TaxTMI 
TaxTMI 
1953 (6) TMI 2
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....of the machinery, their value really being Rs. 2,80,000, and as depreciation to the extent of Rs. 2,84,000 had already been allowed to the assessee, the written down value of these machineries at the beginning of the accounting year under consideration really came to a minus figure and should be taken as nil and no depreciation should be allowed. For the next assessment year, 1947-48, similarly no depreciation has been allowed. On appeal, the Appellate Assistant Commissioner confirmed this finding of the Income-tax Officer and dismissed the appeals. 3. In the second appeal before the Tribunal, the following contentions were raised:- (1) That it was not open to the Income-tax Officer to go behind the order of the Income-tax Officer passed for the assessment year 1939-40, during the accounting period in which the purchase was made. (2) That in any case there was no fresh material for the Income- tax Officer entitling him to question the valuation which was accepted in the year 1939-40. (3) Lastly it was contended that on the facts on record, the assessee has proved that it had actually paid the sum of Rs. 3,94,000 as the price of the machinery and that in any case this wa....
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....and 1947-48 was entitled in law to go behind the original cost which was accepted by his predecessor ever since the assessment year 1939-40?" 6. The other points as to whether the Income-tax Officer was entitled to take into consideration the market value of the machinery and as to whether there was any evidence on which the Income-tax Officer could hold the real value to be Rs. 2,80,000 are, in our opinion, not questions of law and in any case do not arise out of the order of the Tribunal. The Tribunal has clearly held that the sum of Rs.. 3,94,000 alleged to have been paid by the assessee was really not a bona fide payment as original cost of the equipment to the assessee. The material on which the Tribunal came to the conclusion has been stated above and has also been so stated in the order of the Tribunal. Consequently, these questions do not arise out of the order of the Tribunal and are not referred. 7. The assessee has also raised questions Nos. (4) and (5) which are as follows:- (4) "Whether in view of the recent decision of the Supreme Court, the Appellate Tribunal was not bound to consider the point newly rai....
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....ted company and on 6th April, 1938, it acquired from one of its creditors some cinematograpahic machinery at the price, as was claimed, of Rs. 3,94,000. That figure of the cost of the machinery was accepted in successive assessments of the assessee, but was doubted for the first time in the course of the assessment for the year 1946-47. That year, the Income- tax Officer seems to have made an enquiry into the circumstances in which the machinery had been acquired and he came to the conclusion that its real cost to the assessee had been not Rs. 3,94,000, as claimed and as also allowed in previous assessments, but only Rs. 2,80,000. Since he found that depreciation allowance of the amount of Rs. 2,84,000 had already been allowed to the assessee, he came to the conclusion that the written down value had been reduced to a minus figure and, therefore, there was no further depreciation allowance to be allowed. Necessarily, in the next assessment also, that for the year 1947-48, he made a similar order. The assessee's contention is that the Income-tax Officer was not entitled to determine afresh, as it were, the original cost of the machinery to the assessee, but had merely to t....
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....lause of the section. This is not a case of ocean-going ships, but one of "other" cases and, therefore, under the language of the section, the depreciation is the prescribed percentage on the written down value of the machinery or plant concerned in the case. Mr. Mitra's contention was that the written down value bad a well understood meaning in commerce and so far as the Income-tax Act was concerned both method of determining it and the quantum at which it was to be determined were regulated by the rules framed. He pointed out that whereas the written down value, entered by the owner of a business in his own books, might be what he considered to be proper in view of the principles of commercial accounting and the exigencies of the case, the Income-tax Act laid down a fixed percentage which had to be applied. All that had to be done in the first year was to fix the original cost and thereafter the Income-tax Officer had merely to write the value down from the figure of the original cost to a figure to which the figure of the original cost would be reduced, if the statutory percentage was deducted, and then allow the statutory percentage of the written down value so determine....
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....en down value for the year concerned. Since the two component parts of the definition were, (a) actual cost to the assessee, and (b) depreciation so far allowed, Mr. Meyer contended that there was nothing to prevent the Income-tax Officer from determining for himself what the actual cost had been and, in fact, the section required him to do so. He might certainly accept the cost as originally determined and in most cases would probably do so, but if he thought that the original determination was erroneous, the section left him free and indeed made it his duty to find the actual cost for himself. It was pointed out that even the method suggested by Mr. Mitra implied some reference to the original cost, because the written down value of the previous year on which. according to Mr. Mitra, the Income-tax Officer would have always to rely, was only the resultant figure that had been reached by working down from the figure of the original cost. As regards Mr. Mitra's actual argument, Mr. Meyer's answer was that if the intention of the Legislature was to limit the Income-tax Officer in the way contended for by Mr. Mitra, then clause (b) of section 10(5) might well have said that i....