Accounting-year change cannot strip statutory depreciation and investment allowance for the extended period; invalid condition was quashed.

Permission to change the accounting year could not be coupled with arbitrary conditions that denied statutory deductions for the extended period. The assessee remained entitled to depreciation under section 32 read with rule 5 and investment allowance under section 32A for the relevant excess period, and the impugned restriction unlawfully curtailed those entitlements. The objection based on delay and alleged acceptance of the condition was rejected, and the invalid condition was held severable from the rest of the order.

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Issues: Whether the condition imposed while permitting change of the previous year, which denied depreciation and investment allowance in respect of the extended accounting period, was valid in law.

Analysis: The permission to vary the accounting year did not authorise the imposition of conditions that were arbitrary or that took away deductions otherwise allowable under the Act. The assessee was entitled to claim depreciation under section 32 read with rule 5 and investment allowance under section 32A for the relevant period, and the impugned condition curtailed those lawful entitlements without justification. The objection based on delay and alleged acceptance of the condition was rejected, and the condition was found severable from the rest of the order.

Conclusion: The condition denying depreciation, investment allowance and allied deductions for the excess period of three months was invalid and was quashed.

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