1975 (7) TMI 36 - HC - Income Tax

Summary

Issues involved:
1. Entitlement to full depreciation allowance u/s 10(2)(vi) for assessment years 1958-59 and 1959-60.
2. Treatment of Rs. 1,65,424 as revenue expenditure.

Entitlement to full depreciation allowance:
The court ruled that the assessee was not entitled to full depreciation as claimed, based on rule 8 of the Indian Income-tax Rules, 1922. The depreciation would be granted for the relevant period as per the Rules, not for the entire period.

Treatment of Rs. 1,65,424 as revenue expenditure:
The expenditure of Rs. 1,65,424 for constructing dams was initially disallowed by the Income-tax Officer as of a capital nature. However, the Appellate Assistant Commissioner and the Tribunal considered it as revenue expenditure, essential for protecting the mines and ensuring safety for laborers. The revenue contended that the expenditure was capital in nature, citing various legal precedents. The court ultimately held that the construction of the dams conferred an enduring benefit to the existing asset, making it capital expenditure. Therefore, the question was answered in the negative and in favor of the revenue.

Separate Judgment by DEB J.:
DEB J. concurred with the decision, answering the question in the negative. Each party was directed to bear its own costs.