1972 (1) TMI 32 - HC - Income Tax

Depreciation not claimed in the returns - If during the assessment proceedings the Income-tax Officer comes to know of the relevant particulars for granting depreciation the Income-tax Officer must give effect to it and allow depreciation

Summary

Issues:
Assessment of depreciation on a truck without furnished particulars in the return for the assessment year 1961-62.

Analysis:
The judgment revolves around the assessment of depreciation on a truck purchased by an unregistered firm for the assessment year 1961-62. The Income-tax Officer allowed depreciation amounting to Rs. 3,000, even though the assessee did not furnish the necessary particulars in the return for claiming depreciation. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal both rejected the plea that depreciation should not have been allowed due to the lack of particulars. The Tribunal referred a question regarding the justification of allowing depreciation without furnished particulars. The assessment proceedings were initiated under section 147 of the Income-tax Act, 1961, and concluded under section 143(3) read with section 147. The contention of the assessee was that without complying with the statutory requirement of furnishing particulars, the Income-tax Officer had no jurisdiction to allow depreciation.

The judgment delves into the provisions of the Income-tax Act, particularly Section 32 and Section 34. Section 32 allows depreciation on assets used for business, subject to the provisions of Section 34, which mandates the furnishing of prescribed particulars for claiming depreciation. While Section 34 does not specify the form or document for furnishing particulars, Rule 12 of the Income-tax Rules outlines the form for filing returns. The court emphasized that the absence of particulars in the return does not deprive the Income-tax Officer of the jurisdiction to allow depreciation. The deduction for depreciation is crucial for determining the true profits of the business, and the Income-tax Officer must consider relevant particulars during assessment proceedings to arrive at the accurate profit figure.

The judgment concludes by affirming that the Income-tax Officer was justified in allowing depreciation on the truck, even without furnished particulars in the return. The court rejected the contention that the absence of particulars invalidated the depreciation allowance. Consequently, the question was answered in the affirmative, upholding the decision to allow depreciation. The Commissioner of Income-tax was awarded costs, assessed at Rs. 200, with the counsel's fee set at the same amount.