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TMI Blog1984 (9) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... . During the previous year relevant to this assessment year, one of its ships " S. S. Dimitrios " touched the Port of Mangalore and for the cargo which it carried from that port, it had received freight earnings. In computing its income assessable to Indian income-tax for that year, the assessee claimed proportionate depreciation of pounds17,143. This claim was negatived by the ITO and in his order, the said ITO made the following observations: " The ship `S. S. Dimitrios' was built in 1944 and purchased by the assessee in 1962. At the time of purchase, as per I.T. Rules, anticipated life of the ship comes to 7 years. Therefore, depreciation could be allowed on it only in 7 assessments, from assessment year 1963-64 to 1969-70. In this acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iry of the said period of seven years calculated from the date of purchase. The Tribunal opined that the language of the said rule did not lead to such a construction. According to the Tribunal: "What the rule says, in effect, is that in the case of second-hand ships, the depreciation allowance shall first be computed in the same manner as in the case of new ships and it shall then be multiplied by the fraction 20 / L, L being the expectation of life of the ship as at the date of its purchase as given in the appropriate table. We do not think that there is any scope for contending that rule 5(2), in its present form, restricts the grant of depreciation allowance to a period not exceeding the expectancy of life of the second-hand ships. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cal), although here also we have case of new ships and not of second-hand ships purchased by the assessee. Question No. 1 submitted for consideration of the Calcutta High Court by the Income-tax Appellate Tribunal was whether the assessee was entitled to depreciation allowance under rule 5 of the I.T. Rules, 1962, even in respect of ships which had formed part of the assessee's fleet for more than twenty years. The Tribunal held in favour of the assessee and the Tribunal's view was upheld by the High Court. In our opinion, in the matter before us, the Tribunal was entirely right in holding that rule 5(2), which only contains a formula for computing the depreciation allowance, does not lead any further to any construction of the sort sough ..... X X X X Extracts X X X X X X X X Extracts X X X X
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