JUDGMENT
Venkataswami, J.
1. The Tribunal, at the instance of the Revenue, has referred the following question, under section 256(1) of the Income-tax Act, 1961, for the decision of this court :
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the view taken by the Appellate Assistant Commissioner that depreciation allowance as directed by him should be granted to the assessee in respect of its Malaysian assets for the assessment years under reference, namely, 1970-71 to 1972-73, was correct and reasonable ?”
2. The brief facts leading to the reference are the following :
The assessee is a banking company. Its head office and branches in India were nationalised on July 18, 1969. The assessee had also branches at Mallacca, Kuala Lampur, Klang, Ipoh and Penang in Malaysia. For the assessment years, namely, 1970-71 to 1972-73, the assessee claimed depreciation in respect of its assets in its foreign branches. The particulars of the working of the written down value in respect of the assets in those places were not available at the time of assessment. According to the Income-tax Officer, in terms of section 34 of the Act, the depreciation can be allowed only if the prescribed particulars are furnished. On that account, the Income-tax Officer held that the assessee has not given the correct opening written down value of the assets in the Malaysian branches as on January 1, 1969, and, therefore, the depreciation could not be allowed. On appeal, the appellate authority found that the only way available for calculating the written down value of the Malaysian assets was on a reasonable basis. For this purpose, he had taken the proportion of the written down value of the whole of the assets in the assessee-company to the book value of the assets of the whole company. This proportion was applied to the book value of the Malaysian assets and finally worked out the opening written down value of the Malaysian assets for the assessment year 1969-70. The opening written down value of the Malaysian assets for the assessment year 1969-70 was arrived at by the Appellate Assistant Commissioner on the above basis, and with that, he directed the Income-tax Officer to work out the depreciation allowable for the assessment years in question. The Appellate Assistant Commissioner has given further direction that the income-tax Officer, while calculating the depreciation allowable, should also consider the additions to the various assets during the relevant years in question, and the assessee was also directed to furnish the relevant particulars before the Income-tax Officer. He further seems to have arrived at the figure itself at Rs. 2,85,212 on the basis of the particulars furnished before him, and, on the basis of the formula propounded by him, directed the Income-tax Officer to verify the correctness of the claim and allow deduction of the correct amount of depreciation.
3. The Revenue, aggrieved by the orders of the Appellate Assistant Commissioner, filed appeals before the Tribunal, and contended that in the absence of the written down value of the assets in the Malaysian branches, the Appellate Assistant Commissioner was wrong in giving directions as mentioned above which go contrary to the terms of section 34 of the Act.
4. It appears, before the Tribunal, the assessee’s counsel contended that the assessee had given particulars that the business was a composite one and the Income-tax Officer should have determined the written down value, and as he has failed to do so, the Appellate Assistant Commissioner has taken a reasonable view, which cannot be found fault, with on the facts of the case.
5. The Tribunal after referring a case decided by the Calcutta High Court, namely, Karnani Industrial Bank Limited v. CIT [1954] 25 ITR 558, held the method adopted by the Appellate Assistant Commissioner as correct. The Tribunal also referred to a decision of the Supreme Court in Guzdar Kajora Coal Mines Limited v. CIT [1972] 85 ITR 599 in support of the conclusion reached by the Appellate Assistant Commissioner. The Appellate Tribunal noticed in the order the difficulties experienced by the assessee in ascertaining the written down value on account of the nationalisation of the Indian branches and the consequential necessity for propounding a reasonable method to find out the reasonable written down value in respect of assets in the Malaysian branches.
6. Learned counsel appearing for the Revenue reiterated before us that the assessee should strictly comply with the requirement of the provision of section 34 by furnishing the particulars to arrive at the written down value of the assets in Malaysia, and, in the absence of that, the reasonable proportion as allowed by the Appellate Assistant Commissioner and confirmed by the Tribunal cannot be sustained.
7. We do not think we can sustain this argument of learned counsel for the Revenue on the special circumstances of this case, namely, nationalisation of the head office and branches of the assessee-banking company in India, and in view of the ruling of the Supreme Court referred to by the Tribunal, namely, Guzdar Kajora Coal, Mines Ltd. v. CIT [1972] 85 ITR 599.
8. We derive support for our above conclusion from a decision of this court, namely, Indian Bank Limited v. CIT [1985] 153 ITR 282. One of the questions dealt with by the learned judges in that case was similar to the one dealt with in this case. There also, the written down value of the assets of the branches of the Indian Bank in Malaysia, came up for consideration.
9. Ramanujam J., speaking for the Bench, held as follows (at page 291) :
“Coming to the question as to whether the assessee is entitled to depreciation in respect of the Malaysian assets for the years 1970-71 and 1972-73, it is seen that the assessing authority has directed the withdrawal of the depreciation given earlier only because no item-wise particulars have been furnished as required by section 32. As already stated, the Appellate Assistant Commissioner as well as the Tribunal has held that the Income-tax Officer should not have disturbed the depreciation allowed in the original assessment for 1970-71 and 1972-73. It is not in dispute that the assets in Malaysia have been actually used for business purposes. The only reasoning for the withdrawal of the depreciation already granted is that item-wise particulars regarding the written down value have not been given by the assessee. As a matter of fact, in the original assessment, the Income-tax Officer allowed depreciation of Malaysian assets on a proportionate basis in the absence of particulars. It is true, the item-wise particulars of the written down value of each of the assets were not available with the assessee. But, once it is conceded that the entire assets have been used only for business purposes, depreciation on Malaysian assets can be allowed on a proportionate basis as has been done by the Income-tax Officer at the stage of the original assessment. It is no doubt true, section 34 says that the deductions referred to in section 32(1) shall be allowed only if the prescribed particulars have been furnished and, in this case, the assessee is not in a position to furnish the particulars. But having regard to the fact that the Malaysian assets have not been valued separately, depreciation can be given on a proportionate basis. Having given depreciation on the Malaysian assets on a proportionate basis, the assessing authority is not justified in withdrawing the benefit merely on the basis that item-wise particulars have not been furnished. We are inclined to agree with the view taken by the Appellate Assistant Commissioner and the Tribunal on this aspect of the case. Thus, the second question referred in Tax Cases Nos. 857 and 858 of 1979, is answered in the affirmative and against the Revenue.”
10. In the result, we answer the question in the affirmative and against the Revenue with costs. Counsel’s fee Rs. 1,000 one set.