9911796707
TMI Blog1985 (6) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... year was allowed 'subject to the condition that it may be withdrawn in any of the subsequent years, if it is found, the change of accounting year leads to loss to the revenue'. By subsequent letter dated 20-12-1977 the same ITO informed the assessee that 'the period of 15 months from 1-4-1977 to 30-6-1978 is being divided into two assessment years, relevant accounting years being 1-4-1977 to 31-3-1978 and 1-4-1978 to 30-6-1978 for the assessment years 1978-79 and 1979-80, respectively'. He advised it to make payment under section 210 of the Income-tax Act, 1961 ('the Act') in accordance with the estimate filed on 14-12-1977. He, however, stated that the change in the accounting year was allowed subject to the condition that 'proportionate d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded that as a corollary to the proviso of this section, depreciation proportionate to the period during which the machinery was used and not full depreciation for the entire period should be granted. He also contended that both the letters of the ITO dated 14-12-1977 and 20-12-1977 should be read together. These contentions were opposed by the authorised representative for the assessee who contended that the condition imposed by the letter dated 20-12-1977 was an additional condition which could be imposed only in exercise of the powers under section 154 of the Act, but the same is invalid because it was not imposed by an order under section 154. He further contended that the condition about the proportionate depreciation imposed by the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the letter dated 20-12-1977. It runs as follows : "The change in the accounting year is allowed subject to the condition that proportionate depreciation shall be allowed only for the accounting year relevant to the assessment year 1979-80, i.e., from 1-4-1978 to 30-6-1978 one-fourth of the normal depreciation." According to the authorised representative for the assessee, it is an additional condition imposed subsequent to the granting of permission for change of accounting year and as such is invalid for not being imposed in accordance with law. According to the departmental representative, this letter dated 20-12-1977 and the letter dated 14-12-1977 should be read together and it should be held that they were one and the change of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional condition. As such, the ITO was not entitled to impose such condition by letter dated 20-12-1977. 6. There is another aspect which determines the validity of imposition of this condition. In the case of J.K. Synthetics Ltd. the Allahabad High Court laid down that : ". . . sub-section (4) of section 3 provides that if an assessee has already chosen a previous year he shall not after it without the permission of the Income-tax Officer. It is under this provision that the company applied for permission to change its previous year and the Income-tax Officer allowed the change on certain conditions, which we have already reproduced above. It is not disputed that the conditions which the Income-tax Officer can impose must be valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the second column of the Table in Part I of Appendix I to the Rules. The following words in this sub-rule 'the written down value of such of the assets aforesaid as are used for the purposes of the business or profession of the assessee at any time during the previous year' are sufficient to show that depreciation at the percentage mentioned in second column of the Table in Part I of Appendix I is available though the machinery is used for part of the year. The words 'at any time' are sufficient to show that depreciation at the rate mentioned in the Table is available even though the machinery is used for any length of time during the previous year. So, the assessee was entitled to full depreciation at the rate mentioned in the Table ..... X X X X Extracts X X X X X X X X Extracts X X X X
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