9911796707
TMI Blog1978 (11) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... another company named Belvedere Jute Mills Co. Ltd., had amalgamated with the assessee with effect from the 30th November, 1961. In the assessment year 1967-68, the previous year being the year ended on the 30th November, 1966, the assessee in its assessment to income-tax claimed that depreciation should be allowed on the assets taken over by it on amalgamation calculated at the book value at which they were taken over. The ITO, however, allowed depreciation on the said assets on their written down value in the books of Belvedere Jute Mills Co. Ltd. Being aggrieved, the assessee preferred an appeal against the said order of the ITO. The AAC held that Expln. 7 to s. 43(1) of the I.T. Act, 1961, was not applicable in the facts of the case in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case, the Tribunal is right in holding that the Explanation 7 to section 43(1) of the Income-tax Act, 1961, will have no effect for the assessment year 1967-68 in the case of the assessee-company for the purpose of the determination of the actual cost of the capital assets received by the assessee-company on transfer from the amalgamating company ?" Mr. A. K. Sengupta, learned counsel for the revenue, contended before us that the law as it stood on the date of the assessment had to be applied for the purpose of calculation of allowable depreciation. He submitted that Expln. 7 to s. 43(1) of the Act did apply to the facts and circumstances. He submitted further that if it was held that the said Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e portion of the cost met directly or indirectly by any other person or authority. In the assessment of income-tax of the assessee in the assessment year 1962-63, the question whether in allowing depreciation the actual cost would be as provided in the earlier Act or as defined in the later Act, came up for consideration before this court. It was hold that the depreciation allowable had to be calculated according to the provisions of the I.T. Act, 1961, with reference to all assets in use in the previous year for the assessment year 1962-63 including those that had been acquired prior thereto. It was held further that the actual cost determined for a particular asset could be altered or re-determined for a subsequent assessment year and thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (1A) of section 32 or under the Indian Income-tax Act, 1922 (11 of 1922)....... shall, in no case, exceed the actual cost to the assessee of the...... machinery, plant,....... as the case may be: Explanation.-Where a capital asset is transferred- (i) by a holding company to its subsidiary company or by a subsidiary company to its holding company, or (ii) by a company to another company in a scheme of amalgamation, and the conditions specified in clause (iv) or, clause (v), or, as the case may be, clause (vi) of section 47 are satisfied, then, in determining the aggregate of all deductions in respect of depreciation under this clause, account shall also be taken of the deductions in respect of depreciation allowed in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any shall be taken to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its business ........" Under s. 32, depreciation has to be allowed at the prescribed percentage on the written down value of machinery and plant. In the relevant assessment year, the written down value had been defined in s. 43(6). In the case of assets acquired in the previous year, written down value would be equal to the actual cost, i.e., actual cost to the assessee. For assets acquired before the previous year, the written down value would be the actual cost to the assessee less all depreciation actually allowed. But the Expln. 2A to s. 43(6) provides that where there has been an amalgamation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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