Block of assets depreciation: only sale proceeds reduce written down value; delay in filing was also condoned.

Delay of 368 days in filing the Tribunal appeal was condoned because the explanation of misplaced papers was accepted, no advantage from late filing was shown, and the appeal raised an arguable case on merits. On depreciation, section 43(6)(c) was applied to the block of assets concept, and only the moneys payable on sale of the asset were required to be reduced from the block's written down value. The reduction could not extend to the entire written down value of the individual sold asset. Depreciation was therefore allowable on the balance block value.

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Issues: (i) Whether the delay of 368 days in filing the appeal before the Tribunal deserved condonation. (ii) Whether, for the purpose of computing depreciation on the block of assets, the reduction under section 43(6)(c) was to be confined to the sale proceeds of the asset sold or to the entire written down value of the asset.

Issue (i): Whether the delay of 368 days in filing the appeal before the Tribunal deserved condonation.

Analysis: The delay was explained as having occurred due to misplacement of papers by office staff. The assessee was not shown to have gained any advantage by late filing, and the appeal was also found to raise an arguable case on merits.

Conclusion: The delay was condoned in favour of the assessee.

Issue (ii): Whether, for the purpose of computing depreciation on the block of assets, the reduction under section 43(6)(c) was to be confined to the sale proceeds of the asset sold or to the entire written down value of the asset.

Analysis: Section 43(6)(c) requires reduction from the written down value of the block only by the moneys payable in respect of the asset sold. The block of assets concept was applied, and the reduction could not extend to the entire written down value of the individual asset. The Tribunal followed the principle that depreciation must be computed on the balance written down value after reducing only the sale proceeds.

Conclusion: The reduction had to be restricted to the sale proceeds of Rs. 26,782 only, and the assessee was entitled to depreciation on the balance block value.

Final Conclusion: The appeal succeeded, and the assessment was modified by directing limited reduction from the block of assets and allowance of depreciation accordingly.

Ratio Decidendi: Under section 43(6)(c), only the moneys payable on sale of an asset falling within a block are to be reduced from the block's written down value for depreciation computation, not the entire written down value of the sold asset.

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