1966 (9) TMI 38 - SC - Income Tax

Clarification on Depreciation Calculation and Tribunal's Jurisdiction: Key Interpretations and Findings

Hukumchand Mills Limited Versus Commissioner Of Income-Tax, Central, Bombay

The court addressed issues concerning depreciation allowance calculation, statutory interpretation, and Tribunal's jurisdiction. It clarified that only ... Whether the Tribunal was not competent to go into the question whether the provisions of paragraph 2 of the Taxation Laws? Held that:- It was certainly open to the department, in the appeal filed by the assessee before the Tribunal, to support the finding of the Appellate Assistant Commissioner with regard to the written down value on any of the grounds decided against it. It was argued on behalf of the appellant that the action of the Tribunal in remanding the case is not strictly justified by the language of rule 27 or rule 12. Even assuming that rules 12 and 27 are not strictly applicable, we are of opinion that the Tribunal has got sufficient power under section 33(4) of the Act to entertain the argument of the department with regard to the application of paragraph 2 of the Taxation Laws Order and remand the case to the Income-tax Officer in the manner it has done. It is necessary to state that rules 12 and 27 are not exhaustive of the powers of the Appellate Tribunal. We are accordingly of the opinion that the Tribunal had jurisdiction to entertain the argument of the department in this case and to direct the Income-tax Officer to find whether any depreciation was actually allowed under the Industrial Tax Rules and whether such depreciation should be taken into consideration for the purpose of computing the written down value. Appeals dismissed. Issues:1. Proper written down value determination for depreciation allowance under section 10(2)(vi) of the Income-tax Act, 1922.2. Interpretation of the phrase 'all depreciation actually allowed' in section 10(5)(b) of the Act.3. Applicability of paragraph 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950.4. Tribunal's jurisdiction to entertain new arguments and remand the case.Analysis:Issue 1: Proper written down value determination for depreciation allowance under section 10(2)(vi) of the Income-tax Act, 1922:The case involved determining the written down value of assets for calculating depreciation allowance under section 10(2)(vi) of the Act. The dispute arose between the assessee and the department regarding the method of calculating depreciation, specifically whether the original cost or the total depreciation allowed should be considered. The Tribunal held that only the depreciation affecting the taxable income should be considered for determining the written down value.Issue 2: Interpretation of the phrase 'all depreciation actually allowed' in section 10(5)(b) of the Act:The High Court was tasked with interpreting the phrase 'all depreciation actually allowed' in section 10(5)(b) of the Act. The court agreed with the Tribunal's interpretation that this phrase refers to the depreciation allowed for determining the amount liable to Indian income-tax, supporting the assessee's position.Issue 3: Applicability of paragraph 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950:Paragraph 2 of the Taxation Laws Order was invoked to determine if depreciation allowed under the Industrial Tax Rules should be considered for calculating the written down value. The Tribunal remanded the matter to the Income-tax Officer to ascertain if such depreciation was allowed under relevant rules related to income-tax or super-tax, emphasizing the need for factual determination before applying the Order.Issue 4: Tribunal's jurisdiction to entertain new arguments and remand the case:The Tribunal's authority to permit new questions to be raised for the first time in appeal was challenged by the assessee. However, the court upheld the Tribunal's jurisdiction under section 33(4) of the Act, emphasizing the wide powers granted to the Tribunal to pass orders as deemed fit. The court highlighted that procedural rules do not limit the Tribunal's powers, allowing for remand and further enquiry based on new arguments raised during the appeal.In conclusion, the judgment addressed key issues related to depreciation allowance calculation, interpretation of statutory provisions, and the Tribunal's jurisdiction to entertain new arguments. The court's detailed analysis provided clarity on the application of relevant laws and rules in determining the written down value for depreciation purposes, ultimately dismissing the appeals based on the findings and interpretations presented in the judgment.