Depreciation on scientific research assets is barred after full section 35 deduction, the High Court holds.

Depreciation under section 32(1)(ii) was barred where the same plant and machinery had already been fully deducted under section 35 in earlier years. The retrospective amendment to section 35(2)(iv) from 1 April 1962 expressly prevented a further depreciation claim on assets for which a deduction had already been allowed under section 35 in any previous year. As the assets had admittedly received full scientific research deduction earlier, the later depreciation claim on those very assets was not allowable, and the issue was answered in favour of the Revenue.

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Issues: Whether depreciation under section 32(1)(ii) of the Income-tax Act, 1961 could be allowed on plant and machinery used for scientific research where deduction had already been granted under section 35 of the same Act in earlier years.

Analysis: The relevant provision in section 35(2)(iv), as retrospectively amended from 1 April 1962 by the Finance (No. 2) Act, 1980, barred allowance of depreciation under section 32(1)(ii) in respect of assets for which a deduction had already been allowed under section 35 in any previous year. The assets in question had admittedly already obtained full deduction under section 35 in the earlier assessment years, and the later claim for depreciation related to the very same assets.

Conclusion: The depreciation claim was not allowable; the question was answered in the negative and in favour of the Revenue.

Ratio Decidendi: Where the full value of an asset has already been allowed as a deduction under section 35, a subsequent claim for depreciation under section 32(1)(ii) on the same asset is barred by section 35(2)(iv) as retrospectively amended.

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