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TMI Blog2009 (10) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... rmplasm as on 31.03.2001 when the Department had challenged the said WDV computed by ITAT in assessment year 2001-2002? 2. Whether the cost incurred by the assessee much before becoming an "assessee" can still be treated as actual cost to the assessee in complete disregard to the peculiar circumstances of the case?" 2. The issue therefore pertains to the claim for depreciation on germplasm seeds which is a plant. That the germplasm seeds are a plant is undisputed by the revenue. The facts of the case are that the assessee is in the business of producing superior quality hybrid seeds of rice for supply to farmers. For the purpose of producing hybrid seeds, the assessee is using paddy seeds, also referred to as germplasm seeds. The germplas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsisted that the depreciation be allowed on the actual cost. In the absence of details, the A.O. disallowed the entire claim of depreciation for the assessment year 2001-02. For assessment year 2002-03, the depreciation allowed by him was on the basis of WDV as per the assessment order for assessment year 2001-02. The basic issue raised in these appeals is as to what should be the WDV of the germplasm seeds for the purpose of computation of depreciation. There is no dispute about allowability of depreciation. 3. Before we proceed to deal with the issue raised, it may be appropriate to refer to the relevant provisions of the Act relating to the allowance of depreciation. Depreciation on an asset used for the purpose of business is allowable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on appeal that the assessee had not been allowed excess depreciation allowance as per the original assessment and there was no basis for initiating proceedings under section 34. He was of the view that the expression "actually allowed" could not imply depreciation allowed by a mental phenomenon. The Appellate Tribunal upheld the order of the Appellate Assistant Commissioner and directed the computation of the allowance on that basis. On a reference the High Court by its judgment dated August 22, 1961, answered the question as follows: "In the circumstances of this case the correct basis for computing written down value of depreciable assets of the company is the one adopted by the Appellate Assistant Commissioner." "Mr. A.V. Viswanatha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he words actually allowed does not include notional allowance. In the Nand Lal Bhandari Mills case the Supreme Court ( per Subha Rao & Sikri JJ), held as under:- "that in fixing the depreciation allowance for the years in which the respondent was assessed as a non-resident under the Indian Income-tax Act, the Income-tax Officer had "actually allowed" only a portion of the amount towards depreciation allowable in assessing its world income. The mere fact that in the matter of calculation the total amount of depreciation was first deducted from the world income and thereafter a proportion was struck did not amount to an actual allowance of the entire depreciation in ascertaining the taxable income that accrued in British India. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the depreciation has been made in the return. The Income-tax Officer in such a case is required to compute the income without allowing depreciation allowance. The circular of the Board dated April 11, 1955, imposes merely a duty on the officers of the department to assist the tax payers in every reasonable way, particularly, in the matter of claiming and securing relief. The officer is required to do no more than to advise the assessee. It does not place any mandatory duty on the officer to allow depreciation if the assessee does not want to claim. The provision for claim of depreciation is certainly for the benefit of the assessee. If he does not wish to avail of that benefit for some reason, the benefit cannot be forced upon him. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be to a disadvantage and an option cannot become an obligation. The Assessing Officer cannot grant depreciation allowance when the same is not claimed by the assessee." 5. The counsel for the revenue has strongly relied upon the judgment of the Supreme Court in CIT Vs. Saharanpur Electrical Supply Corporation Ltd. 194 ITR 294. We fail to understand as to how the said judgment would apply at all to the facts of the present case. In the said judgment, the Supreme Court has only held that if actual cost is wrongly assessed earlier, then, in the subsequent assessment years the actual cost can be recomputed and the mistake can be corrected. However, the facts of the present case clearly are different because in the earlier assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X
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