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TMI Blog1955 (4) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... ial depreciation allowed to the assessee 'under Section 10(2)(vi) is also to be deducted from the cost to the assessee of the assets in arriving at the written down value? 2. The decision of the Supreme Court in Navinchandra Mafutial v. Commissioner of Income Tax, Bombay, (S) [1954]26ITR758(SC) , (A) concludes the first question. We answer the first question in the negative and against the assessee. 3. The assessee firm conducted the business of a public transport (bus) service in Tirunelveli district during the year of account, April 1946 to March 1947. It discontinued that business sifter 30th September 1946 and sold its entire fleet of buses on 1-10-1946 to the Southern Roadways, Ltd., Madurai, for a sum of ₹ 2,25,700. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has obtained depreciation allowance in any year, the actual cost of the asset of the assessee shall be its written down value as defined in Section 10 : .... Thus, the basis for computing the capital gain is the written down value, that is, the written down value as defined by Section 10 of the Act, Written down value has been defined by Section 10(5) of the Act, the relevant portion of which runs : ..... written down value means (a) in the case of assets acquired in the previous year, the actual cost of the assessee ; (b) in the case of assets acquired before the previous year the actual cost to the assessee less all depreciation actually allowed to him under this Act. The relevant portion of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not be deducted from the written down value for any purpose whatever, which meant that in the case of new buses purchased in 1946 and 1946 the actual cost of the buses and not the cost of the buses less the 20 per cent, depreciation actually allowed to the assessee should be taken into account. We are unable to accept this contention. 6. No doubt in Section 10(2)(vi)(A) where provision was made for depreciation allowance for machinery or plant installed after 31-3-1948, the specific direction was that this further depreciation allowance shall be deductible in determining the written down value. But then, unlike Section 10(2) (vi), which restricted the further allowance of 20 per cent to the year of purchase, Section 10(2)(vi) (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on allowance for which Part 1 of Section 10(2)(vi) provided, this sum of ₹ 11,506 should not be taken into account and was not taken into account. That is the real scope of the excluding Clause in Section 10(2)(vi). 9. Neither the departmental authorities nor the Appellate Tribunal made any distinction between the 20 per cent, allowance made in the accounting year 1945-46 and that made in 1946-47. They appear to have ignored the specific direction of Section 10(5)(a) of the Act. The assessee is entitled to have this sum of ₹ 11,506 excluded from the computation of written down value of the buses he sold on 1st October 1946. 10. ₹ 25,970 was the further depreciation allowance granted in the year of account 1949-47, an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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