9911796707
|
Home
Issues involved:
The judgment deals with the issue of determining depreciation for assets acquired before April 1, 1961, based on the written down value as per the provisions of the Income-tax Act of 1922 versus the Income-tax Act of 1961. Controversy over Depreciation Calculation: The controversy arose regarding the depreciation on service lines installed by the assessee for providing electrical connections to consumers up to March 31, 1961. The Income-tax Officer initially disallowed any depreciation for these service lines for the assessment year 1963-64, stating that the actual cost to the assessee was recovered from consumers, including labor charges. However, the Appellate Assistant Commissioner allowed depreciation based on the actual cost to the assessee determined under the old Act until the end of the assessment year 1961-62. Contentions of the Parties: The Income-tax department argued that the actual cost should be determined as per the provisions of the current Act for the assessment year 1963-64, allowing deduction of all amounts received from consumers. On the other hand, the assessee contended that the amounts received from consumers were irrelevant in determining the actual cost and that the written down value determined in the earlier assessment year should be accepted without reevaluation. Legal Interpretation and Precedents: The court rejected the assessee's argument, citing the definition of "actual cost" in the present Act, which allows deduction of amounts received from any person, not just the Government or public authorities. It was also established that the Income-tax Officer has the authority to determine the actual cost afresh for each assessment year, not solely relying on past determinations. This interpretation was supported by the Supreme Court's decision in Mahayana Mills (Private) Ltd. v. Income-tax Officer [1959] 36 ITR 350. Judgment and Conclusion: The court ruled in favor of the revenue, stating that depreciation for assets acquired before April 1, 1961, should be determined based on the written down value as per the provisions of the Income-tax Act of 1961. The court held that the Income-tax Officer has the discretion to ascertain the actual cost for each assessment year and is not bound by past determinations. The judgment was delivered by Judge D. M. Chandrashekhar. The assessee was directed to pay Rs. 200 as costs.
|
