1977 (11) TMI 28 - HC - Income Tax

Summary

Issues:
1. Computation of income of a co-operative society exempt from tax under s. 14(3) of the Indian Income-tax Act, 1922.
2. Allowance of depreciation under s. 10(2)(vi) when no claim for deduction was made by the assessee.

Analysis:

Issue 1:
The case involved determining whether the income of a co-operative society, exempt from tax under s. 14(3) of the Act, needed to be computed under s. 16. The Tribunal held that even though the income was exempt, its computation was necessary as per s. 16(1)(a). The court upheld this decision, emphasizing that s. 16(1)(a) mandates the inclusion of exempted income for computing total income, as it is not for determining tax rates. The court clarified that exemptions under the Act can either exclude income from tax and total income or exclude it from tax but include it in total income, as per judicial interpretations. Therefore, the first issue was answered in the affirmative against the assessee.

Issue 2:
Regarding the allowance of depreciation under s. 10(2)(vi) without a claim by the assessee, the court found difficulty in determining the relevance of the question posed by the Tribunal. The court noted that the question did not seem to arise from the Tribunal's order and was not discussed in detail. Despite efforts to relate the question to the Tribunal's decision, the court found no substantial connection. As the question did not arise from the Tribunal's order and was not argued before the Tribunal, the court declined to answer it. Consequently, the second issue was deemed not arising from the Tribunal's order and was left unanswered.

In conclusion, the court affirmed the necessity of computing the income of a co-operative society even when exempt under s. 14(3) as per s. 16(1)(a). However, the court declined to address the issue of depreciation allowance under s. 10(2)(vi) due to lack of relevance to the Tribunal's order. The assessee was directed to bear the costs of the revenue.