to the trust and not the assessee. The Income-tax Appellate Tribunal upheld this decision, ruling that the amount did not constitute income for the assessee. Depreciation on Spare Engines: The claim for depreciation on spare engines by the assessee was initially disallowed. The Revenue contended that depreciation could only be claimed if the machinery was actively used. However, it was argued that the spare engines were necessary for the transport corporation's operations, even if not actively in use. The Tribunal supported the claim for depreciation, noting that the nature of the business required the maintenance of spare engines for emergencies. Legal Dispute: The Revenue filed a second appeal under section 260A of the Income-tax Act, 1961, raising substantial questions of law regarding the treatment of the forfeited provident fund and the allowance of depreciation on spare engines. The court upheld the decisions of the lower authorities, stating that no substantial question of law arose for consideration. The appeal was dismissed, affirming the decisions on both issues in favor of the assessee.
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