Depreciation on tea estate assets was available where the vendor managed the business as agent after the sale became effective.

Where the sale of the tea estate was treated as effective from 1 January 1969, the vendor's management of the estate as agent of the purchaser meant the business was carried on for the assessee from that date. On that factual and legal footing, depreciation under section 32 of the Income-tax Act, 1961 was available in computing the estate's income, and the claim was allowed in favour of the assessee.

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Issues: Whether the assessee was entitled to depreciation under section 32 of the Income-tax Act, 1961, on the footing that the sale of the tea estate was effective from 1 January 1969 and the vendor managed the estate as agent of the assessee.

Analysis: The question referred did not fully bring out the depreciation aspect, but the court treated that consequence as arising from the factual premise already accepted, namely that the sale operated from 1 January 1969. On that basis, the business from that date was carried on by the vendor as agent of the vendee-assessee, and the corollary of that arrangement was the availability of depreciation in computing the income from the estate.

Conclusion: The assessee was entitled to depreciation under section 32 of the Income-tax Act, 1961, and the issue was answered in favour of the assessee and against the Revenue.

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