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Issues: Whether the assessee was entitled to depreciation for the full year on kohlus let out on hire for the crushing season under proviso (2) to rule 8 of the Income-tax Rules, 1922.
Analysis: The income from letting out the kohlus formed part of the assessee's business income, so the depreciation claim had to be considered under section 10(2)(vi) of the Indian Income-tax Act, 1922 and rule 8 of the Income-tax Rules, 1922. Proviso (2) to rule 8 applied to a seasonal factory worked during all the working seasons of the previous year. The expression "worked by the assessee" was construed broadly and was held to cover working through a hirer or licensee. The kohlus, used for gur crushing during the seasonal period, were treated as a seasonal factory in the popular sense, and the machinery was not to be denied full depreciation merely because it was not used throughout the entire year.
Conclusion: The assessee was entitled to the benefit of proviso (2) to rule 8 and to depreciation for the full year. The question referred was answered in the affirmative, in favour of the assessee.
Ratio Decidendi: For a seasonal business asset worked through a hirer or licensee during the full working season, the expression "worked by the assessee" in proviso (2) to rule 8 is not confined to personal operation by the owner and full-year depreciation is allowable.
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