TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether depreciation allowance under rule 8 could be denied in respect of ships forming part of the assessee's fleet for more than twenty years; (ii) whether depreciation on the vessel Tortugus could be restricted to 365 days notwithstanding the round-voyage method adopted in assessment; (iii) whether unabsorbed depreciation brought forward from an earlier year could be set off against the assessee's income for the assessment year 1958-59.
Issue (i): Whether depreciation allowance under rule 8 could be denied in respect of ships forming part of the assessee's fleet for more than twenty years.
Analysis: The assessment having been made under rule 33, the instructions issued under that rule governed the manner of computation. Those instructions were held to be binding on the income-tax authorities even though they did not accord in every respect with section 10(2)(vi), proviso (c), and rule 8. On their plain language, the expressions used in the instructions referred to the assessee's fleet as a whole and not merely to ships actually engaged in Indian trade for twenty years. The allowance under the instructions therefore ceased after the prescribed twenty-year period, regardless of intermittent use in Indian trade.
Conclusion: The answer was in the negative and against the assessee.
Issue (ii): Whether depreciation on the vessel Tortugus could be restricted to 365 days notwithstanding the round-voyage method adopted in assessment.
Analysis: The computation under rule 33 and the instructions took account of the actual number of days spent in Indian trade. The assessment had itself proceeded on the basis of 473 days of receipts and expenditure for the vessel, and the depreciation allowance had to match that same period in order to ascertain the true Indian income. The attempt to confine the allowance to 365 days was therefore inconsistent with the basis on which the profit from the vessel had been computed.
Conclusion: The answer was in the affirmative and in favour of the assessee.
Issue (iii): Whether unabsorbed depreciation brought forward from an earlier year could be set off against the assessee's income for the assessment year 1958-59.
Analysis: The court held that the matter was controlled by the rule 33 instructions rather than by proviso (b) to section 10(2)(vi) in the manner suggested by the assessee. Under those instructions, unabsorbed depreciation was attributable to the particular ship to which it related and could be carried forward only against that ship in later years when it was again employed in Indian trade. As the relevant ships did not come to India in the year in question, the carried-forward amount could not be allowed against the 1958-59 profits.
Conclusion: The answer was in the negative and in favour of the revenue.
Final Conclusion: The reference was disposed of with mixed success, the assessee succeeding only on the question relating to the vessel Tortugus and failing on the remaining questions.
Ratio Decidendi: Where assessment of a non-resident shipping company is made under rule 33, the departmental instructions issued under that rule are binding for computation, and depreciation or brought-forward depreciation is to be allowed only in the manner and subject to the limits laid down by those instructions.
TaxTMI 
