9911796707
|
Home
Issues Involved
1. Entitlement to depreciation on machinery and buildings from a specific date. 2. Inclusion of certain costs in the original cost of machinery and buildings. 3. Entitlement to depreciation on additions to buildings and machinery. Detailed Analysis Issue 1: Entitlement to Depreciation on Machinery and Buildings from a Specific Date The primary issue was whether the assessee was entitled to claim depreciation on the machinery and buildings from December 28, 1926, the date they were put in possession of the mills, despite the sale deed being executed on May 18, 1932. The Court referred to a previous decision in Miscellaneous Case No. 528 of 1936, where it was held that for the purposes of assessment for the year 1933-34, the assessee was entitled to claim a set-off of the unabsorbed previous depreciation against the profits earned in the year of transfer under Section 10(2)(vi) of the Indian Income-tax Act. However, the Court noted that the decision in Indian Iron and Steel Co. Ltd. v. Commissioner of Income-tax, Bengal [1943] 11 I.T.R. 328, clarified that the assessee could not claim the balance of unabsorbed depreciation set off against profits made in the year 1933. The Court concluded that the previous decision did not operate as res judicata for the year 1933, and thus, the assessee was not entitled to claim the accumulated depreciation during the period prior to the date of purchase. Issue 2: Inclusion of Certain Costs in the Original Cost of Machinery and Buildings The second issue involved whether the assessee could include losses incurred in working the mills, interest on sums advanced to the liquidators, and interest on the capital invested by it during its incumbency as mortgagee and managing agent in the original cost of the machinery and buildings. The Court decided this issue against the assessee, holding that the original cost of the machinery and buildings was only Rs. 11,12,000. The assessee accepted this decision, and thus, no further analysis was required on this point. Issue 3: Entitlement to Depreciation on Additions to Buildings and Machinery The third issue was whether the assessee was entitled to depreciation on the amounts of Rs. 13,391 and Rs. 14,035, representing the original cost of additions to buildings and machinery made during its incumbency. The Court decided this issue in favor of the assessee. The department accepted this decision, and thus, no further analysis was required on this point. Separate Judgments Both judges agreed on the conclusions. Malik, CJ, provided a detailed analysis of the issues and the principle of res judicata in tax matters. Seth, J., concurred with the conclusions and added further observations on the applicability of res judicata in income-tax cases, expressing reservations about its applicability without deciding the issue definitively. Conclusion The Court answered the first question in the negative, holding that the assessee was not entitled to claim the accumulated depreciation during the period prior to the date of purchase. The second and third questions were resolved based on the parties' concessions, with the second question decided against the assessee and the third in favor of the assessee. The assessee was ordered to pay the costs of the proceedings, assessed at Rs. 700.
|
