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Issues:
- Disallowance of depreciation on old machinery, building, etc. for assessment years 2001-02 and 2002-03. Analysis: The case involved the assessee challenging the order of the Agricultural Income-tax Appellate Tribunal confirming the assessments for the years 2001-02 and 2002-03. The assessee had been paying agricultural income tax under the compounding system until the assessment year 2000-01 but re-opted for regular assessment under section 3 for 2001-02. The Assessing Officer disallowed depreciation on old machinery for 2001-02 under section 13(6) of the Act. However, depreciation was allowed on new assets purchased in relevant previous years. The main contention was the disallowance of depreciation on old assets. Section 13(6) was crucial, as it stated that an assessee re-opting for regular assessment under section 3 shall not be eligible for carry forward of losses or depreciation, even if other provisions of the Act allow it. The court analyzed the provision of section 13(6) and the arguments presented. The assessee claimed that the disability under the provision was only for carry forward loss and depreciation, while the Government pleader argued for an absolute ban on granting carry forward loss or depreciation. The court interpreted that section 13(6) applies to the first year when the assessee re-opts for regular assessment under section 3, leading to a disability for that year. However, from the next year onwards, the assessee would be entitled to carry forward losses and depreciation, as provided under section 12 of the Act. The court clarified that the disability under section 13(6) was limited to the year of re-option and that the assessee could carry forward losses and depreciation from the following year onwards. The court dismissed the tax revision case for the assessment year 2001-02 but allowed the revision for 2002-03. It held that the assessee could carry forward losses and unabsorbed depreciation from 2001-02 to 2002-03. The court specified that depreciation would only be available for new assets acquired from the relevant previous year for the assessment year 2001-02 onwards. Assets acquired before the switch from the compounding system to regular assessment under section 3 would not be eligible for depreciation.
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