TaxTMI 
TaxTMI 
2007 (8) TMI 644
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....e cyclone in the assessment year 1999-2000 against which the assessee received a sum of Rs. 2,25,37,301 from the insurance company in the year under consideration. This amount was not offered for taxation by the assessee. A note had been given in the return of income stating that the same is not taxable in view of the opinion given by an advocate. According to that opinion, the assessee had not claimed deduction in respect of depreciation under section 32(1)(i) of the Act and consequently, the provisions of section 41(2) of the Act were not applicable. The Assessing Officer rejected the opinion given by that advocate for the reasons given in the assessment order. It was observed by the Assessing Officer that section 41(2) was omitted with effect from April 1, 1988 with a view to streamlining with the provisions of section 32(1) and section 50 of the Act, where the block of assets was to be considered for allowance of depreciation and no effect was to be given for the partial reduction of assets in the respective blocks. However, section 41(2) has again been brought on the statute book by the Finance (No. 2) Act, 1998, with effect from April 1, 1998. The Assessing Officer then refer....
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....provisions of section 32(1)(i) and, therefore, such provisions would apply only to those cases where depreciation in respect of building, plant or machinery is allowed for the assessment years 1998-99 and onwards. On the other hand, the learned Departmental representative has relied on the orders of the lower authorities. Rival submissions of the parties have been considered carefully. In our opinion, the contention raised by learned counsel for the assessee is not without force. The provisions of section 41(2) are charging sections and, therefore, the same must be construed strictly. If the facts of any case do not fall within the ambit of charging sections, then the assessee cannot be charged to tax by construing the provisions liberally. Section 41(2) as brought on the statute book with effect from April 1, 1998 is being reproduced as under : "41.(2) Where any building, machinery, plant or furniture,- (a) which is owned by the assessee ; (b) in respect of which depreciation is claimed under clause (i) of sub-section (1) of section 32 ; and (c) which was or has been used for the purposes of business, is sold, discarded, demolished or destroyed and the moneys pay....
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....e concept of block of assets brought on the statute book with effect from April 1, 1988. The depreciation was allowable under clause (ii) of section 32(1) of the Act, in respect of the assets forming block of assets. It was under such provisions that the assessee claimed deduction at 100 per cent. as per the prescribed rate in respect of windmills installed by the assessee. Clause (i) of section 32(1) of the Act, as enacted originally, had been omitted with effect from April 1, 1988 and, therefore, it was not on the statute book in the assessment year 1996-97. Thus it is clear that the assessee had claimed the depreciation under clause (ii) of section 32(1) of the Act and not under clause (i) of section 32(1). The Legislature was well aware that clause (i) of section 32(1) had been omitted with effect from April 1, 1988 and clause (i) was being brought again on the statute book with effect from April 1, 1998. Therefore, while enacting section 41(2) with effect from April 1, 1998, in our opinion, the Legislature referred to the amended provisions of section 32(1)(i) effective from April 1, 1998. Therefore, in our humble opinion, the provisions of section 41(2) being the charging pro....
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....ents made within the grace period are to be allowed as deduction under section 43B of the Act. A perusal of the details show that all the payments except one payment of Rs. 51,268 were made within the grace period. Consequently, the disallowance is restricted to Rs. 51,268 only. The order of the Commissioner of Income-tax (Appeals) is, therefore, modified. The Assessing Officer shall restrict the disallowance to Rs. 51,268. Now we take up the Revenue's appeal. Though various grounds have been raised, the effective ground relates to the disallowance of Rs. 3,00,818 under section 35D, which has been deleted by the Commissioner of Income-tax (Appeals). Briefly stated, the facts are that the assessee had adopted a sum of Rs. 3,75,818 as pre-operative expenses in the profit and loss account under section 35D of the Act. The Assessing Officer noted that deduction under section 35D was available in respect of certain preliminary expenses over a period of 10 years at 10 per cent. per annum subject to maximum of 2.5 per cent. of the capital employed over the entire period. Since the cost of the windmill project was Rs. 3 crores, the maximum limit allowable under section 35D was worked....