1981 (8) TMI 110

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....e assessee had paid out of this a sum of 3,592 American dollars in October, 1968. The balance amount of 33,894 dollars was outstanding. This amount was outstanding till the year ended 31-12-1973. Between the purchase of the machinery and the trawler in the year 1973, the assessee had sustained substantial losses in its business and was not in a position to repay the balance to Atlanta Corporation. There were also other amounts outstanding to be paid to Atlanta Corporation by the assessee in the course of its business. The assessee negotiated with Atlanta Corporation who agreed to waive the outstandings due from the assessee in view of the trade relations existing between them for many years in the past. The assessee has, however, been grant....

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....lusion that in the absence of any provision for varying the written down value in a year subsequent to the year in which the machinery is installed the ITO cannot reduce the written down value as he has done in the assessment under appeal before him. It is against this that the revenue has come in appeal. 3. It is urged that the Commissioner (Appeals) erred in holding that the written down value on which depreciation is to be allowed for the assessment year could not be worked out by deducting the cost of the assets waived by the seller. In this regard the following cases are relied upon:--- Karnani Industrial Bank Ltd. v. CIT [1954] 25 ITR 558 (Cal.), Maharana Mills (P.) Ltd. v. ITO [1959] 36 ITR 350 (SC), CIT v. Hides Leather Products ....

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....t there is no provision for evaluating the actual cost in a subsequent year on the development of a situation which was not in existence during the year in which the machinery was installed. The various cases cited by the departmental representative clearly support the position that the ITO can in working out the written down value for a subsequent year take into account any variation in the actual cost to the assessee that has taken place after the period in which the machinery was acquired by the assessee. In the face of these decisions, the argument based upon the introduction of a special provision, namely, section 43A is for meeting a situation where the cost to the assessee escalates due to circumstances beyond the control of the asse....