Block assessment depreciation claim allowed where business activity existed and Chapter XIV-B did not exclude the general provision.

In block assessment proceedings under Chapter XIV-B, depreciation otherwise admissible under the Income-tax Act, 1961 remains claimable unless expressly excluded, because that chapter does not displace the general provisions of the Act except to the extent specifically provided. The assessee was found to be carrying on business, so the Revenue's objection that no business income was involved did not hold. On that basis, current depreciation for the block period was allowed notwithstanding the absence of the claim in earlier regular returns, and the disallowance was not sustained.

---

---

Issues: Whether depreciation on a business building could be claimed in block assessment proceedings under Chapter XIV-B of the Income-tax Act, 1961, and whether the Revenue's objection that no business income was involved had merit.

Analysis: The assessment was made under section 158BC of the Income-tax Act, 1961, following a search under section 132. The record showed that the assessee was carrying on business, and the Revenue's stand that there was no element of business income was found to be inconsistent with the assessment record. It was further held that Chapter XIV-B does not override the Act in its entirety and that only provisions specifically excluded would not apply to the computation of undisclosed income. On that basis, the assessee was entitled to claim current depreciation for the block period, notwithstanding the absence of such claim in earlier regular returns.

Conclusion: The Revenue's challenge to allowance of depreciation failed, and the disallowance was not sustained.

Ratio Decidendi: In block assessment proceedings, depreciation admissible under the Income-tax Act, 1961 can be claimed unless expressly excluded, because Chapter XIV-B does not displace the general provisions of the Act except to the extent specifically provided.

---