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Issues: Interpretation of section 10(2)(vi) of the Indian Income-tax Act regarding the admissibility of allowance for depreciation when a limited company leases out its plant, machinery, and buildings.
Analysis: 1. Interpretation of Section 10(2)(vi): The judgment involves a detailed analysis of Section 10(2)(vi) of the Indian Income-tax Act and its application in the context of a limited company leasing out its plant, machinery, and buildings. The court examined whether the allowance for depreciation is admissible in such a scenario. 2. Business Activity of the Assessees: The court deliberated on the nature of the business activity carried out by the assessees, emphasizing the distinction between the business of milling rice and the business of leasing out the mill. It was established that the assessees were engaged in the business of letting the mill for the purpose of being worked by lessees, rather than directly milling rice themselves. 3. Ownership and Use of Property for Business: An essential aspect considered was whether the property depreciated belonged to the assessees and whether it was used for the purpose of their business. The court analyzed the ownership of the property and its utilization in the context of the lease agreement, determining that the property was indeed used for the business of leasing out the mill. 4. Entitlement to Deduction for Depreciation: The judgment concluded that the assessees were entitled to a deduction for the depreciation of their buildings, machinery, and plants, which they had to bear under the terms of the lease agreement. It was established that the loss due to wear and tear, arising from the authorized use of the property by lessees, was a legitimate basis for claiming depreciation. 5. Commissioner's Decision and Court's Ruling: The Commissioner of Income-tax had initially denied the allowance for depreciation, leading to the reference to the court. The court, comprising Sir Murray Coutts Trotter, KT., Krishna, and Beasley, JJ., collectively ruled in favor of the assessees, allowing the deduction for depreciation based on the interpretation of the law and the specific circumstances of the case. 6. Cost Awarded to the Assessees: Lastly, the judgment mentioned that the government would pay the assessees a sum of &8377;100 each for their costs in the case, indicating a resolution on the financial aspect related to the legal proceedings. In summary, the judgment extensively analyzed the provisions of the Indian Income-tax Act, particularly Section 10(2)(vi), to determine the admissibility of depreciation allowance for a limited company leasing out its assets. The court's decision clarified the entitlement of the assessees to claim deductions for depreciation based on the specific business activities and contractual obligations involved in the lease arrangement.
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