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TMI Blog1980 (10) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... e present appeal before the Tribunal have been succinctly summarised by the CIT (A) in his order as under; The appellant is a non resident Shipping Company and in the original assessment made under s. 143 (3) the appellant total income was computed at nil after setting off the unabsorbed depreciation of the earlier years Subsequently, the ITO received general instructions from the Board to the effect that in respect of the non resident companies for allowing depreciation under the Indian law in respect of assets acquired before the date of Devaluation, the original cost of the assets has to be converted into Indian rupees at the pre devaluation rate of exchange and then the original cost in terms of rupees would remain the same even after devaluation expecting cases where s. 43A of the IT Act applied The board, in the course of the Circular has also directed the ITO to have the assessment of foreign shipping companies reviewed in the light of the Board's instructions issued on the basis of Audit objection so that if depreciation had been wrongly allowed and in any case immediate steps should be taken to revise these assessment suitably. In the light of these instructions the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore CIT (A) firstly on the ground that the proceedings under s. 147 (b) were wrongly initiated and there was no justification for the same. But as it would appear from the CIT's order that the assessee was aggrieved of the ITO's action in reopening the assessment under s. (14)(b) of the IT Act. In any case, he upheld the action of the ITO as he found that excessive depreciation had been allowed which led him to believe that income of the assessee bad been underestimated in the original assessment Relying on the Supreme Court decision in the case of R.K. Malhotra, ITO, Group CIR II (I) Ahmedabad vs. Kasturbai lalbhai 1977 CTR SC 336; (1977) 109 ITR 537 (SC) and in the case of Kayanji Mavji s Co. vs. CIT W.B.(1976) 102 ITR 287 (SC) he justified the ITO's action under s. 147 (b) of the IT Act. 5. The assessees next objection before the CIT (A) was that the assessee was non-resident company maintaining its account in Yugoslavia in Dinars and the ships under consideration had been purchased by the assessee by payment in Dinars Accordingly the cost in Dwould be the actual cost of the shops and the question of their conversion into Indian Rupees would not arise. The accounts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the reassessment proceedings that depreciation allowed in the original assessment and sought to be reduced by the ITO in the course of reassessment had not been correctly worked out in that the assessee had been allowed less depreciation than what it was entitled to. Finally he upheld the assessment made by the ITO in principle but he directed them as contained in the Board's Circular on the subject. While doing so he directed the ITO to compute the depreciation based on the actual cost in rupees of the ships engaged in Indian trade including those brought prior to 1966 when the rupee was devalued. He further directed the ITO to ensure that all unabsorbed depreciation relating to the earlier years was duly brought for ward ad allowed as a set off. Appearing on behalf of the Revenue the ld. Deptl. Rep. has taken us through the course of the reassessment proceedings. It is submitted on behalf of the Revenue, that if the direction as given by the CIT (A) to the ITO for re-calculating the Depreciation allowance were carried out, the assessment as finally framed would be of an income lower than what was assessed by the original assessment As explained by the learned Judges of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overruled their own decision in the case of Kevaldas Ranchhoddas (1968) 68 ITR 842 (Bom) following the Supreme Court decision in the case of V. Jogmohan Rao Ors vs. CIT Ept (AP)(1970) 75 ITR 373 (SC). 8. Coming to the cross objection filed by the assessee against the appeal filed by the Revenue the main objection which has been pressed before us is that the CIT (A) erred in not allowing the depreciation for the full year after determining the Indian income of freight earnings basis as per the provisions of the IT Act. It was the submission of the learned counsel for the assessee that the CIT (A) should have allowed depreciation on the basis of the full year and not on the basis of pro rata on time basis. It was stated that the CIT (A) should have accepted that the correct method of working the depreciation would only be on the basis of time factor based on number of days to ship had spent in Indian Waters. The ld. CIT (A) should have allowed the depreciation claimed on the basis of the number of days in Indian Water to the number of days in the year after determining the Indian income of freight earning basis. We find that this issue has been decided by the ITO against the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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