Depreciation and discarding allowances require actual use or discard in the relevant year; unreferenced questions cannot be reopened later.

Depreciation under the business provisions was confined to buildings, machinery, plant or furniture actually used for business during the relevant accounting year, so idle assets did not qualify. The discarding allowance was similarly limited to machinery or plant actually discarded within that accounting year, and no allowance arose for assets discarded before it began. The Court also held that it could not examine questions not validly referred by the Commissioner once the statutory time for seeking a further reference had expired; those matters had to be pursued through the prescribed procedure and were not reopened in the existing reference.

---

---

Issues: (i) Whether the words "used for the purposes of the business" in section 10(2)(iv), as governing section 10(2)(vi), require actual user of buildings, machinery, plant or furniture in the accounting year for allowance of depreciation; (ii) whether depreciation or discarding allowance is admissible under section 10(2)(vii) in respect of machinery or plant discarded before the beginning of the accounting year; (iii) whether questions not referred by the Commissioner can be argued after the time for seeking a reference under section 66(3) has expired.

Issue (i): Whether the words "used for the purposes of the business" in section 10(2)(iv), as governing section 10(2)(vi), require actual user of buildings, machinery, plant or furniture in the accounting year for allowance of depreciation.

Analysis: The allowance was treated as one granted not for depreciation in the abstract but as a consequence of earning income or employment in the business. Once the machinery remained idle, there was no basis to treat it as having been used for business purposes during the relevant accounting year. The phrase was therefore read as referring to actual use in that year.

Conclusion: The requirement of "used for the purposes of the business" means use during the accounting year, and the claim fails if the asset was not so used.

Issue (ii): Whether depreciation or discarding allowance is admissible under section 10(2)(vii) in respect of machinery or plant discarded before the beginning of the accounting year.

Analysis: The same reasoning applied to discarded machinery. The claim could arise only in respect of machinery actually discarded in the accounting year, because the allowance was tied to the relevant period in which the statutory condition operated.

Conclusion: No allowance was admissible for machinery discarded before the accounting year; the claim was confined to machinery discarded within that year.

Issue (iii): Whether questions not referred by the Commissioner can be argued after the time for seeking a reference under section 66(3) has expired.

Analysis: The Court held that it was seized only of the questions actually raised by the Commissioner. A party dissatisfied with the refusal to refer additional questions had to pursue the prescribed remedy within time under section 66(3). Having failed to do so, the party could not reopen those questions through the reference already made.

Conclusion: The remaining questions could not be examined after expiry of the statutory time limit, and no decision was given on them.

Final Conclusion: The reference was answered against the taxpayer on all points that were properly before the Court, and the unresolved additional questions were excluded from consideration for want of a timely reference.

Ratio Decidendi: Depreciation and related allowances under the business provisions of the Income-tax Act are confined to assets actually used, or actually discarded, in the relevant accounting year, and the reference court cannot enlarge its jurisdiction beyond the questions validly referred within the statutory time limit.

---