1986 (3) TMI 32 - HC - Income Tax

Summary

Issues:
1. Reopening of assessment under section 147(b) of the Income-tax Act, 1961.
2. Entitlement of the assessee to claim 100% depreciation on salt pans, condensers, etc.

Analysis:

Issue 1: Reopening of assessment under section 147(b) of the Income-tax Act, 1961
The case involved the reopening of the assessment for the assessee, a private limited company, for the assessment year 1970-71. The original assessment, completed with 'nil' income, was reopened under section 147(b) of the Income-tax Act, 1961, due to information in the possession of the Income-tax Officer. The Income-tax Appellate Tribunal upheld the decision to reopen the assessment. However, the High Court did not delve into this issue further as the decision on the second issue rendered the first one academic.

Issue 2: Entitlement of the assessee to claim 100% depreciation on salt pans, condensers, etc.
The dispute centered around the assessee's claim for 100% depreciation on salt pans, condensers, etc., in the reassessment proceedings. The Income-tax Officer rejected the claim, stating that 100% depreciation was only applicable to new salt pans, not old ones. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal initially upheld this decision. However, the High Court analyzed the materials used in constructing the salt pans. The Court determined that the materials used were earth and clay, not cement or concrete, as contended by the Revenue. As per the Income-tax Rules, the assessee was entitled to claim 100% depreciation for such materials. Therefore, the High Court held that the withdrawal of depreciation granted to the assessee was not justified. Consequently, the High Court answered the question in favor of the assessee, rendering the second question, regarding the correctness of reopening the assessment, unnecessary to address.

In conclusion, the High Court ruled in favor of the assessee, allowing the claim for 100% depreciation on salt pans, condensers, etc., and did not delve into the reopening of the assessment issue due to the favorable decision on the depreciation claim.