{"id":236871,"date":"2000-03-15T00:00:00","date_gmt":"2000-03-14T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-mahendra-mills-on-15-march-2000"},"modified":"2017-07-13T14:41:05","modified_gmt":"2017-07-13T09:11:05","slug":"commissioner-of-income-tax-vs-mahendra-mills-on-15-march-2000","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-mahendra-mills-on-15-march-2000","title":{"rendered":"Commissioner Of Income Tax vs Mahendra Mills on 15 March, 2000"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Commissioner Of Income Tax vs Mahendra Mills on 15 March, 2000<\/div>\n
Author: D Wadhwa<\/div>\n
Bench: D.P.Wadhwa, S.S.M.Quadri<\/div>\n
           PETITIONER:\nCOMMISSIONER OF INCOME TAX\n\n\tVs.\n\nRESPONDENT:\nMAHENDRA MILLS\n\nDATE OF JUDGMENT:\t15\/03\/2000\n\nBENCH:\nD.P.Wadhwa, S.S.M.Quadri\n\n\n\n\nJUDGMENT:\n<\/pre>\n
      D.P.  WADHWA, J.\n<\/p>\n
      A\t common question of law arises in these appeals.  It
\nis:\n<\/p>\n
      “Whether, on the facts and in the circumstances of the
\ncase,  the  Tribunal was right in coming to  the  conclusion
\nthat  the  Income-tax Officer could not\t grant\tdepreciation
\nallowance  to  the assessee under the Income-tax  Act,\t1961
\nwhen the same was not claimed by the assesse?”\n<\/p>\n
      The  question was referred at the instance of  Revenue
\nto  the\t High  Court by the Income  Tax\t Appellate  Tribunal
\n(‘Tribunal’  for  short)  for its opinion  and\tanswered  in
\naffirmative  in\t favour\t of  the assessee  and\tagainst\t the
\nRevenue.   This\t question has been answered  differently  by
\nvarious\t High  Courts one in favour of the assessee and\t the
\nother in favour of the Revenue.\n<\/p>\n
      Section 32 has since been amended by the Taxation Laws
\n(Amendment  and\t Miscellaneous Provisions) Act,\t 1986,\twith
\neffect\tfrom 1.4.1988.\tHowever, the answer to the  question
\nremains\t of  substantial importance as various\tmatters\t are
\nstated\tto  be\tpending\t in  the  High\tCourts\trelating  to
\nAssessment  Years prior to 1.4.1988.  Section 32 as it stood
\nprior to 1.4.1988, in relevant part, is as under :\n<\/p>\n
      “32.   (1)  In respect of depreciation  of  buildings,
\nmachinery, plant or furniture owned by the assessee and used
\nfor  the  purposes  of\tthe   business\tor  profession,\t the
\nfollowing  deductions  shall, subject to the  provisions  of
\nsection 34, be allowed<\/p>\n
      (i) …………\n<\/p>\n
      (ii)  in\tthe case of buildings, machinery,  plant  or
\nfurniture,  other  than\t ships covered by clause  (i),\tsuch
\npercentage  on the written down value thereof as may in\t any
\ncase or class of cases be prescribed:\n<\/p>\n
      Provided\tthat where the actual cost of any  machinery
\nor plant does not exceed seven hundred and fifty rupees, the
\nactual\tcost  thereof  shall be allowed as  a  deduction  in
\nrespect\t of  the  previous year in which such  machinery  or
\nplant  is first put to use by the assessee for the  purposes
\nof his business or profession:\n<\/p>\n
      Provided\tfurther\t that no deduction shall be  allowed
\nunder  this  clause  or\t clause\t (iii)\tin  respect  of\t any
\nmotor-car  manufactured outside India, where such  motor-car
\nis  acquired by the assessee after the 28th day of February,
\n1975, and is used otherwise than in a business of running it
\non hire for tourists;”\n<\/p>\n
      “32(2)  Where, in the assessment of the assessee\t(or,
\nif the assessee is a registered firm or an unregistered firm
\nassessed  as  a\t registered firm, in the assessment  of\t its
\npartners),  full  effect  cannot be given to  any  allowance
\nunder  clause  (i) or clause (ii) or clause (iia) or  clause\n<\/p>\n
(iv)  or  clause  (v) or clause (vi) of sub-section  (1)  or
\nunder  clause (i) of sub-section (1A) in any previous  year,
\nowing to there being no profits or gains chargeable for that
\nprevious  year, or owing to the profits or gains  chargeable
\nbeing  less  than  the\tallowance,   then,  subject  to\t the
\nprovisions of sub- section (2) of section 72 and sub-section
\n(3) of section 73, the allowance or part of the allowance to
\nwhich  effect has not been given, as the case may be,  shall
\nbe added to the amount of the allowance for depreciation for
\nthe  following\tprevious year and deemed to be part of\tthat
\nallowance,  or\tif  there  is no  such\tallowance  for\tthat
\nprevious  year,\t be  deemed  to be the\tallowance  for\tthat
\nprevious year, and so on for the succeeding previous years.”\n<\/p>\n
      We may also quote Sections 28 and 29 :\n<\/p>\n
      “28.   The  following  income shall be  chargeable  to
\nincome-tax  under the head “Profits and gains of business or
\nprofession”, –\n<\/p>\n
      (i)  the\tprofits\t and  gains   of  any  business\t  or
\nprofession  which was carried on by the assessee at any time
\nduring the previous year;\n<\/p>\n
      (ii)  any\t compensation  or other payment\t due  to  or
\nreceived by, –\n<\/p>\n
      (a) any person, by whatever name, called, managing the
\nwhole or substantially the whole of the affairs of an Indian
\ncompany,  at  or in connection with the termination  of\t his
\nmanagement  or the modification of the terms and  conditions
\nrelating thereto;\n<\/p>\n
      (b)  any person, by whatever name called, managing the
\nwhole  or substantially the whole of the affairs in India of
\nany  other company, at or in connection with the termination
\nof  his\t office\t or  the   modification\t of  the  terms\t and
\nconditions relating thereto;\n<\/p>\n
      (c)  any\tperson, by whatever name called, holding  an
\nagency\tin India for any part of the activities relating  to
\nthe  business of any other person, at or in connection\twith
\nthe  termination  of the agency or the modification  of\t the
\nterms and conditions relating thereto;\n<\/p>\n
      (d)  any person, for or in connection with the vesting
\nin the Government, or in any corporation owned or controlled
\nby  the\t Government,  under any law for the  time  being  in
\nforce, of the management of any property or business;\n<\/p>\n
      (iii)  income  derived  by a  trade,  professional  or
\nsimilar association from specific services performed for its
\nmembers;\n<\/p>\n
      (iv)  the value of any benefit or perquisite,  whether
\nconvertible  into money or not, arising from business or the
\nexercise of a profession.\n<\/p>\n
      “Income\tfrom  profits  and   gains  of\tbusiness  or
\nprofession, how computed<\/p>\n
      29.   The\t income referred to in section 28  shall  be
\ncomputed  in  accordance  with the provisions  contained  in
\nsections 30 to 43A.”\n<\/p>\n
      Assessee\tis  a  company\tand  maintains\taccounts  on
\nmercantile basis.  For the assessment year 1974-75, assessee
\ndid  not  claim\t any   depreciation.   Income-tax   Officer,
\nhowever,  allowed  depreciation.  Assessee appealed  to\t CIT
\n(Appeals)  who\tallowed the appeal.  Revenue then  took\t the
\nmatter\tto  the Tribunal which dismissed the appeal  of\t the
\nRevenue.   At  the instance of the Revenue, the question  of
\nlaw as set out in the beginning of the judgment was referred
\nto  the\t Gujarat High Court for its opinion.  High Court  by
\nthe  impugned  judgment\t following its earlier\tdecision  in
\nChokshi\t Metal\tRefinery  vs.  Commissioner  of\t Income-Tax,
\nGujarat-II  [(1977) 107 ITR 63 (Guj)] answered the  question
\nin  affirmative,  in favour of the assessee and against\t the
\nRevenue.   Aggrieved,  revenue\thas   come  to\tthis  Court.
\nIncome-tax  Officer in Assessment Order noted that  assessee
\ndid not claim current depreciation.  It was contended before
\nhim  that the allowance of depreciation is a right given  to
\nthe  assessee  and  like  all other  rights  and  privileges
\nassessee  has  full freedom to claim or not to claim it\t and
\nthat  right cannot be a burden.\t A privilege cannot be to  a
\ndisadvantage  and  an  option cannot become  an\t obligation.
\nIncome-tax  Officer  did  not accept the contention  of\t the
\nassessee  and computed the current depreciation for a sum of
\nRs.37,61,652\/- which he allowed.  Mr.  Verma, learned senior
\ncounsel\t for the Revenue submitted that Sections 28, 29\t and
\n32(1)  and  32(2)  are\tto be read  together  and  so  read,
\ndepreciation  had  to  be allowed under law and\t it  is\t not
\nrelevant  if it is claimed by the assessee or not.  He\tsaid
\nthere  is  conflict of judgments of the High Courts.   While
\nsome  judgments\t support the view canvassed by\thim,  others
\nsupport\t the view of the assessee.  Section 28 lays down  as
\nto  what Income shall be chargeable to income tax under\t the
\nhead  “Profits\tand  gains of business\tor  profession”\t and
\nSection\t 29  mandates that income referred to in Section  28
\nshall\tbe  computed  in   accordance  with  the  provisions
\ncontained  in  Sections\t 30  to 43A.  That  being  the\tlaw,
\nIncome-\t tax Officer was bound to allow depreciation whether
\nthe assessee chooses to claim the same or not.\tTo arrive at
\nthe  profit,  depreciation has to be deducted  commercially,
\naccountably  as well as statutorily.  Written down value  of
\nthe  plant  and machinery for the next year will have to  be
\nclaimed\t which\tcannot\tbe  the written down  value  of\t the
\ncurrent\t year.\t Sub- section (2) of Section  32  prescribes
\nmechanism  as  to how the deduction is to be  allowed.\t Mr.
\nVerma  said  if\t the claim for depreciation was\t a  case  of
\nchoice\tfor  the assessee, it would negate the\tdecision  of
\nthis  Court  in\t Commissioner of  Income-Tax,  Calcutta\t vs.
\nJaipuria China Clay Mines (P) Ltd.<\/a>  [(1966) 59 ITR 555 (SC)]
\nand  Garden  Silk  Weaving   Factory  vs.   Commissioner  of
\nIncome-tax<\/a>  [(1991)  189 ITR 512 (SC)].\t Income-tax  Officer
\nduring the course of assessment can call for the records.\n<\/p>\n
      Mr.   Verma said that during the course of  assessment
\nproceedings,  Income-tax  Officer can call for\tthe  account
\nbooks  of the assessee, look into the same and calculate the
\ndepreciation  allowable under Section 32.  To carry  forward
\nloss  one has to arrive at the net income which can be\tdone
\nonly after adjusting depreciation though now after change in
\nlaw  depreciation  cannot be carried forward beyond  certain
\nyears.\t Mr.   Verma submitted that looking at the  language
\nused  in Section 29 the Income-tax Officer is duty bound  to
\nallow  depreciation in order to compute the income  referred
\nto  in\tSection 28 of the Act which he is to do\t keeping  in
\nview  of the provisions contained in Sections 30 to 43\t(now
\nSection\t 43D).\t The  assessee need not make any  claim\t for
\ndepreciation  of  the current year.  It is admissible  under
\nthe  law.  Section 32 only requires as to how the  allowance
\nof  depreciation  is  to  be quantified.  As  any  claim  of
\ndepreciation  made  by\tthe assessee is not binding  on\t the
\nIncome-tax  Officer similarly not to claim the same is\talso
\nnot  binding on the Income- tax Officer and he can from\t the
\navailable  material  allow  admissible\t deduction  for\t the
\ncurrent year in arriving at the true income of the assessee.\n<\/p>\n
      Mr.   Dastur,  who on our request appeared  as  amicus
\ncuriae,\t submitted that view canvassed by the Revenue is not
\ncorrect.    He\tsaid  if  the\tassessee  does\t not   claim
\ndepreciation  or  does not furnish particulars for  claiming
\ndepreciation  as  prescribed under Section 34 of the Act  in
\nhis  return  of income, depreciation cannot be\tthrust\tupon
\nhim.   To get depreciation allowance, there must be a  claim
\nfor  that under Section 32 which would subject to furnishing
\nof  particulars\t under\tSection\t 34 of the  Act.   The\tword
\n“furnishing”  in  Section  34  would  mean  ‘what  is  given
\nvoluntarily’.\tSection 34 of the Act prescribes  conditions
\nfor  depreciation allowance.  Sub-section (1) of Section  34
\nis  relevant  and it is as under :  “34.(1)  The  deductions
\nreferred  to  in  sub-section  (1) of  sub-section  (1A)  of
\nsection\t 32  shall  be\tallowed\t  only\tif  the\t  prescribed
\nparticulars have been furnished;  and the deduction referred
\nto  in\tsection 33 shall be allowed only if the\t particulars
\nprescribed  for the purpose of clause (i) and clause (ii) of
\nsub-section  (1)  of section 32 have been furnished  by\t the
\nassessee in respect of the ship or machinery or plant.”\n<\/p>\n
      Mr.   Dastur  referred  to a circular of\tthe  Central
\nBoard\tof   Direct  Taxes   (CBDT)  which   provides\tthat
\ndepreciation  could not have been allowed.  Circular of\t the
\nCentral Board of Revenue (No.  29D (XIX-14) of 1965, F.\t No.
\n45\/239\/65.ITJ  dated August 31, 1965) was to the effect that
\n“where\tthe required particulars have not been furnished  by
\nthe  assessee and no claim for depreciation has been made in
\nthe  return,  the  Income-tax Officer  should  estimate\t the
\nincome\twithout\t allowing  depreciation\t allowance”.   Thus,
\nunless\tthe  particulars of depreciation are  furnished,  no
\ndepreciation allowance could be allowed.  He referred to yet
\nanother\t circular of the CBDT which provides that it is\t the
\nduty of the Income Tax Officer to advise the assessee of his
\nright  to claim depreciation etc.  but that would arise only
\nif  the\t assessee is ignorant of his right.   Moreover,\t the
\nduty  of  the  Income Tax Officer is to give advice  to\t the
\nassessee  of  his  right and no more.  The circular  of\t the
\nCentral\t Board\tof Revenue (No.\t 14 (SL- 35) of\t 1955  dated
\nApril  11, 1955) required the officers of the department “to
\nassist\ta taxpayer in every reasonable way, particularly  in
\nthe   matter  of  claiming   and  securing  reliefs.\t….
\nAlthough, therefore, the responsibility for claiming refunds
\nand  reliefs rests with the assessees on whom it is  imposed
\nby  law,  officers should  (a) draw their attention to\tany
\nrefunds\t or  reliefs  to  which they appear  to\t be  clearly
\nentitled  but  which  they have omitted to  claim  for\tsome
\nreason\tor other……” When there are two provisions  under
\nwhich  an  assessee could claim some benefit, it is for\t the
\nassessee  to  choose one.  Reference was made to  claim\t for
\nmedical\t  reimbursement\t for  the   current  year  which  is
\ndifferent  than claim for depreciation.\t This is so  because
\ndepreciation  is  a  claim  on written\tdown  value  and  if
\ndepreciation  is  not claimed in the current  year,  written
\ndown  value  would remain the same for the  following  year.
\nPrior  to the amendment of Section 32 business loss could be
\ncarried\t forward  for eight years.  There was no time  limit
\nfor  the  claiming  of depreciation.  This is  not  so\tnow.
\nEarlier,  therefore, it was always for the assessee to claim
\nbusiness  loss first and current depreciation thereafter  if
\nhe  so desired.\t There was, thus, basic difference in  carry
\nforward loss and carry forward unabsorbed depreciation.\t Mr.
\nDastur\tsaid it is not correct to say that if the contention
\nof  the assessee is correct, that would negate the  decision
\nof the Supreme Court in the cases of CIT vs.  Jaipuria China
\nClay  Mines [59 ITR 555] and Garden Silk Weaving Factory vs.
\nCIT  [189  ITR\t512].  He then referred to Rule 5AA  in\t the
\nIncome\tTax  Rules, 1962 (Rules) which was inserted  by\t the
\nIncome Tax (Amendment) Rules, 1981 with effect from April 1,
\n1981.  It was omitted by Income Tax (Third Amendment) Rules,
\n1987  with effect from April 2, 1987.  Rule 5AA is as under:\n<\/p>\n
–\n<\/p>\n
      “5AA.   (1) For the purposes of the deduction referred
\nto  in sub-section (1) or sub-section (1A) of section 32 and
\nsub-section  (1)  of section 32A, the following\t particulars
\nshall be furnished in a columnar form, namely:\t–\n<\/p>\n
      (i)  description\tof  assets in respect  of  building,
\nindicate  whether the building is taken on lease or is owned
\nby the assessee;\n<\/p>\n
      (ii) written down value of existing assets;\n<\/p>\n
      (iii)  actual  cost  of  assets  acquired\t during\t the
\nprevious year;\n<\/p>\n
      (iv) capital expenditure on additions or alterations;\n<\/p>\n
      (v)  period  of  user  only where\t return\t relates  to
\nassessment year 1969-70 or any earlier year;\n<\/p>\n
      (vi)  amount  of\tmoneys payable and  scrap  value  in
\nrespect of assets sold, discarded, demolished or destroyed;\n<\/p>\n
      (vii)  amount on which depreciation is allowable total
\nof  items  (ii)\t to (iv) exclusive of  amounts\trelating  to
\nassets referred to in item (vi);\n<\/p>\n
      (viii) rate of depreciation;\n<\/p>\n
      (ix)  total number of days worked to be furnished only
\nif extra shift allowance is claimed;\n<\/p>\n
      (x)  total  number of days worked\t double\t shift\tand
\ntriple\tshift (to be furnished only if extra shift allowance
\nis claimed);\n<\/p>\n
      (xi) depreciation claimed<\/p>\n<\/blockquote>\n
      (a) initial depreciation;<\/p><\/blockquote>\n
      (b)  normal depreciation (including extra depreciation
\nfor approved hotels);\n<\/p>\n
      (c) additional depreciation;\n<\/p>\n
      (d)  extra-shift\tallowance  double shift and  triple
\nshift;\n<\/p>\n
      (xii) total depreciation;\n<\/p>\n
      (xiii)  investment  allowance claimed  (also  indicate
\nrate);\n<\/p>\n
      (xiv)   remarks  (indicate  the\tamount\tof   initial
\ndepreciation,  investment  allowance or\t development  rebate
\nallowed in respect of the assets in an earlier year).\n<\/p>\n
      (2)  Where the depreciation in respect of any asset is
\nnot  admissible\t as  a deduction under clause (ii)  of\tsub-
\nsection\t (4) of section 37 or sub-clause (ii) of clause\t (c)
\nof  section  40\t or sub-clause (ii) of clause  (a)  of\tsub-
\nsection\t (5)  of  section 40A, such  depreciation  shall  be
\nexcluded for the purposes of sub-rule (1).”\n<\/p>\n
      This   Rule  5AA\tprescribed   the   particulars\t for
\ndepreciation  necessary\t to  be furnished for  allowance  of
\ndepreciation.\tPrior  to  insertion of Rule 5AA  return  of
\nincome\t tax   in  the\t form  prescribed  itself   required
\nparticulars   to  be  furnished\t if  the  assessee   claimed
\ndepreciation.\tMr.  Dastur said that the case set up by the
\nassessee  before the Income Tax Officer was correct.  It was
\nwrong  on  the\tpart  of the Income Tax\t Officer  to  refuse
\ndepreciation  in  the  face of the provision of law  to\t the
\ncontrary.   He\tsaid that calling the books of the  assessee
\nfor the purpose of computing depreciation is of no relevance
\ninasmuch  as depreciation in the books cannot necessarily be
\nthe amount of depreciation which is allowable under the Act.\n<\/p>\n
      Section  37  also uses the words “shall be allowed  in
\ncomputing  the\tincome chargeable”.  Under this Section\t any
\nexpenditure  which  is\tnot   expenditure  as  described  in
\nSections  30 to 36 and is also not in the nature of  capital
\nexpenditure  or\t personal expenses and laid out or  expended
\nwholly\tor  exclusively\t for  the  purpose  of\tbusiness  or
\nprofession of the assessee shall be allowed in computing the
\nincome\tchargeable  under  the head “Profits  and  gains  of
\nbusiness  or profession”.  It was submitted that expenditure
\ncan  be\t allowed  only\tif it is claimed.   Similar  is\t the
\nlanguage  used\tin  Section  34\t of  the  Act.\t Here\talso
\ndepreciation  can  be  allowed only if it is  claimed  after
\ngiving\tnecessary  particulars\tas required in a  return  of
\nincome, which is to be submitted in the form prescribed.  If
\nreference  is  made  to the form of return relevant  at\t the
\ntime,  complete\t details  are required to be given  for\t the
\npurpose of claiming depreciation.  This is under the heading
\n“Statement   of\t particulars   under  Section\t32A(4)\/34(1)
\nregarding investment allowance, depreciation and development
\nrebate”.\n<\/p>\n
      The  provisions  contained in Sections 34 and 37\twere
\ncontrasted  with Section 16 which deals with deduction\tfrom
\nsalary.\t  The language here is “the income chargeable  under
\nthe  head  “salary”  shall  be\tcomputed  after\t making\t the
\nfollowing deductions namely:  -“.\n<\/p>\n
      Mr.  Dastur like Mr.  Verma also referred to judgments
\nof  the\t High Courts giving diverse views.  High  Courts  of
\nAllahabad  and\tMadras supported the view canvassed  by\t the
\nRevenue while the High Courts of Bombay, Gujarat, Punjab and
\nHaryana,  Karnataka,  Andhra  Pradesh, Calcutta\t and  Kerala
\nsupported  the\tcase of the assessee.  We may now  refer  to
\nsome  of  the  judgments  cited at the\tBar  beginning\twith
\nJaipuria  China\t Clay Mines and Garden Silk Weaving  Factory
\ncases.\t Commissioner of Income Tax, Calcutta vs.   Jaipuria
\nChina  Clay  Mines (P) Ltd.<\/a>  [(1966) 59 ITR 555 (SC)] was  a
\ncase  under  the Income Tax Act, 1922.\tThe  question  which
\ncame  up for consideration before this Court was:  “whether,
\nin  the facts and circumstances of the case, the  unabsorbed
\ndepreciation  of  the  past  years should be  added  to\t the
\ndepreciation  of  the current year and the aggregate of\t the
\nunabsorbed   depreciation  of  the   current  year  and\t the
\naggregate  of  the unabsorbed depreciation and\tthe  current
\nyear’s depreciation be deducted from the total income of the
\nprevious year relevant for the assessment year 1952-53?”\n<\/p>\n
      The  Court  noted\t the following facts in the  case  :
\n“The  Income-tax  Officer  assessing  the  respondent,\tM\/s.
\nJaipuria  China\t Clay Mines (P) Ltd., Calcutta,\t hereinafter
\nreferred  to as “the assessee” for the year 1952-53 computed
\nits  total income at Rs.14,041 before charging\tdepreciation
\nfor  that  year.  From that figure he deducted\tdepreciation
\nfor  the year amounting to Rs.5,350, thus computing a profit
\nof  Rs.8,681.\tFrom this figure he deducted  an  equivalent
\namount, i.e., Rs.8,681, in respect of losses during 1947-48,
\nand  he thus worked out the business income as nil.  He then
\ncomputed  the dividend income at Rs.2,01,130 and  determined
\nthe  total income at this figure and levied tax on it.\t The
\nassessee  had  in  its\tfavour\tan  unabsorbed\tdepreciation
\naggregating  to\t Rs.76,857  and\t it  contended\tbefore\t the
\nIncome-tax Officer that this sum should be deducted from the
\nincome received from dividends, which, if done, would reduce
\nthe  total income to Rs.1,32,955, but the Income-tax Officer
\nrefused\t to  accede  to\t  this\tcontention.   The  Appellate
\nAssistant  Commissioner\t upheld the order of the  Income-tax
\nOfficer\t and the assessee’s appeal to the Appellate Tribunal
\nmet  with the same fate.  The High Court, however,  accepted
\nthe  contention\t of the assessee and answered  the  question
\nreferred to it in favour of the assessee.”\n<\/p>\n
      The  Court  said\tthat  the  answer  to  the  question
\ndepended upon the interpretation of Sections 6, 10 and 24 of
\nthe 1922 Act.  The Court also observed that it was concerned
\nwith  the law as it stood on April 1, 1952.  It analysed the
\nsections  stating that the scheme of the Act is that the tax
\nis  levied  in respect of the total income of  the  previous
\nyear  of every individual, Hindu undivided family, etc., and
\nthe total income consists of income under various heads such
\nas  Salaries, Interest on securities, Income from  property,
\nProfits\t and gains of business, profession or vocation,\t and
\nIncome\tfrom  other  sources  and  Capital  gains.   Various
\nsections  deal with how income, profits and gains under each
\nhead  have  to\tbe  computed.  Section\t10  deals  with\t the
\ncomputation  of profits and gains of any business carried on
\nby  an\tassessee.  Section 10(2) prescribes  the  allowances
\nwhich  have to be deducted before computing the profits\t and
\ngains;\tone of the allowances is “depreciation”, and this is
\nprovided  under\t sub-clause (vi).  Section 24  provides\t for
\nset-off\t of  losses  in computing aggregate  income.   After
\nreferring  to  proviso (b) to Section 10(2)(vi)\t this  Court
\nobserved:   “Apart from authority, looking at the Act as  it
\nstood on April 1, 1952, it is clear that the underlying idea
\nof  the\t Act is to assess the total income of  an  assessee.
\nPrima  facie, it would be unfair to compute the total income
\nof  an\tassessee  carrying on business without\tpooling\t the
\nincome\tfrom  business with the income or loss\tunder  other
\nheads.\t The second consideration which is relevant is\tthat
\nthe  Act  draws no express distinction between\tthe  various
\nallowances  mentioned in section 10(2).\t They all have to be
\ndeducted  from\tthe gross profits and gains of\ta  business.
\nAccording  to  commercial principles, depreciation would  be
\nshown  in the accounts and the profit and loss account would
\nreflect\t the depreciation accounted for in the accounts.  If
\nthe  profits are not large enough to wipe off  depreciation,
\nthe  profit and loss account would show a loss.\t  Therefore,
\napart from proviso (b) to section 10(2)(vi), neither the Act
\nnor  commercial principles draw any distinction between\t the
\nvarious\t allowances  mentioned in section 10(2);   the\tonly
\ndistinction  is\t that  while  the other\t allowances  may  be
\noutgoings, depreciation is not an actual outgoing.”\n<\/p>\n
      Proviso (b) to Section 10(2)(vi) is as under:  –\n<\/p>\n
      “(b)  where,  in the assessment of the assessee or  if
\nthe  assessee is a registered firm, in the assessment of its
\npartners,  full effect cannot be given to any such allowance
\nin  any\t year not being a year which ended prior to the\t 1st
\nday of April, 1939, owing to there being no profits or gains
\nchargeable  for that year, or owing to the profits or  gains
\nchargeable  being less than the allowance, then, subject  to
\nthe  provisions of clause (b) of the proviso to\t sub-section
\n(2) of section 24, the allowance or part of the allowance to
\nwhich  effect has not been given, as the case may be,  shall
\nbe added to the amount of the allowance for depreciation for
\nthe  following year and deemed to be part of that  allowance
\nfor  depreciation  for the following year and deemed  to  be
\npart of that allowance, or if there is no such allowance for
\nthat  year, be deemed to be the allowance for that year, and
\nso on for succeeding years.”\n<\/p>\n
      In  conclusion  this Court agreed with the High  Court
\nand  answered  the question in favour of the  assessee.\t  In
\nGarden\tSilk Weaving Factory vs.  Commissioner of Income-Tax<\/a>
\n[(1991)\t 189 ITR 512 (SC)] questions before this Court were:
\n“(1)  Whether, on the facts and in the circumstances of\t the
\ncase,  the  Tribunal  was right in law in holding  that\t the
\nassessee,  a  registered firm, is entitled to carry  forward
\nunabsorbed  depreciation from earlier years and that it will
\nbe  deemed to be an allowance in the nature of\tdepreciation
\nin  the\t previous  year\t relevant to  the  assessement\tyear
\n1968-69?   (2)\tWhether the claim of the assessee  to  carry
\nforward\t and  set off loss of Rs.3,49,242 against its  total
\nincome\tfor  the  assessment year 1968-69 has  been  rightly
\nrejected?” It will be seen that the issues which were before
\nthe Court are not the same which we are now considering.  In
\nthe  case of Garden Silk Weaving Factory reliance was  again
\nplaced\ton  the earlier decision of this Court\tin  Jaipuria
\nChina  Clay  Mines  (P) Ltd.’s case.  The  whole  stress  of
\nargument  of  Mr.   Verma  was that net\t income\t has  to  be
\nascertained  and for that purpose Income Tax Officer is duty
\nbound  to look into the amount of depreciation available for
\nthat  assessment  year and to allow credit for the  same  to
\narrive\tat  the\t net  income.  This, he said,  would  be  so
\nirrespective  whether the assessee has claimed\tdepreciation
\nor  not\t and whether particulars of depreciation  have\tbeen
\nfurnished  or  not.  We do not think these two judgments  of
\nthis Court on which strong reliance was placed by Mr.  Verma
\nadvance\t his  case.   Issues in those  cases  were  entirely
\ndifferent  having no bearing on the question before us.\t CIT
\nvs.   Dharampur Leather Co.  Ltd.  [(1966) 60 ITR 165  (SC)]
\nwas  a case under the Income-tax Act, 1922.  Sub-section (1)
\nof  section 10 deals with the tax payable by an assessee  in
\nrespect\t of the profits or gains of any business, profession
\nor  vocation  carried on by him.  Sub-section  (2)  requires
\nsuch  profits  or  gains  to be computed  after\t making\t the
\nallowances  therein set out.  Clause (vi) thereof speaks  of
\nallowances   in\t respect  of   depreciation  of\t  buildings,
\nmachinery,  plant, etc., and the proviso (a) to clause\t(vi)
\nreads  thus:  “Provided that the prescribed particulars have
\nbeen  duly  furnished”.\t In proceedings for  the  Assessment
\nYear  1955-56, the Income-tax Officer held that depreciation
\nmust  be  computed  as if income of the\t assessee  had\tbeen
\nworked\tout  properly  in  the earlier\tyears  when  it\t was
\nexempted  and  depreciation  had been allowed at  the  usual
\nrates.\t  It  was  contended  by   the\tassessee   that\t  no
\ndepreciation  had  in  fact  been actually  allowed  to\t the
\nassessee   in\tany  earlier   years  and,  therefore,\t the
\ndepreciation  should  be  computed on the original  cost  of
\nvarious items of plant and machinery and other assets of the
\nassessee.   The\t Income-tax Officer, however, rejected\tthis
\ncontention  and\t held that depreciation must be computed  on
\nthe  written  down  values of machinery computed as  if\t the
\nincome\tof the assessee had been worked out properly in\t the
\nyears  when  the company was exempted and  the\tdepreciation
\nbeing  allowed\tat  the usual rates.   The  assessee  failed
\nbefore\t the  Appellate\t Assistant   Commissioner  and\t the
\nAppellate  Tribunal.   The Appellate Tribunal held that\t the
\nwords “actually allowed” in section 10(5)(b) of the Act were
\nwide  enough  to cover the case of the assessee.   The\tHigh
\nCourt,\thowever,  held\tthat  if  in  the  prior  years\t  no
\ndepreciation  had been actually allowed then the actual cost
\nincurred  by the assessee for acquiring the machinery  would
\nbe  the\t written  down value of the machinery.\t This  Court
\nrejected  the  contention  of the Revenue that on  a  proper
\ninterpretation\t of   Section  10(5)(b)\t of  the   Act\t the
\ndepreciation  must  be\tdeemed to have been allowed  to\t the
\nassessee  for the years in which the income of the  assessee
\nwas  exempted.\t The Court interpreted the  words  “actually
\nallowed”  occurring  in\t Section 10(5)(b) to hold  that\t the
\nwords  “actually  allowed”  did\t not  include  any  notional
\nallowance.   In Beco Engineering Co.  Ltd.  vs.\t CIT [(1984)
\n148  ITR  478  (P&H)] assessee claimed depreciation  in\t its
\noriginal  return.  Later he filed a revised return in  which
\nhe  withdrew the claim for depreciation.  Income-tax Officer
\nwas  of the view that it was statutorily binding upon him to
\ncompute\t the total income which must take into consideration
\nthe  deduction\tof depreciation allowance.  High Court\theld
\nthat  in  case\tthe assessee had  not  claimed\tdepreciation
\nallowance he could not be granted the same by the Income-tax
\nOfficer.   In  regard to the revised return High Court\ttook
\nthe view that the original return could not be adverted to.\n<\/p>\n
      In  CIT  vs.  Shri Someshwar Sahakari Sakhar  Karkhana
\nLtd.   [(1989)\t177 ITR 443 (Bom.)] two issues were  raised.
\nOne  issue  was\t whether the assessee had a  choice  in\t the
\nmatter\tof  claiming a deduction on account of\tdepreciation
\nand  the  second  issue was whether, having claimed  in\t the
\noriginal return, the Income-tax Officer was entitled to rely
\non  the particulars furnished therein and allow a  deduction
\non  account of depreciation regardless of the fact that\t the
\nassessee  had  stated in the revised return that he did\t not
\nwant  it.   After  examining judgments of the  various\tHigh
\nCourts\tand of this Court in CIT vs.  Dharampur Leather\t Co.
\nLtd.  [(1966) 60 ITR 165 (SC)] the Court said:\t–\n<\/p>\n
      “In  our\tview,  to  sum up on the  first\t issue,\t the
\nassessee  has a choice to claim or not to claim a  deduction
\non  account of depreciation.  If he chooses not to claim it,
\nthe  Income-tax Officer is not entitled to allow a deduction
\non account of depreciation.”\n<\/p>\n
      In  CIT  vs, Friends Corporation [(1989) 180  ITR\t 334
\n(P&H)] the question before the High Court was whether on the
\nfacts  and  in the circumstances of the case  the  Appellate
\nTribunal  was  right in law in holding that  the  Income-tax
\nOfficer\t could not suo motu allow depreciation on the  three
\ntankers\t held by the assessee.\tSecond question was  whether
\non  the\t facts\tand  in the circumstances of  the  case\t the
\nTribunal was right in law in accepting the contention of the
\nassessee  that\the  had not made an effective claim  in\t the
\nreturn\tfor claiming depreciation.  For the Assessment\tYear
\n1976-77\t assessee filed its return of income showing loss of
\nRs,22,521\/-.   No  particulars of the depreciation  for\t the
\ntankers were filed.  Income-tax Officer, however, worked out
\ndepreciation  on  the tankers from what he gleaned from\t the
\nassessee’s  account.   High  Court  said  that\tdepreciation
\nallowance  is,\tat  any\t rate, a benefit  available  to\t the
\nassessee  to  avail of, but if the assessee chooses  not  to
\nclaim  it,  it would be contrary to reason and law  to\thold
\nthat it must be forced upon him.  High Court said:\n<\/p>\n
      “There   is   no\tgainsaying    that   allowance\t for
\ndepreciation  is  a  benefit available to  the\tassessee  to
\nclaim,\tbut not one that can be thrust upon him against\t his
\nwishes.\t  At  any rate, in order to claim depreciation,\t the
\nassessee   must\t furnish  the\trequisite   particulars\t  as
\nprescribed  by\tthe  Income-tax\t Act   and  the\t Rules\tmade
\nthereunder.   In  the  absence\tof  such  particulars,\t the
\nassessee  cannot  avail\t of,  nor  indeed  can\the  be\theld
\nentitled,  to  depreciation.  It would be pertinent in\tthis
\nbehalf\tto  advert  to the judgment of this  Court  in\tBeco
\nEngineering  Co.  Ltd.\tv.  CIT [1984] 148 ITR 478, where  a
\nreference  was\tmade to Circular No.  29D(XIX- 14) of  1965,
\ndated August 31, 1965, issued by the Central Board of Direct
\nTaxes  which  provides that where the  required\t particulars
\nhave  not  been furnished by the assessee and no  claim\t for
\ndepreciation  has  been made in the return,  the  Income-tax
\nOfficer\t  should  estimate  the\t  income  without   allowing
\ndepreciation  allowance.  Further, it was held that from the
\nlanguage  of  section  32(1)(ii)  and 34(1)  read  with\t the
\ncircular,  it  was  clear that in case an assessee  had\t not
\nclaimed\t depreciation, the Income-tax Officer could not give
\nhim depreciation allowance.”\n<\/p>\n
      In  CIT  vs.   Arun Textiles “C” [(1991) 192  ITR\t 700
\n(Guj.)]\t the assessee withdrew the claim of depreciation  in
\nthe revised return.  Income-tax Officer nevertheless allowed
\ndepreciation, which was claimed in the original return.\t The
\nCourt  noticed\tfrom the provisions of section 32(1) of\t the
\nsaid  Act  that the deduction in respect of depreciation  on
\nthe  items mentioned therein shall be allowed subject to the
\nprovisions of section 34 of the Act.  Under section 34(1) of
\nthe  said Act as was applicable during the relevant year, it
\nwas, inter alia, provided that the deductions referred to in
\nsub-section  (1) of section 32 shall be allowed only if\t the
\nprescribed  particulars\t have  been   furnished.   The\tform
\nprescribed  by rule 12 required particulars to be given\t for
\nthe  purpose  of  the claim for deductions  under  the\tsaid
\nprovision.   It is not that when depreciation is  allowable,
\nthe Income-tax Officer has no option but to grant it even if
\nthe  assessee  makes  clear its intention not to  claim\t the
\ndepreciation.  The Court said:\t–\n<\/p>\n
      “Under  clause (ii) of sub-section (1) of section\t 32,
\nsuch  percentage on the written down value of the  specified
\nassets\tis  to be allowed as a deduction in respect  of\t the
\ndepreciation  of  the assets.  It appears that allowance  in
\nsuch  cases  is, therefore, to be calculated on the  written
\ndown  value of the assets.  The written down value of assets
\nis  defined  in section 43(6) of the Act and, in respect  of
\nthe  assets  acquired  prior  to the  accounting  year,\t the
\nwritten\t down value would be the actual cost of\t acquisition
\nless  the aggregate of all the deductions “actually allowed”
\nto  the\t assessee in the past years.  It would follow  that,
\nwhere  depreciation may be merely allowable but which is not
\ncomputed, it cannot be said to have been “actually allowed”.
\nTherefore,  depreciation which is not claimed cannot be made
\nto  reflect in the written down value of the assets.  If the
\nidea  behind  the provisions was to provide  for  compulsory
\ndeductions for the depreciation, then the written down value
\nof  assets acquired before the previous year would have been
\ndefined\t so  as\t to mean actual cost less  all\tdepreciation
\nallowable  and not “actually allowed” as provided in section
\n43(6)(b) of the Act.  The provisions of section 32(1) of the
\nAct  are  intended  to\tconfer benefit on  the\tassessee  of
\nclaiming deductions on account of depreciation in respect of
\nthe specified classes of assets and, whenever it is claimed,
\nit ought to be allowed.”\n<\/p>\n
      High  Court also noticed that in that case  admittedly
\nthe  assessee  had filed his revised return in which he\t has
\nnot  claimed  deductions  in respect of\t depreciation  under
\nSection 32(1)(ii) of the Act and said:\t–\n<\/p>\n
      “The  provisions\tof section 32 are intended  to\tgive
\nbenefit\t to the assessee for claiming deductions in  respect
\nof  depreciation  on the type of assets\t mentioned  therein.
\nFurthermore,  a mere claim to deduction would not be  enough
\nsince  the  deductions\tare  to be allowed  subject  to\t the
\nprovisions   of\t  section  34\twhich\trequired   necessary
\nparticulars   to  be  furnished\t in  the  prescribed   form.
\nTherefore,  until a claim is made for allowing deductions of
\nthe  nature  covered under section 32 along  with  necessary
\nparticulars,  there  would  hardly be any occasion  for\t the
\nIncome-tax  Officer to “allow” any claim.  In the context in
\nwhich  the  word “allowed” is used in section 32(1),  it  is
\nclear to us that the meaning intended is “to admit something
\nclaimed”.   The\t word “allowed” means “to accept as true  or
\nvalid,\tto  acknowledge admit, grant”, “to  admit  something
\nclaimed,  to  acknowledge  grant, concede” (See\t the  Oxford
\nEnglish\t Dictionary,  Volume  I, 1970 Reprint,\tpage  2392).
\nThere  is  nothing in the provisions of section\t 32(1)\tread
\nwith  section  29 of the Act to indicate that even  when  no
\nclaim  is  made\t for allowing deduction in  respect  of\t the
\ndepreciation  under section 32(1), the Income-tax Officer is
\nbound  to allow a deduction.  In our view, it is implicit in
\nthe  said  provisions that the assessee should have  made  a
\nclaim  for deduction under the said provisions to enable the
\nIncome-tax Officer to consider the same.”\n<\/p>\n
      High  Court rejected the argument of the Revenue\tthat
\nunless\tdepreciation  was taken into account the  Income-tax
\nOfficer\t could\tnot arrive at the correct taxable income  of
\nthe assessee.  This is how the High Court said:\t –\n<\/p>\n
      “It  is  difficult to accept this argument for,  under
\nthe scheme of the Act, income is to be charged regardless of
\ndepreciation  on  the value of the assets and it is only  by
\nway  of an exception that section 32(1) grants an  allowance
\nin  respect  of\t depreciation on the value  of\tthe  capital
\nassets\tenumerated therein.  It may appear intriguing on the
\npart of the assessee as to why it does not claim the benefit
\nof  deduction  from  its taxable income, but the  choice  is
\nclearly\t its.  Where the assessee does not want the benefit,
\nit  cannot  be thrust upon it.\tThere is no provision  which
\nmakes it compulsory on the part of the Income-tax Officer to
\nmake  deductions in all cases.\tIf it were incumbent on\t the
\nIncome-tax   Officer   to     make   compulsory\t  deductions
\nirrespective  of  whether the assessee claimed or  not,\t the
\nstatutory  requirement\tof  making   the  claim\t along\twith
\nnecessary  particulars\tand the provision for “allowing”  it
\nwould be unnecessary.”\n<\/p>\n
      In  Chief\t CIT  (Administration)\t vs.   Machine\tTool
\nCorporation  of India Ltd.<\/a>  [(1993) 201 ITR 101 (Kar.)]\t the
\nassessee  filed revised return whereby it withdrew its claim
\nregarding  depreciation in the original return.\t Income- tax
\nOfficer,  however,  allowed  depreciation   as\tper  details
\nfurnished  in  the original return.  High Court noticed\t the
\ndivergence  of opinion among the High Courts on the question
\nand  also  referred  to a circular of the Central  Board  of
\nDirect\tTaxes dated September 4, 1972 to the effect that the
\nBoard will have no objection to the line of action suggested
\nby  the assessee, as there is nothing in law to hold that it
\nis   mandatory\t for  the   assessing  authority  to   allow
\ndepreciation  even  if\tthe assessee  withdraws\t his  claim.
\nCourt  said  there could not be any doubt that\tallowing  of
\ndeductions  as\tprovided under Section 32 of the Act  itself
\nwas  subject  to the provisions of Section 34.\t Sub-section
\n(1)  of Section 34 requires furnishing of particulars by the
\nassessee  in  return as a condition precedent to  claim\t the
\ndeductions,  and  if he does not choose to do so it  is\t not
\nmandatory  for\tthe Income-tax Officer to find something  on
\nthe  record to impose that benefit upon the assessee.  Court
\nalso  held that once a revised return is filed under Section
\n139(5) of the Act, the original return is substituted by the
\nrevised\t return and consequently the entries in the relevant
\nclaim  of the original return seeking depreciation could not
\nbe  used for any purpose.  It is, therefore, not open to the
\nIncome-tax  Officer  to\t advert to the\toriginal  return  or
\nstatement  filed  along with it for the purpose of  allowing
\ndeductions  after  such claim was expressly withdrawn  under
\nthe revised return.\n<\/p>\n
      In  CIT vs.  Andhra Cotton Mills Ltd.<\/a>  [(1996) 219 ITR
\n404  (AP)]  for the Assessment Year 1979-80 the assessee,  a
\ncompany,  filed its return of income showing a loss of\tover
\nrupees one crore.  Later, a revised return was filed showing
\na  loss of over rupees one crore though for a lesser  amount
\nthan  in the original return.  Income-tax Officer,  however,
\ncomputed the current profit at Rs.4,32,364\/- and the current
\ndepreciation  at  Rs.9,64,029\/-\t leading to a  net  loss  of
\nRs.5,31,665\/-.\t Contention  of the assessee was that  since
\nthere  was  carried  forward loss, if  depreciation  is\t not
\nallowed\t as  the  deduction, then the carried  forward\tloss
\ncould  be set off against the current profit and the current
\ndepreciation  could  be carried forward without\t limitation,
\nunlike\tbusiness  loss,\t for  which there  is  a  period  of
\nlimitation  for\t set  off.   That was  the  reason  why\t the
\nassessee  had filed the revised return withdrawing the claim
\nfor deduction of depreciation.\tThe question that ultimately
\ncame  to be referred to the High Court was “Whether, on\t the
\nfacts  and in the circumstances of the case, the Income- tax
\nAppellate  Tribunal is justified in upholding the orders  of
\nthe   Commissioner   of\t  Income-tax   (Appeals)   directing
\nwithdrawal  of the deduction by way of depreciation  allowed
\nby  the\t Income-tax Officer.” It was the submission  of\t the
\nRevenue\t that  the provisions of the statute  required\tthat
\ntrue income should be ascertained and such income in respect
\nof  a  business\t cannot\t be  properly  ascertained   without
\ndeducting  the depreciation which is the first charge on the
\nprofit.\t For this support was drawn from the decision of the
\nSupreme\t  Court\t in  CIT  v.   Mother  India   Refrigeration
\nIndustries  P.\t Ltd.  [1985] 155 ITR 711.  High Court\tsaid
\nthat under Section 139(5) a revised return could be filed if
\nthere  was  an\tomission or wrong statement.   Assessee\t had
\nprepared   a   Profit  and   Loss  Account   providing\t for
\ndepreciation  but  it  did not opt for that  option  in\t the
\nnormal course of its business.\tHigh Court found that in the
\noriginal  return  Profit  and Loss  Account  containing\t the
\nprovision  for depreciation had been filed.  High Court\t was
\nof  the view that revised return was not a valid return\t and
\nrejected   the\tcontention  of\t the  assessee\tthat   since
\nparticulars  of\t depreciation were not given in the  revised
\nreturn\tthe  Income-tax Officer could not take into  account
\nthe  particulars  of depreciation contained in the  original
\nreturn.\t High Court then went on to observe:\n<\/p>\n
      “Moreover,  under\t section 143(1)(b)(iv),\t even  while
\nmaking\tan assessment accepting the return of the  assessee,
\nthe  Income-tax\t Officer has to allow the  proper  deduction
\nunder  section 32.  Under section 143(3), an assessment made
\nunder  section\t143(1)\tis  deemed   to\t be  incomplete\t  or
\ninadequate  if\tproper depreciation is not  allowed.   These
\nprovisions  also  indicate,  along  with  section  28  which
\nrequires  that the income from a business has to be computed
\nin  accordance with the provisions of sections 29 to 44, and
\nread  with  section  145,  that\t depreciation  is  a  proper
\ndeduction  in arriving at the correct income from  business.
\nNo  doubt  section 34 provides that the deduction  shall  be
\nallowed\t only  if the prescribed particulars are  furnished.
\nThis  only ensures that correct information is available  to
\nthe  Income-tax\t Officer for allowing the proper  deduction.
\nBut this cannot be construed to mean that where the assessee
\ndeliberately  withholds\t the information, no  deduction\t for
\ndepreciation could be given in computing the income.  In the
\npresent\t case,\tthe motivation for the assessee to  withdraw
\nthe  claim  for deduction of depreciation is only to  get  a
\nset-off\t of the business loss of the earlier year.  But\t the
\ncurrent depreciation is a first charge on the profit as held
\nby   the  Supreme  Court  in  Mother   India   Refrigeration
\nIndustries  P.\t Ltd.’s\t case [1985] 155 ITR  711  and\tthat
\ncharge\tcannot be ignored by withholding the particulars  so
\nas to avail of the setting off the earlier year’s loss which
\nlapses\tby  the\t prescribed period of  limitation.   In\t our
\nconsidered  opinion, therefore, the assessee cannot withdraw
\nthe  claim  for depreciation allowance when particulars\t are
\navailable in accordance with section 34 only for the purpose
\nof  setting off of the loss of the earlier years.  Since the
\nparticulars  were  available  as furnished  along  with\t the
\noriginal  return,  the Income-tax Officer is bound to  allow
\nthe  deduction of depreciation in computing the income\tfrom
\nbusiness.  The assessment made by the Income-tax Officer, in
\nthis  case,  is, therefore, correct and in  accordance\twith
\nlaw.”\n<\/p>\n
      High Court, therefore, answered the question in favour
\nof the Revenue and against the assessee.\n<\/p>\n
      In  CIT vs.  Andhra Cotton Mills Ltd.<\/a>  [(1997) 228 ITR
\n30  (AP)],  where  one of us (Quadri,J.) was a\tmember,\t the
\nassessee   questioned\tthe  deductions\t   in\trespect\t  of
\ndepreciation allowed by the Income-tax Officer under Section
\n32  of the Act on the ground that it did not raise any claim
\nfor  such deductions in its return of income.  The  assessee
\nalso  did  not\tfurnish\t the  prescribed  particulars  under
\nSection\t 34(1)\tof the Act.  High Court considered both\t the
\nviews  one in favour and the other against the assessee\t and
\npreferred  the view favouring the assessee.  The Court\talso
\nreferred  to  the circular of the Central Board\t of  Revenue
\ndated  August  31, 1965 directing that “where  the  required
\nparticulars  have not been furnished by the assessee and  no
\nclaim  for  depreciation  has been made in the\treturn,\t the
\nIncome-tax  Officer  should  estimate\tthe  income  without
\nallowing  depreciation allowance”.  The Court observed\tthat
\nthe  record did not disclose that any particulars  regarding
\ndepreciation  were  furnished  by the assessee or  that\t the
\nIncome-tax  Officer had asked for the particulars  whereupon
\nthe  assessee furnished them.  In its view, therefore, under
\nSection\t 34(1)\tof the Act and the circular of\tthe  Central
\nBoard  of  Revenue  the Income-tax Officer  could  not\thave
\nallowed the deduction of depreciation.\tHigh Court said:  –\n<\/p>\n
      “We may also observe that, on reading sub- section (1)
\nof  Section 34 we do not find any reference to the  assessee
\nclaiming  or  not  claiming deduction of  depreciation.\t  It
\nstates\tthat deduction in respect of depreciation “shall  be
\nallowed\t only  if  the\t prescribed  particulars  have\tbeen
\nfurnished;   ..”  (emphasis* supplied).\t A fair\t reading  of
\nthis provision conveys that when prescribed particulars have
\nbeen  furnished,  there\t is  no option\tbut  that  the\tsaid
\ndeductions  shall  be allowed.\tThe reverse may not  follow:
\nthat  means, the assessing authority even then may allow the
\ndeduction  in  respect of depreciation, but before  he\tdoes
\nthat he has to require the assessee to furnish the requisite
\nparticulars   for  computing   the  depreciation  allowance.
\nSub-section  (9)  of section 139, introduced by the  Finance
\n(No.   2)  Act,\t 1980, with effect from September  1,  1980,
\nallows\tthe Income-tax Officer to give an opportunity to the
\nassessee  to  rectify the return, if he found it  defective,
\nand,  if  within the period allowed the assessee  failed  to
\nrectify\t the  return,  “the return shall be  treated  as  an
\ninvalid return”.”\n<\/p>\n
      In  the  case of Commissioner of Income-Tax vs.\tJ.K.
\nIndustries  Ltd.<\/a>  [(2000) 241 ITR 537 (Cal.)] the Court held
\nthat  neither  the  assessee has  claimed  the\tdepreciation
\nallowance  nor he had furnished the required particulars for
\ndeduction on account of depreciation allowance nor there was
\nmaterial  on record before the Income-tax Officer, which was
\nnecessary to consider the depreciation allowance, Income-tax
\nOfficer\t was  not justified in allowing the depreciation  to
\nthe assessee.\n<\/p>\n
      In  the  case  of\t Ascharajlal Ram  Prakash  vs.\t CIT
\n[(1973)\t 90  ITR 477 (All.)] the issue before the Court\t was
\nthat  though  the  assessee  had  not  claimed\tdepreciation
\nwhether the Income-tax Officer could allow the depreciation.
\nHigh  Court  took  the\tview that if during  the  course  of
\nassessment  proceedings the Income-tax Officer came to\tknow
\nthe relevant particulars necessary for grant of depreciation
\nhe  was bound to give effect to that and allow depreciation.
\nThis is how the High Court considered the matter:  –\n<\/p>\n
      “Section\t32 of the Act provides that depreciation  in
\nrespect\t of buildings, machinery, plant and furniture  owned
\nby  the assessee and used for the purpose of his business or
\nprofession  shall  be allowed subject to the  provisions  of
\nsection\t 34.   Section\t34 provides  that  deductions  under
\nsection\t 32 on account of depreciation shall be allowed only
\nif  the prescribed particulars have been furnished.  In what
\nform  the  prescribed particulars must be furnished,  or  in
\nwhat  document, is not mentioned in section 34.\t There is no
\nrequirement  in that section that the prescribed particulars
\nmust  be  furnished in any particular document.\t Rule 12  of
\nthe  Income-tax\t Rules\tprovides for the form in  which\t the
\nreturn\tof income must be furnished.  In the form of  return
\nthere  is a section which refers to the various\t particulars
\nrequired  under\t section  34(1)\t when a claim  is  made\t for
\ndepreciation.\tNow,  merely because the form of the  return
\nprovides for a place where the statement of such particulars
\nshould\tbe set out does not mean that in the absence of such
\nstatement  the Income-tax Officer has no power to allow\t the
\ndepreciation.\tA  deduction  by   way\tof  depreciation  is
\nnecessary in order to arrive at the true profits or gains of
\nthe business or profession.  The Income-tax Officer is bound
\nto  arrive at the true figure of such profits and gains\t and
\nif  in the course of assessment proceedings he comes to know
\nof  the\t relevant  particulars necessary for  the  grant  of
\ndeduction,  he\tis bound to give effect to it.\tThere is  no
\ndispute that during the course of the assessment proceedings
\nin  this  case the Income-tax Officer did come to  know\t the
\ndate on which the truck was purchased, and the original cost
\nof  the truck, and from that along with the rate  prescribed
\nby  the\t rules\tfor  allowing depreciation,  he\t could\thave
\ncomputed  and  allowed depreciation.  We are  not  satisfied
\nthat  merely because the assessee did not file the necessary
\nparticulars  in\t the  return filed by  him,  the  Income-tax
\nOfficer did not have the jurisdiction to grant the allowance
\nby way of depreciation.”\n<\/p>\n
      In Dasa-prakash Bottling Co.  vs.\t CIT [(1980) 122 ITR
\n9  (Mad.)]  the Madras High Court considered the  fact\tthat
\nthough the figures had not been furnished in return as such,
\nbut  the  figures were furnished by the assessee during\t the
\ncourse\tof  assessment under protest.  High Court  took\t the
\nview  that  once the details and particulars  required\twere
\nfurnished by the assessee whether furnished under protest or
\nnot  did  not make any difference and depreciation could  be
\nallowed.\n<\/p>\n
      In  CIT  vs.   Southern\tPetro  Chemical\t  Industries
\nCorporation  Ltd.<\/a>  [(1998) 233 ITR 400 (Mad.)] following its
\nearlier decision in Dasaprakash Bottling case the Court held
\nthat the grant of depreciation was a statutory allowance and
\neven  if the assessee had not furnished the particulars,  it
\nwas open to the Income-tax Officer to grant the depreciation
\nand  that  it would not be perfectly open to the  Income-tax
\nOfficer\t to  disallow  the  claim if the  assessee  had\t not
\nfurnished  the particulars.  On the other question where the
\nassessee  in  the revised return had withdrawn his claim  of
\ndepreciation  the  Court  said that where the  assessee\t had
\nfurnished   the\t  particulars  regarding    the\t  claim\t  of
\ndepreciation  in the original return the assessee would\t not
\nbe  able  to withdraw his claim for depreciation as in\tthat
\ncase revised return would not be valid within the meaning of
\nSection\t 139(5) of the Act.  High Court said that in that it
\ncould  not  be\tsaid that the assessee\thad  discovered\t any
\nomission  or  wrong statement in the original return.\tEven
\notherwise  it  was not open to the assessee to withdraw\t the
\nparticulars  regarding\tgrant  of depreciation by  filing  a
\nrevised return.\t This is how the Court said:  –\n<\/p>\n
      “Even  that  apart,  the assessee\t had  furnished\t the
\nparticulars  regarding\tthe  claim of  depreciation  in\t the
\noriginal  return  and  a revised return was filed.   In\t our
\nopinion,  the revised return is not a revised return  within
\nthe  meaning  of section 139(5) of the Act as it  cannot  be
\nstated\tthat  the  assessee had discovered any\tomission  or
\nwrong  statement in the original return filed.\tWe hold that
\nit  is not open to the assessee to deliberately withdraw the
\nclaim  for depreciation and such a deliberate withdrawal  of
\nthe  claim  can\t neither  be regarded  as  an  omission\t nor
\nfurnishing  a  wrong statement in the original\treturn.\t  It
\ncannot,\t therefore,  be stated that the revised\t return\t has
\ntaken  the  place of the original return.  That apart,\teven
\nassuming  that the assessee withdrew the original return  by
\nfiling\ta revised return, it is not open to the assessee  to
\nwithdraw the particulars regarding the grant of depreciation
\nby filing a revised return.  The particulars had found their
\nway  and  reached the records of the Income-tax Officer\t and
\nonce  they  become a part of the records of  the  Income-tax
\nOfficer,  it  is  not  open to the assessee  to\t direct\t the
\nIncome-tax  Officer  to\t close his eyes to  the\t particulars
\navailable  in his files.  When the particulars regarding the
\ngrant  of depreciation were available, the decision of\tthis
\nCourt  in  Dasaprakash Bottling Co.’s case [1980] 122 ITR  9
\nwould  apply.\tAs seen earlier, section 34 of the Act\tdoes
\nnot  require that the particulars should be furnished  along
\nwith  the return.  Therefore, once the particulars regarding
\nthe  grant of depreciation are available, it is open to\t the
\nIncome-tax  Officer  to\t grant\tdepreciation,  even  if\t the
\nassessee had withdrawn the claim in the revised return.”\n<\/p>\n
      In  Hopeville Estate vs.\tState of Tamil Nadu  [(1978)
\n112  ITR 861 (Mad.)] High Court struck somewhat a  different
\nnote.\tIt  was\t a case under the  Tamil  Nadu\tAgricultural
\nIncome-tax Act, 1955.  The assessee had claimed depreciation
\non  the value of the tank said to have been constructed\t for
\nthe   use  of  the  workers,  in  the  computation  of\t the
\nagricultural  income.\tThis claim was rejected by  all\t the
\nauthorities on the ground that the depreciation could not be
\nallowed\t as  per the Income-tax Act, 1961 as no\t particulars
\nnecessary  to  claim depreciation had been furnished.\tHigh
\nCourt  rejected the contention of the assessee by making the
\nfollowing observations :\n<\/p>\n
      “Even  if the authorities have loosely referred to the
\napplicability of the provisions of the Income-tax Act, still
\nwe are of the opinion that the petitioner is not entitled to
\nsucceed\t with  regard  to the facts of this  case.   We\t are
\nassuming  for  the  purpose  of\t  this\targument  that\t the
\ncontention of the learned counsel that building includes all
\nstructures  constructed with a view to provide amenities  to
\nworkers\t as  defined in the Plantation Labour Act, 1951,  as
\ncontained  in  the Explanation to section 5(f) of the  Tamil
\nNadu  Agricultural  Income-tax Act, is correct.\t  Still\t the
\npetitioner  will  have\tto establish with reference  to\t the
\nprovisions  contained  in  the Income-tax Act, the  rate  of
\ndepreciation  to which it is entitled, because rule 4(1)  of
\nthe  Tamil Nadu Agricultural Income-tax Rules, 1955,  refers
\nto   the  rates\t prescribed  in\t  the  Income-tax  Act\t for
\ncalculating  the rate of depreciation to be arrived at under
\nsection\t 5(f) of the Tamil Nadu Agricultural Income-tax Act,
\n1955.  Under rule 5 of the Income-tax Rules, 1962, read with
\nAppendix  I  thereto,  buildings are  classified  into\tfour
\ncategories and in respect of the first three categories only
\nthe rate of depreciation has been prescribed.  Consequently,
\nbefore claiming depreciation under section 5(f) of the Tamil
\nNadu  Agricultural  Income-tax\tAct,   the  petitioner\tmust
\nfurnish\t the  necessary\t particulars in order to  claim\t the
\nparticular  rate  of  depreciation as provided\tfor  in\t the
\nIncome-tax  Rules.  No such claim whatever has been made  in
\nthe  present case, and the only contention that has been put
\nforward\t was a general one that the tank is a building, and,
\ntherefore,  a  depreciable  asset.   As a  matter  of  fact,
\nsection\t 5(f) itself expressly states that the\tdepreciation
\nwill  be  deducted  only  when the  assessee  furnishes\t the
\nprescribed  particulars.  In this case, no such\t particulars
\nhave  been  furnished by the petitioner.  In view  of  these
\ncircumstances, it is not necessary to consider and deal with
\nany  general  question, and with reference to the  facts  of
\nthis  case  for\t the year in question the Tribunal  and\t the
\nauthorities below were right in holding that no depreciation
\ncould be deducted in computing the agricultural income.”\n<\/p>\n
      In  CIT  vs.   Gujarat State  Warehousing\t Corporation<\/a>
\n[(1976)\t 104 ITR 1 (Guj.)] the question before the Court was
\nregarding  priorities  adjustment  as  between\tthe  current
\ndepreciation,  carried\tforward\t  depreciation\tand  carried
\nforward losses against the profits and gains of business for
\nthe  current  year  in view of the provisions  contained  in
\nSections  32(2)\t and 72(2) of the Act.\tFor  the  Assessment
\nYear  1967-68  Gujarat\tState Warehousing  Corporation,\t the
\nassessee,  made a business profit of Rs.2,18,488\/-.   Before
\nthis  Assessment Year assessee had suffered business  losses
\nof  Rs.2,43,339\/- which were carried forward from the  years
\n1964-65, 1965-66 and 1966-67.  Assessee also carried forward
\nunabsorbed  depreciation for all these three previous  years
\namounting  to  Rs.46,696\/-.   For the current  year  1967-68
\nthere  was  current  depreciation of  Rs.27,047\/-.   As\t the
\nassessee  earned  business profit of  Rs.2,18,488\/-  without
\ndeducting  the current depreciation the question which arose
\nduring\tthe  course  of assessment proceedings\twas  whether
\ncarried\t forward business loss of Rs.2,43,339\/- should first
\nbe  deducted  from the business profit or whether  from\t the
\nsaid  profit  the  current   depreciation  should  first  be
\ndeducted  and thereafter the carried forward loss should  be
\ndeducted.  For the Assessment Year 1967-68 assessee had also
\nincome\tof  Rs.48,105\/- from other sources.  The  Income-tax
\nOfficer\t  first\t deducted  the\t current   depreciation\t  of
\nRs.27,047\/-  from the profit of Rs.2,18,488.  This gave\t the
\nbalance\t of Rs.1,81,041\/-.  From this the Income-tax Officer
\ndeducted  the  carried\tforward loss of\t Rs.2,43,339\/-\tthus
\nresulting  in the carried forward balance of Rs.61,898\/-  as
\nbusiness  loss.\t  So far as carried forward depreciation  of
\nRs.46,696\/- was concerned the Income-tax Officer deducted it
\nfrom the income from other sources which gave the net profit
\nfrom  other  sources at Rs.1,409\/-.  The net result of\tthis
\nassessment  was that while the carried forward\tdepreciation
\nas  well as current depreciation were absorbed the  business
\nloss  of  Rs.61,898\/-  was  carried   forward  to  the\tnext
\nAssessment  Year  1968-69.   According to the  assessee\t the
\nmethod\tadopted by the Income-tax Officer in giving priority
\nto the adjustment of the current depreciation over the carry
\nforward\t loss  of  Rs.2,43,339\/- was not  correct  and\tthat
\ncarried\t forward  loss should have first been deducted\tfrom
\nthe  business  profit  of Rs.2,18,488\/-.   Assessee  further
\ncontended  that\t carry forward depreciation  of\t Rs.46,696\/-
\nshould\thave  been clubbed with the current depreciation  of
\nRs.27,047\/- and should have been adjusted against the amount
\nof  Rs.48,105\/-\t which\twas the income from  other  sources.
\nThat  would  have  enabled  the assessee  to  carry  forward
\ndepreciation of the amount of Rs.25,638\/- and also the carry
\nforward loss of Rs.24,851\/- for the Assessment Year 1968-69.
\nThe Appellate Assistant Commissioner dismissed the appeal of
\nthe  assessee.\t It then approached the Appellate  Tribunal.
\nThe  Tribunal considered the provisions of sub- section\t (2)
\nof  Section  32,  which contains the  deeming  fiction\tthat
\ncarried\t forward  depreciation should be treated as  current
\nyear’s\tdepreciation  by clubbing the same with the  current
\nyear’s\tdepreciation.\tThe  Tribunal  relied  upon  certain
\nobservations of this Court in Commissioner of Income Tax vs.
\nJaipuria China Clay Mines (P) Ltd.<\/a>  [(1996) 59 ITR 555 (SC)]
\nand  held  that the lower authorities were not justified  in
\nnot giving priority to the adjustment of the carried forward
\nloss  as  against  current year’s depreciation\tin  view  of
\nsub-section  (2)  of  Section  72  of  the  Act.   Tribunal,
\ntherefore, allowed the appeal of the assessee.\tIt held that
\nagainst\t the income of Rs.2,18,488\/- for the Assessment Year
\n1967-68 first the carried forward loss of early years should
\nbe   deducted  and  thereafter\t current  depreciation\t and
\nunabsorbed  depreciation of early years should be  deducted.
\nSub-section  (2)  of  Section  72  provides  that  where  an
\nallowance  or  part  thereof is, under\tsub-section  (2)  of
\nSection\t 32 or sub-section (4) of Section 34, to be  carried
\nforward,  effect  shall first be given to the provisions  of
\nthis Section.  Section 72 provides for carry forward and set
\noff  business losses.  Revenue thereafter took the matter to
\nthe  High  Court in reference.\tHigh Court was of  the\tview
\nthat the observations of the Supreme Court in Jaipuria China
\nClay  Mines case “make it clear that the taxable profits  or
\ngains  from  a\tparticular business  cannot  be\t ascertained
\nwithout\t debiting  the\tcurrent year’s depreciation  to\t the
\nprofits\t and  gains” It further said that the Supreme  Court
\nhad  held  that current year’s depreciation was\t always\t the
\nfirst  charge  on the profit earned in the business  in\t the
\ncurrent\t year.\t High  Court finally  observed:-  “One\tmore
\nreason\twhich impels us to take the view which we have taken
\nis  that  carried forward depreciation cannot be put at\t par
\nwith  current  year’s depreciation for all purposes  because
\ncarried\t  forward  depreciation\t is   made  up\tof   current
\ndepreciation  of  respective previous years and as such\t its
\ncomponents had the chance of being set off partially against
\nthe income of the relevant previous years.  These components
\nwere  carried  forward only because they could not be  fully
\nset  off against the income of those relevant years.   Under
\nthe  circumstances,  it stands to reason that while  working
\nout  the  provisions  of sub-section (2) of section  72\t the
\ncarried\t forward  depreciation cannot stand at par with\t the
\ncurrent\t year’s\t depreciation, which like the components  of
\nthe  carried  forward  depreciation must get the  chance  of
\nbeing first set off against the current year’s income.”\n<\/p>\n
      High  Court,  therefore,\tanswered  the  reference  in
\nfavour of the Revenue and against the assessee.\n<\/p>\n
      We  do  not  think Gujarat High Court in the  case  of
\nGujarat\t State Warehousing Corporation [104 ITR 1] has taken
\ncorrect\t view  in  respect of the issues with which  we\t are
\nconcerned  in  the  present  appeal.   High  Court  has\t not
\nproperly  appreciated  the context in which this Court\tmade
\nobservations  in  the case of Jaipuria China Clay Mines\t (P)
\nLtd.  [59 ITR 555] on which High Court has relied.  In later
\ntwo  cases  of Chokshi Metal Refinery [107 ITR 63] and\tArun
\nTextiles  “C”  [192 ITR 700] Gujarat High Court\t has  itself
\ntaken,\tif  we may say so, a different view falling in\tline
\nwith  the  views of Bombay, Punjab and\tHaryana,  Karnataka,
\nAndhra\tPradesh, Calcutta and Kerala High Courts which\tview
\ncommends  to  us.  Language of the provision of Sections  32
\nand  34 are specific and admits of no ambiguity.  Section 32
\nallows\tdepreciation as deduction subject to the  provisions
\nof  Section  34.  Section 34 provides that  deduction  under
\nSection\t 32 shall be allowed only if prescribed\t particulars
\nhave  been  furnished.\tWe have seen Rule 5AA of  the  Rules
\nwhich  though  since  deleted provided for  the\t particulars
\nrequired  for  the  purpose of deduction under\tSection\t 32.
\nEven in the absence of Rule 5AA return of income in the form
\nprescribed  itself  requires particulars to be furnished  if
\nthe  assessee  claims depreciation.  These  particulars\t are
\nrequired  to  be  furnished  in great detail.\tThere  is  a
\ncircular  of the Board dated August 31, 1965, which provides
\nthat  depreciation  could not be allowed where the  required
\nparticulars  have not been furnished by the assessee and  no
\nclaim  for  the\t depreciation has been made in\tthe  return.
\nIncome-tax Officer in such a case is required to compute the
\nincome without allowing depreciation allowance.\t Circular of
\nthe Board dated April 11, 1955 is of no help to the Revenue.
\nIt  imposes merely a duty on the officers of the  department
\nto   assist   the  tax-payers  in  every   reasonable\tway,
\nparticularly, in the matter of claiming and securing relief.
\nThe  Officer  is required to do no more than to\t advise\t the
\nassessee.   It\tdoes  not place any mandatory  duty  on\t the
\nofficer\t to allow depreciation if the assessee does not want
\nto  claim  that.   Provision for claim\tof  depreciation  is
\ncertainly  for the benefit of the assessee.  If it does\t not
\nwish  to avail that benefit for some reason, benefit  cannot
\nbe  forced  upon him.  It is for the assessee to see if\t the
\nclaim\tof  depreciation  is  to  his\tadvantage.    Rather
\nIncome-tax   Officer   should  advise\thim  not  to   claim
\ndepreciation  if that course is beneficial to the  assessee.
\nThat  would be in our view the spirit of the circular  dated
\nApril 11, 1955.\t Income under the head “profits and gains of
\nbusiness  or  profession” is chargeable to income-tax  under
\nSection\t 28  and  that\tincome under Section  29  is  to  be
\ncomputed  in  accordance  with the provisions  contained  in
\nSections  30  to  43A.\tThe argument that since\t Section  32
\nprovides  for depreciation it has to be allowed in computing
\nthe  income  of the assessee cannot in all circumstances  be
\naccepted  in  view of the bar contained in Section  34.\t  If
\nSection\t 34  is\t not  satisfied\t  and  particulars  are\t not
\nfurnished  by the assessee his claim for depreciation  under
\nSection 32 cannot be allowed.  Section 29 is thus to be read
\nwith reference to other provisions of the Act.\tIt is not in
\nitself a complete code.\n<\/p>\n
      In Ascharajlal Ram Prakash case [90 ITR 477] Allahabad
\nHigh Court said that since it is not mentioned in Section 34
\nas   to\t in  what  form\t  the  prescribed   particulars\t  of
\ndepreciation must be furnished and that, therefore, there is
\nno  requirement\t in  that Section that particulars  must  be
\nfurnished.   High  Court further went on to say that  merely
\nbecause\t the  form of return provides for a place where\t the
\nstatement  of such particulars should be set out, would\t not
\nmean  that  in\tabsence\t of such  statement  the  Income-tax
\nOfficer\t has  no power to allow the depreciation.   This  is
\ncontrary  to the mandate of Section 34 as well as the  Board
\ncircular  dated August 31, 1965.  Madras High Court in\tDasa
\nPrakash\t Bottling Co.  case [122 ITR 9] following  Allahabad
\nHigh  Court in the case of Ascharajlal Ram Prakash said that
\nIncome-tax Officer can disallow the claim of depreciation if
\nthe assessee did not furnish the prescribed particulars.  It
\nfurther\t went  on  to  hold that it would  be  open  to\t the
\nIncome-tax  Officer  to\t grant\t depreciation  even  if\t the
\nassessee  had not furnished the prescribed particulars.\t  In
\nthis case the assessee did not give the particulars relating
\nto  depreciation  in  the  return  form\t nor  did  it  claim
\ndepreciation.\tOn  being  called  upon\t by  the  Income-tax
\nOfficer\t to  furnish necessary particulars the\tassessee  in
\nresponse  thereto  furnished the particulars under  protest.
\nOn   that   basis  the\t Income-tax  Officer   granted\t the
\ndepreciation.\tWe do not think that the views expressed  by
\nthe  Madras High Court lay down correct law.  Section 34  is
\nnot  in the nature of merely an enabling provision.  In\t the
\nabsence\t of  particulars  of  depreciation  as\trequired  by
\nSection\t 34,  there is no mandate on the Income-tax  Officer
\nunder  Section\t29  to\tcompute\t  the  income  by   allowing
\ndepreciation  under  Section 32.  In the second Madras\tcase
\n(CIT  vs.   Southern Petro Chemicals Industries\t Corporation
\nLtd.<\/a>   [233 ITR 400] the assessee did claim depreciation but
\nhe  withdrew the same in the revised return.  On that  basis
\nit  was\t held  that  since the assessee\t had  furnished\t the
\nparticulars  regarding\tthe  claim of  depreciation  in\t the
\noriginal  return the assessee would not be able to  withdraw
\nhis claim for depreciation.  It would appear that High Court
\nproceeded  on  the basis that the revised return was  not  a
\nvalid  return  under Section 139(5) of the Act.\t High  Court
\nfollowed  its earlier decision in Dasa Prakash Bottling\t Co.
\nTo  us\tit  appears that if the revised return\tis  a  valid
\nreturn\tand  the  assessee  has\t  withdrawn  the  claim\t  of
\ndepreciation  it  cannot be granted relying on the  original
\nreturn when the assessment is based on the revised return.\n<\/p>\n
      We get support from the earlier decision of this Court
\nin  Dharampur  Leather\tCo.   Ltd.    case  [60\t ITR   165].
\nAllowance  of depreciation is calculated on the written down
\nvalue  of the assets, which written down value would be\t the
\nactual\tcost  of  acquisition  less  the  aggregate  of\t all
\ndeductions  “actually allowed” to the assessee for the\tpast
\nyears.\t “Actually  allowed”  does   not  mean\t ‘notionally
\nallowed’.   If\tthe  assessee has not claimed  deduction  of
\ndepreciation  in any past year it cannot be said that it was
\nnotionally  allowed to him.  A thing is “allowed” when it is
\nclaimed.   A subtle distinction is there when we examine the
\nlanguage  used in Section 16 and that Sections 34 and 37  of
\nthe Act.  It is rightly said that a privilege cannot be to a
\ndisadvantage and an option cannot become an obligation.\n<\/p>\n
      We  thus uphold the views expressed by the High Courts
\nof  Bombay,  Punjab and Haryana, Karnataka, Andhra  Pradesh,
\nCalcutta  and Kerala.  Accordingly the appeal is  dismissed.
\nWe  answer  the\t question set out in the beginning  of\tthis
\njudgment   in\taffirmative,   i.e.,  in   favour   of\t the
\nrespondent-assessee and against the Revenue.  There shall be
\nno order as to costs.\n<\/p>\n
      We  record our appreciation to the assistance rendered
\nby  Mr.\t  Soli\tDastur, who appeared amicus  curiae  on\t our
\nrequest.   He  made  splendid  presentation of\tlaw  on\t the
\nsubject.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Commissioner Of Income Tax vs Mahendra Mills on 15 March, 2000 Author: D Wadhwa Bench: D.P.Wadhwa, S.S.M.Quadri PETITIONER: COMMISSIONER OF INCOME TAX Vs. RESPONDENT: MAHENDRA MILLS DATE OF JUDGMENT: 15\/03\/2000 BENCH: D.P.Wadhwa, S.S.M.Quadri JUDGMENT: D.P. WADHWA, J. A common question of law arises in these appeals. It is: “Whether, on the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-236871","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nCommissioner Of Income Tax vs Mahendra Mills on 15 March, 2000 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-mahendra-mills-on-15-march-2000\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Commissioner Of Income Tax vs Mahendra Mills on 15 March, 2000 - 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