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TMI Blog1981 (3) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... cap lamps and haulage ropes. Prior to the amendment of rule 5, these assets were not considered as depreciable assets. Only the value of replacement and renewal is allowed as revenue charge. The assessee's claim for 100% depreciation on the said assets is unacceptable on the ground that these assets have already got the benefit of replacement or renewals from year to year. Further, 100% depreciation for the original cost of those assets cannot be allowed on the ground that those assets had no W.D.V. at the beginning of the accounting year. Section 43(6) provides that depreciation will be allowed: (a) in the case of assets acquired in the previous year, the actual cost to 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. Hence, 100% depreciation will be allowed on coal tubs, cap lamps haulage ropes as per revised rule only if the assets are acquired during the accounting year. From the statement filed by the assessee it is found that the assessee brought into use coal tubs, cap lamps and haulage ropes to the extent of Rs. 57,452 during the accounting year. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... items, where is the capital value left for this amount on which depreciation should be allowed ? In the absence of any figures regarding the cost of replacement having been allowed by the Revenue, I agree with the finding given by the ITO that the assessee is not entitled to the depreciation on the value of cap lamps, safety lamps, coal tubs, etc., as claimed by the assessee. I also agree that there can be no written down value of the items which were replaced. The ITAT, 'B' Bench, in ITA No. 3217 (Cal) of 1973-74 in the case of South Karanpura Coal Co. Ltd. v. ITO, Comp. Dist.-II, has sustained a similar view and have upheld the ITO's action in disallowing depreciation on the original cost. The ITO's action is, therefore, upheld. " Being aggrieved further, the assessee went up before the Tribunal. Before the Tribunal it was claimed that under r. 5 of the I.T. Rules, as amended, the assessee was entitled to the depreciation on the original cost of coal tubs, winding ropes and on safety lamps at 100%. The Tribunal noted that the ITO was of the view that these assets had already got the benefit of replacements before the amendment of the rule and these assets had no written down v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire amount of that year had been allowed as a revenue expenditure on account of replacement of these items, where there is capital value left for this amount on which depreciation should be allowed; (6) The AAC, in the absence of any figures regarding the costs of replacement having been allowed by the revenue, agreed with the finding given by the ITO that the assessee was not entitled to the depreciation on the value of cap lamps, safety lamps and coal tubs, etc., as claimed by the assessee ; and (7) The AAC further went on to observe " I also agree that there can be no written down value of the items which were replaced ". The AAC, therefore, agreed with the order of the ITO. The Tribunal observed in its order as follows : " Before us it is submitted by the learned counsel for the assessee that no depreciation had been allowed on these assets before the amendment of rule 5 and that only replacement costs were allowed as expenditure. According to him the allowance of replacement costs was immaterial as the replaced assets were substituted for the original assets on which no depreciation had been allowed earlier and in spite of the replacements, assets on which no depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at was the position in the previous year. These propositions we had reiterated in the case of Riverside (Bhatpara) Electric Supply Co. Ltd. v. CIT [1977] 109 ITR 399 (Cal). We had observed in the said decision that " actual cost " and " written down value " had to be computed in accordance with the provisions of the Act, even with reference to the assets used in the previous year for the assessment year 1962-63, which were acquired prior thereto. In this case, if there has been replacement of any asset, then the written down value would be the full value of that asset. As r. 5 and the relevant Schedule prevalent in the year provides, for tubs, winding ropes, haulage ropes and sand stowing pipes 100% depreciation under Item 9 of App. I of the I.T. Rules, 1962, on the value of the replaced assets which were used in the year in question, 100% depreciation was to be allowed. To this extent, learned advocate for the assessee was right but in the instant case, this controversy does not seem to be relevant because there is no finding that there were any assets which were replaced In the year in question and the actual cost and written down value of the assets of which were the full valu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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