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Issues:
1. Assessment of interest from securities on due basis vs. accrual basis. 2. Treatment of certain equipments as plant and machinery for depreciation and development rebate. Analysis: *Issue 1: Assessment of interest from securities* The primary issue in this case revolved around the correct method of assessing income from interest on securities - whether on a due basis or an accrual basis. The assessee initially declared income on an accrual basis in the original return but revised it to a due basis in a subsequent return. The Income-tax Officer, however, assessed the income on an accrual basis due to past practice. The Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal both sided with the assessee, holding that interest on securities should be declared on a due basis. The court, in line with the findings of the lower authorities, emphasized that income from interest on securities is chargeable to tax under section 18 of the Income-tax Act only on a due basis, unless specific circumstances under sub-section (2) apply. The court referred to a decision by the Karnataka High Court for support. Therefore, the court concluded that the assessee correctly declared income on a due basis in the revised return. *Issue 2: Treatment of equipments as plant and machinery* The second issue pertained to the treatment of certain items, such as counters, steel equipments, electric fittings, calculating machines, and cooling equipments, as plant and machinery for the purpose of depreciation and development rebate. The assessee claimed 100% depreciation on items costing less than Rs. 750, which was initially rejected by the Income-tax Officer but later allowed by the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal based on previous orders favoring the assessee. However, the Revenue challenged this decision, arguing that the outcome of references for earlier assessment years was unclear, and details regarding the nature and value of the claimed items were lacking. Consequently, the court was unable to provide a definitive answer to this question, returning it unanswered. In conclusion, the judgment favored the assessee regarding the assessment of interest from securities on a due basis, citing the provisions of the Income-tax Act. However, the issue regarding the treatment of certain equipments for depreciation and development rebate remained inconclusive due to insufficient information and clarity on past references and item specifics.
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