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TMI Blog2001 (1) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... started production in the previous year relevant to the asst. yr. 1995-96. The claim of the assessee under s. 80-IA for the year under appeal was Rs. 1,70,26,715. The AO, however, reduced the same by the amount of depreciation of Rs. 13,87,736 and allowed deduction of the balance of Rs. 1,58,99,948. His reasoning, in brief, was that the depreciation claim had been withheld only with a view to availing of the deduction, as otherwise the depreciation claim would be sufficient to adsorb the entire profits from the Daman unit. According to him, tax avoidance was the sole motive for not claiming depreciation and so the case also attracted the McDowell Co. vs. CTO (1985) 47 CTR (SC) 126 : (1985) 154 ITR 148 (SC). He incidentally noticed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if he chooses not to claim it, the AO has no power to thrust the allowance. One such judgment which was approved was that of the Hon'ble Bombay High Court in CIT vs. Shri Someshwar Sahakari Karkhana Ltd. (1989) 75 CTR (Bom) 135 : (1989) 177 ITR 443 (Bom). In this judgment, the High Court referred to the judgment of the Supreme Court in CIT vs. Dharampur Leather Co. Ltd. (1966) 60 ITR 165 (SC) and held that depreciation is an allowance for the benefit of the assessee and he is entitled to a choice of claiming or not claiming the same, and if the choice is exercised in favour of not claiming the allowance, the AO cannot force it on the assessee. Another judgment approved was that of the Punjab Haryana High Court in CIT vs. Friends Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the depreciation allowance on the assessee. It further follows logically that in the absence of a claim by the assessee the allowance cannot be thrust upon him even if the particulars are available to the AO. Therefore, the mere fact that the assessee before us did not make a claim for depreciation in respect of its Daman unit places a fetter upon the powers of the AO to allow depreciation. 6. But the contention of the Revenue is that after 1st April, 1988, the condition of furnishing the particulars required by sub-ss. (1) and (2) of s. 34 has been done away with and that has altered the effect of the judgment in Mahendra Mills. It is difficult to uphold the contention because not only has the Supreme Court viewed the conditions as cumul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of deduction under s. 32. Even in the absence of r. 5AA, the return of income in the form prescribed itself requires particulars to be furnished in great detail. There is a circular of the Board, dt. 31st Aug., 1965, which provides that depreciation could not be allowed where the required particulars have not been furnished by the assessee and no claim for the depreciation has been made in the return. The ITO in such a case is required to compute the income without allowing depreciation allowance. The circular of the Board, dt. 11th April, 1955, is of no help to the Revenue. It imposes merely a duty on the officers of the Department to assist the taxpayers in every reasonable way, particularly, in the matter of claiming and securing r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... makes a claim and the particulars required in the return form are furnished. The ratio of the observations is that in order to obtain an allowance or deduction, it is necessary for the assessee to make a claim and also support it by necessary particulars or evidence. This very basic principle of Income-tax law has been reiterated by the Supreme Court in these observations. Therefore, it is no answer to the judgment to say that it does not hold good after the omission of sub-ss. (1) and (2) of s. 34 and r. 5AA w.e.f. 1st Ar5ril, 1988. 8. The argument based on tax avoidance and the judgment in McDowell has also been answered by the quoted observations. If, as held by the Supreme Court, it is expected of the AO to advise the assessee not to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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