1963 (7) TMI 77 - HC - Income Tax

Summary

Issues:
1. Whether initial depreciation allowed under section 10(2)(via) should be considered in ascertaining the written down value for computing profits under section 10(2)(vii) of the Indian Income-tax Act, 1922?
2. Whether the assessment order dated February 29, 1960, communicated to the assessee on April 4, 1960, is barred by limitation under section 34(3) of the Income-tax Act, 1922?

Analysis:
1. The case involved the question of whether the initial depreciation allowed under section 10(2)(via) should be included in calculating the written down value for the purpose of computing profits under section 10(2)(vii) of the Indian Income-tax Act, 1922. The Appellate Assistant Commissioner rejected the contention that initial depreciation should be excluded from the written down value calculation. The Tribunal also upheld this decision, stating that the written down value should include all depreciation actually allowed, including initial depreciation. The court agreed with this interpretation, emphasizing that the written down value should consider all depreciation allowed, including initial depreciation under section 10(2)(via).

2. The second issue revolved around the limitation period for the assessment order dated February 29, 1960. The assessee argued that the assessment order was barred by limitation under section 34(3) of the Income-tax Act, 1922, as it was communicated after the prescribed period. The Appellate Assistant Commissioner and the Tribunal rejected this argument, citing the language of section 34(3) that focuses on the making of the order rather than its communication. The court concurred with this interpretation, emphasizing that the order was made within the stipulated period, and communication was not a requirement under the section.

3. The court referred to relevant case law and statutory provisions to support its conclusions. The judgment highlighted that the language of section 10(2)(vi) and section 10(2)(via) indicated that all depreciation allowances, including initial depreciation, should be considered in determining the written down value. Additionally, the court stressed that the assessment order's compliance with the statutory limitation period was based on the order's making rather than its communication to the assessee. Consequently, the court ruled in favor of the revenue on both issues, affirming that initial depreciation should be included in calculating the written down value and that the assessment order was not barred by limitation. The assessee was directed to pay the costs, including the advocate's fee.