9911796707
TMI Blog1965 (3) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... d or discarded or demolished or destroyed, the amount by which the written down value thereof exceeds the amount for which the building, machinery or plant, as the case may be, is actually sold, or its scrap value: Provided that such amount is actually written off in the books of the assessee." The assessee in this case was operating a bus transport business as sole proprietor from the 1st of April, 1948. For the periods ending with the 31st of March, 1949, 31st of March, 1950, and 31st of March, 1951, relevant to the assessment years 1949-50, 1950-51 and 1951-52, the assessee claimed this allowance, the sums in question being ₹ 14,927, ₹ 3,363 and ₹ 4,309. It is stated that in these account years, five, three and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used. It is in these circumstances that the question: "Whether the disallowance of the obsolescence allowance for the assessment years 1949-50, 1950-51 and 1951-52 is justified?" stands referred to us. It does not appear to be disputed as a question of fact that certain vehicles were in fact condemned as useless during the relevant account years. During the assessment proceedings, the assessee produced before the Income-tax Officer "daily collections and expenditure book, conductors' challans, trip sheets, tyre consumption stock book and other subsidiary books and vouchers for purchases and expenditure". The assessee also explained to the Income-tax Officer that he submitted his return by estimating the income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and his income was being returned on an estimated basis. We are unable to agree that this is a case where, for lack of compliance with the requirement of the first proviso to section 10(2)(vii), the assessee's claim to obsolescence allowance can be denied. It is not in dispute that the assessee did maintain a set of accounts. He had no doubt omitted to maintain a day-book and a ledger. It is true that these are important accounts in the conduct of a business. But, would it be correct to say that the assessee maintained no books of account at all, or, what is more important, that the amount in question had not been written off in such books of account as he found it necessary and sufficient to maintain? It has been admitted by all the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case. The section does not, however, say, nor is there any provision in the Act that an assessee carrying on a business shall maintain a specified set of accounts. The expression "books of the assessee" in the context in which it appears in section 10(2)(vii) cannot give any indication of the particular type of accounts which the assessee should maintain. That the accounts maintained by the assessee are defective, in the sense that they do not lead to a correct assessment of the income, profits and gains of the business, has nothing whatever to do with the allowance that can be granted under section 10(2)(vii). If the assessee has accounts in which the relevant entry with regard to this allowance appears, it wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required as the asset has, pro tanto, been reduced in value...." This statement found in this text only explains the manner in which depreciation should figure in the accounts maintained on the double entry system. But it does not lay down any inviolable principle. If accounts are maintained on the double entry system, the author explains how it should be done. Nor are we able to agree with the learned counsel for the department that the profit and loss account is an account which can be said to be a book of account. It is only a statement representing the state of business as at the end of the accounting year and the details contained in the statement are culled out from such other books of account which may be called primary books w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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