1980 (7) TMI 92 - HC - Income Tax

Scientific research assets eligible for depreciation beyond purchase year. No double relief.

The High Court affirmed that assets purchased for scientific research qualify for depreciation allowances under section 32 in years other than the year of ... Depreciation, Scientific Research Issues involved: The judgment addresses the question of whether capital assets purchased for scientific research in earlier years qualify for depreciation allowances under section 32 in years other than the year of purchase.Summary:The judgment pertains to three assessment years and a common question regarding the eligibility of depreciation allowances for assets utilized for scientific research. The claim for depreciation was raised during an appeal before the AAC, following a decision by the Bombay Bench of the Income-tax Appellate Tribunal. The Tribunal upheld the claim, leading to a reference to the High Court for opinion. The contention raised was regarding the possibility of double relief by allowing depreciation for assets purchased in earlier years. The Tribunal rejected this argument, emphasizing that Section 32 on depreciation allowance is not subject to other allowances under the Act. The prohibition on double deduction only applies to the same previous year. For assets purchased before April 1, 1967, the Act allowed deductions over a period of five years, with provisions for depreciation if the asset ceased to be used for scientific research. The Tribunal's decision to allow depreciation for assets with capital expenditure post-April 1, 1967, was deemed correct. The judgment affirms the entitlement of the assessee to depreciation allowances for assets purchased for scientific research, even in subsequent years.In conclusion, the High Court answered the question in the affirmative, stating that the assessee is entitled to depreciation allowances for assets utilized for scientific research, even in years following the year of purchase. Each party is to bear their own costs.