1969 (2) TMI 48 - HC - Income Tax

Interpretation of the provisions of s. 10(2)(via) of the IT Act, 1922, as amended by the IT (Amendment) Act, 1953 - entitlement of allowance of additional depreciation on building

Summary

Issues:
Interpretation of provisions of section 10(2)(via) of the Indian Income-tax Act, 1922 for the assessment year 1959-60.

Detailed Analysis:
The case involved an assessment for the year 1959-60 where the assessee, a company, claimed additional depreciation on plant and machinery purchased between 1955 and 1958. The Income-tax Officer allowed normal depreciation but disallowed the claim for additional depreciation. The Appellate Assistant Commissioner allowed the additional depreciation, interpreting section 10(2)(via) to be applicable until 1958-59. The Tribunal, citing ambiguity, favored the taxpayer and allowed the claim for additional depreciation for the year in question.

The main issue was the interpretation of section 10(2)(via) of the Income-tax Act, 1922, as amended by the Income-tax (Amendment) Act, 1953. The clause allowed additional depreciation for buildings or machinery installed after March 31, 1948, for a specified period. The amendment extended the period for claiming additional depreciation until March 31, 1959. The court had to determine the period covered by the expression "falling within the period" in the clause.

The court emphasized strict construction of fiscal statutes and the need for the assessee to meet all conditions for claiming additional depreciation. It highlighted three conditions for eligibility: installation after March 31, 1948; allowance for five successive assessments following the installation year; and falling within the assessment years up to March 31, 1959. The court clarified that the term "financial years" in the clause referred to assessment years.

Referring to precedents, the court held that the expression "falling within the period" governed the assessment years and not the installation period. It rejected the argument that the expression related to the installation period, emphasizing that the relief granted was for assessment years falling within the specified period. The court aligned with the Madras High Court's interpretation and disagreed with the Tribunal's decision, ruling against the assessee and directing them to pay costs.

In a concurring opinion, the second judge agreed with the interpretation and decision of the main judgment, leading to a unanimous decision against the assessee.

In conclusion, the court's strict interpretation of the provisions of section 10(2)(via) led to the denial of the assessee's claim for additional depreciation for the assessment year 1959-60, based on the specified conditions and the period covered by the clause.