9911796707
|
Home
Issues:
Interpretation of Section 10(2)(vi) of the Income-tax Act regarding depreciation allowance irrespective of the period of user. Analysis: The judgment by the Patna High Court involved a reference from the Appellate Income-tax Tribunal regarding the entitlement of the assessee to the full amount of depreciation under Section 10(2)(vi) of the Income-tax Act, regardless of the period of user. The case revolved around a Hindu undivided family engaged in a business involving mica and a rice mill. The dispute arose when the department allowed depreciation only for 8? months, contending that the assessee ceased to be the owner of the mill and building on January 1, 1940, despite claiming depreciation for the entire twelve months. The Appellate Tribunal held that there was no provision for apportionment of depreciation based on time under the Indian Income-tax Act, leading to the reference to the High Court. The Court examined the relevant provisions of the Act, particularly Section 10(2)(vi), which allows depreciation for assets used for business purposes. It was undisputed that the assessee was the owner of the assets during the accounting year. The Court highlighted that the Act did not authorize apportionment of depreciation if machinery or plant was sold during the accounting period. The legislative framework acknowledged the possibility of assets being sold or discarded during the year, as outlined in Section 10(2)(vii), which deals with the treatment of written down value in such cases. Moreover, the Court referenced Section 10(3), which mandates apportionment only when a building or machinery is not wholly used for business purposes. The Court rejected the department's argument for apportionment based on ownership duration, emphasizing that the Act does not support such a calculation method. Referring to a previous case, the Court reiterated that the Act does not require depreciation to be allowed in proportion to the period of ownership within a year. The judgment emphasized that the assessee, as the owner of the assets, used them for business purposes during the accounting period for which they were being assessed. The Court dismissed the department's equity argument, stating that taxation and equity are distinct concepts, and an equitable rule cannot be applied in interpreting tax statutes. Consequently, the Court affirmed the Appellate Tribunal's decision, concluding that the assessee was entitled to claim full depreciation allowance, irrespective of the ownership duration within the accounting year. In conclusion, the High Court answered the reference question in the affirmative, ruling in favor of the assessee and awarding costs for the proceedings. The judgment underscored the statutory provisions governing depreciation allowance and rejected the notion of apportioning depreciation based on the period of asset ownership within a year.
|
