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TMI Blog1982 (7) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's fleet for more than 20 years ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that no profit chargeable to tax within the meaning of section 41(2) of the Income-tax Act, 1961, in respect of any of the ships sold by the assessee could be included in the computation of the total profits and gains of the assessee's business under rule 10(ii) of the Income-tax Rules, 1962 ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that in the computation of the total profits and gains of the assessee's business under rule 10(ii) of the Income-tax Rules, 1962, the assessee was entitled to deduction of a loss under section 32(1)(iii) of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssel would not enjoy the allowance for more than 20 years, as according to s. 32(1)(i) of the Act read with Appx. I under r. 5 of the said Rules, it was entitled to depreciation of 5% on its actual cost. The claim of the assessee, on the other hand, was that it was entitled to depreciation for 20 years under the Indian I.T. Acts, and it was irrelevant to find out when the vessel or ship was actually acquired. The ITO in the assessment year 1962-63 found that the assessee's four vessels whose original cost was Kr. 18,025,592 had been acquired more than 20 years before the assessment year under reference. According to him, therefore, they did not have any written down value and the assessee could not claim any depreciation. Rejecting the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 1958-59 and also in the assessee's own case in the earlier assessment year 1964-65. The assessee contended that the question raised in this appeal before the Tribunal was concluded by the decisions of the Tribunal in the aforesaid cases. The Tribunal, after a consideration of the submissions placed before it, was of the view that the assessee was entitled to depreciation for all the 20 years even if the vessels were purchased and brought into use earlier to that. According to the Tribunal, the expression " written down value" in s. 43(6) of the Act, meant, in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to him under the various Indian I.T. Acts. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdance with the principles laid down by the Tribunal in the two decisions cited above, as it had done, there would actually be losses on the sales and the question of assessing any profit would not arise. It, therefore, deleted Kr. 2,811,653 from the assessment year 1962-63 and Kr. 4,236,752 from the assessment year 1963-64. As regards the additional reason for the disallowance of losses claimed on the vessels sold out also, the Tribunal agreed with the contention of the assessee that it could not write off more than the amount at which the respective vessels appeared in its balance-sheet. The reason for such lower valuation, the Tribunal pointed out, obviously, was that the company had been writing off the depreciation at a higher rate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputation of its world income and again in the computation of its Indian income in respect of the ships in question even though these ships might have been part of the world fleet of the assessee-company. It was held that in view of ss. 32, 34(3) and 43 of the I.T. Act, 1961, the Tribunal was right in its conclusion that the assessee was entitled to claim depreciation in respect of ships which had been on its fleet for more than 20 years. This principle was reiterated in the case of the assessee for the earlier assessment year by this court in Income-tax Reference No. 430 of 1974, by a judgment delivered on April 28, 1980. It has been contended on behalf of the Revenue that the case of the assessee in the earlier assessment year which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that depreciation was allowable from the time when the asset was acquired and it could not be postponed simply because Indian assessment (under the Indian I.T. Act) took place in the subsequent years. The assessee company's case before the AAC was that the first year of assessment of the company in India was 1950-51 and 20 years for calculation of depreciation would run from 1950-51. The ships might have been acquired earlier but the ships did not come into the Indian waters and were not assessed in India and depreciation was not allowed on the ships in question at all before 1950-51. These facts were not in dispute before the AAC. In view of the aforesaid facts, the distinction sought to be made by the learned counsel on beha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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