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TMI Blog1986 (1) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... red in law and on facts in rejecting the assessee's claim that the remuneration paid to the directors of the company could be disallowed under s. 40(C) and not under s. 40A(5). He failed to appreciate that s. 40A(5) was a general section for disallowing part of the remuneration paid to the exployees of the company and s. 40(c) was specific section for the disallowance of remuneration paid to the directors of the company. The ld. counsel for the assessee relied on the judgment reported in Addl. CIT vs. Tarun Commercial Mills Ltd. 1977 CTR (Guj) 141 : (1978) 113 IIT 745 (Guj) in support of his contention that the provisions of s. 4(C) were applicable. He also relied on the order of the Special Bench of the Tribunal reported in Geoffrey Manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 1 SOT 265 (Mad) (SB). Since the issue is already covered in favour of the assessee by the earlier decision of the Chandigarh Bench of the Tribunal referred to above, we have no hesitation in reversing the order of the CIT(A) on this point. The ITO is directed to exclude the commission paid to the directors of the company as part of remunerations for purposes of s. 40(C)/40A(5) of the Act. 6. The fifth ground is that the CIT(A) has erred in law in rejecting the appellant's ground that the provisions relating to depreciation are procedural in nature and would accordingly apply to all the pending assessments. Therefore, the computation of depreciation should have been made in accordance with the new rules. Rates of depreciation on buildin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed from time to time under the various Finance Acts are applicable to the assessment years to which they relate and the rates of depreciation relevant to current assessment year cannot be made applicable to an assessment year three years backwards. The analogy and the judgements cited by the AR are not relevant because the rates of depreciation are not of procedural nature. I hold that the rates of depreciation are having substantive character and cannot be applied to all pending assessments in disregard of the rates laid down for those years by the relevant Finance Acts. This ground of appeal therefore, fails". The assessee is aggrieved against the above order of the CIT(A). 7. It has been contended before us by the ld. Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other hand, has supported the orders of the authorities below. He contended that upto 1st April, 1983 the Department had vested right in allowing depreciation @ 10 per cent and it was only from 2nd April, 1983 that the assessee acquired the right of depreciation at the enhanced rate of 15 per cent. He, therefore, contended that the rule was substantive in nature and, it was applicable prospectively and no retrospectively. 8. We have given our careful consideration to the rival submissions. We are not inclined to agree with the ld. counsel for the assessee that all rules are procedural in nature. The rule can both be procedural as well as substantive, the Act can also be procedural as well as substantive. Each provision has to be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ested right to allow depreciation at the rate of 10 per cent, This right of the Revenue was a substantive right. Unless it was displaced, the Department had right to allow depreciation only @ 10 per cent. Since this was changed from 2nd April, 1983, the assessee acquired vested right for depreciation at the higher rate only from that date. It may not be out of place to mention that right to receive depreciation is conferred on the assessee under s. 32 of the IT Act. The rate of depreciation has not been given in the said section. It only provides that the depreciation shall be allowed at the prescribed rate. Without the prescribed rate, the assessee does not acquire any vested right to the depreciation allowance. Such right is conferred on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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