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Issues:
1. Interpretation of depreciation allowance under section 10(2)(vi) and 19(2)(via) exceeding the original cost to the assessee of the depreciable asset. Analysis: The judgment dealt with the question of whether an assessee is entitled to claim depreciation allowance under section 10(2)(vi) and 19(2)(via) that exceeds the original cost of the depreciable asset. The proviso in question, proviso (c) to section 10(2)(vi), clearly states that the aggregate of all depreciation allowances shall not exceed the original cost to the assessee. The argument presented by the assessee's counsel was based on two premises. Firstly, that the proviso only applies to exceptions like ocean-going ships, and secondly, that initial depreciation should not be considered in calculating the written down value. However, the court rejected these arguments, emphasizing that the proviso applies universally and that initial depreciation does not alter the original cost for the purpose of depreciation calculation. Further, the court delved into the historical context of the legislation, highlighting the shift from allowing depreciation based on original cost to the written down value. The judgment clarified that while initial depreciation is excluded from determining the written down value, it still contributes to the total depreciation allowance. The court refuted the contention that depreciation should continue until the written down value reaches zero, as it would lead to depreciation exceeding the original cost, contrary to established accounting principles and commercial practices. In conclusion, the court answered the question in the negative, affirming that depreciation allowances cannot surpass the original cost of the depreciable asset. The assessee was directed to bear the costs, and the reference was resolved in the negative, upholding the limitation on depreciation allowances as per the proviso in section 10(2)(vi).
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