Depreciation allowance may offset income generally, not just business profits, under the 1922 Income-tax framework.

Depreciation on buildings and machinery under section 10(2)(vi) of the Income-tax Act, 1922 is treated as an allowable deduction in computing income for the year of assessment and is not confined to absorption against profits of the particular business in which the assets were used. The statutory scheme of sections 6, 10 and 24(1) was read as permitting the allowance to operate against income generally, and the proviso on unabsorbed depreciation was construed in its plain terms. On that reading, depreciation could be set off against gains from other heads of income, including house property rent, in the relevant year.

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Issues: Whether depreciation on buildings and machinery allowable under section 10(2)(vi) of the Income-tax Act, 1922 could be set off against gains and profits from other heads of income, such as house property rent, in the year in question.

Analysis: The statutory scheme of sections 6, 10 and 24(1) permits computation of profits and gains under the head "business" after giving effect to the allowances in section 10(2). The Act does not draw any distinction between depreciation under clause (vi) and the other allowances in sub-section (2). The proviso to clause (vi) dealing with carry-forward of unabsorbed depreciation was read in its plain terms and not as restricting the allowance only to cases where the same business earned profits in that year. The phrase "no profits or gains" was held to refer to profits or gains generally, not merely to the particular business in which the asset was employed.

Conclusion: Depreciation on buildings and machinery under section 10(2)(vi) could be set off against income from other sources, including rent from house property, in the relevant year.

Ratio Decidendi: A depreciation allowance under section 10(2)(vi) of the Income-tax Act, 1922 is an allowable deduction against the assessee's income generally in the year of assessment and is not confined to being absorbed only by profits of the particular business in which the depreciable assets were used.

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