Assessee entitled to full depreciation despite ITO condition. Invalid conditions can be challenged.

The Tribunal held that the assessee was entitled to claim full depreciation despite the condition imposed by the Income-tax Officer (ITO) limiting it to 3/12 instead of 12/12 for the assessment year 1985-86. The Tribunal emphasized that depreciation is allowable at the prescribed rate under the Income-tax Act, and invalid conditions imposed by the ITO can be challenged. The doctrine of estoppel was not applicable in this case, as parties cannot contract out of the statute. The Tribunal dismissed the Revenue's appeal, upholding the decision to grant full depreciation to the assessee.

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Issues:
1. Whether the condition imposed by the Income-tax Officer (ITO) restricting depreciation to 3/12 instead of 12/12 for the assessment year 1985-86 is valid.
2. Whether the doctrine of estoppel applies in the case where the assessee accepted the condition imposed by the ITO.
3. Whether the assessee is entitled to claim full depreciation despite agreeing to the condition imposed by the ITO.

Analysis:
1. The appeal pertains to the imposition of a condition by the ITO regarding depreciation for the assessment year 1985-86, limiting it to 3/12 instead of the full 12/12 depreciation. The CIT(Appeals) directed the Assessing Officer to allow normal depreciation and not restrict it to 3/12th. The Tribunal held that under section 32 of the Income-tax Act, depreciation is allowable at the prescribed rate irrespective of the period of asset use. The Tribunal cited the decision of the Allahabad High Court in J.K. Synthetics Ltd., emphasizing that the ITO can only impose valid conditions, and if found invalid, they can be challenged and struck off. The Tribunal concluded that the assessee had the right to claim full depreciation despite the condition imposed by the ITO.

2. The Departmental Representative argued that the doctrine of estoppel should apply since the assessee accepted the condition imposed by the ITO, and the ITO acted upon it. However, the Tribunal referred to various legal precedents, including the decision in J.K. Synthetics Ltd., stating that there is no estoppel against the law. The Tribunal emphasized that parties cannot contract out of the statute, as held in the case of Gwalior Rayon Silk Mfg. Co. Ltd. The Tribunal concluded that the doctrine of estoppel cannot prevent the assessee from challenging the validity of the condition imposed by the ITO.

3. The Tribunal distinguished the case of S. Manickam Chettiar, where the doctrine of promissory estoppel was invoked due to specific circumstances not violating the provisions of the Income-tax Act. In contrast, the condition imposed by the ITO in the present case went against the provisions of the Act. The Tribunal held that statutory provisions cannot be circumvented through agreements that contradict the statute. Therefore, the Tribunal upheld the CIT(Appeals) decision to grant full depreciation to the assessee for the assessment year 1985-86. The appeal by the Revenue was dismissed.

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