9911796707
|
Home
Issues:
1. Calculation of initial depreciation on a car used for business and personal purposes during the accounting year. Analysis: The judgment involves the determination of the initial depreciation to be allowed on a car purchased by the assessee for Rs. 12,000 and used for only four months during the accounting year. The Income-tax Officer initially allowed a depreciation of Rs. 400, considering the car's partial use and private use. However, the Appellate Assistant Commissioner disagreed, stating that the period of use should not affect the depreciation calculation. The Tribunal later allowed the full deduction of Rs. 2,400 claimed by the assessee. The primary issue is whether the assessee is entitled to the entire initial depreciation amount claimed for the car's use during the assessment year 1952-53. The Income-tax Department argued that the Appellate Tribunal's decision was erroneous as it did not consider the provisions of section 10(3) of the Income-tax Act, which restricts allowances for assets not wholly used for business purposes. The Department contended that the correct depreciation amount should be Rs. 1,200, as determined by the Appellate Assistant Commissioner. The court examined the relevant sections, particularly section 10(2)(vi) and section 10(3) of the Act, to interpret the correct application of initial depreciation in cases where assets are used for both business and personal purposes. The court analyzed section 10(3) of the Act, which specifies that if an asset is not wholly used for business purposes but also for personal use, the allowance should be restricted to the fair proportional part applicable if the asset were solely used for business. Based on this provision, the court concluded that the initial depreciation to be granted to the assessee under section 10(2)(vi) is controlled by section 10(3). Therefore, the court held that the Appellate Tribunal's decision was legally incorrect, and the assessee is entitled to a depreciation of Rs. 1,200 for the assessment year 1952-53, as determined by the Appellate Assistant Commissioner. In conclusion, the court ruled in favor of the Income-tax Department, stating that the assessee should receive an initial depreciation of Rs. 1,200 for the car used for business and personal purposes during the accounting year. The court upheld the decision of the Appellate Assistant Commissioner and deemed the Appellate Tribunal's decision as legally flawed. The assessee was directed to bear the costs of the reference.
|
