Mandatory depreciation in business income computation applies even without a claim, affecting deductions under sections 80HHC and 80-I.

Depreciation was held to be mandatory in computing business income even if the assessee did not claim it, because after the omission of section 34 from 1-4-1988 there was no statutory basis to treat depreciation as an optional allowance. The Tribunal also held that depreciation had to be taken into account while computing business profits for deductions under sections 80HHC and 80-I, and earlier authorities based on the pre-amendment position were inapplicable.

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Issues: Whether depreciation can be allowed by the Assessing Officer even when not claimed by the assessee, and whether such depreciation must be considered while computing business profits and deductions under sections 80HHC and 80-I.

Analysis: The assessee's reliance on earlier authorities was held inapplicable because those decisions proceeded on the pre-amendment position when section 34 required prescribed particulars for a claim of depreciation. After the omission of section 34 with effect from 1-4-1988, there was no longer any statutory basis for treating depreciation as a purely optional allowance that could be ignored in computing income. The Tribunal further held that income under the head

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