TaxTMI 
TaxTMI 
1969 (2) TMI 13
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...."initial depreciation" aggregating to Rs. 15,91,511 in respect of new machinery installed in the relevant previous years. The company was also allowed "normal depreciation" at the appropriate rates. In the assessment year 1956-57 the aggregate of all depreciation allowances including "initial depreciation" exceeded the original cost of the machinery, but the Income-tax Officer, on the written down value of the machinery computed at Rs. 16,48,053, allowed Rs. 2,59,236 as normal depreciation. In so computing the normal depreciation, the Income-tax Officer apparently lost sight of clause (c) of the proviso to section 10(2)(vi) of the Income-tax Act, 1922. Depreciation allowance was also allowed in the assessment years 1957-58 and 1958-59 as a ....
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....epreciation had been allowed in the earlier years ; and (2) that in any event the Income-tax Officer knew that initial depreciation had been allowed to the company in the years 1950-51, 1951-52 and 1952-53. R. S. Pathak J., who heard the petitions, held that the company committed no error in failing to take into account the initial depreciation while entering the written down value in column (2) of Part V of the return. But the learned judge held that it was incumbent upon the company to inform the Income-tax Officer of all material facts necessary to make out its claim to depreciation and it was not open to the company to set out only those facts which exaggerated its claim : the company was bound to disclose all material facts which wen....
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....iation in the year 1956-57 in excess of the amount permissible under proviso (c) to section 10(2)(vi). The Income-tax Officer later sought to rectify the error and to bring to tax the income which had escaped tax. Before R. S. Pathak J., it was contented that the definition of "written down value" in section 10(5)(b) applies wherever the expression is used ill section 10(2) and on that account the company in setting out the written down value in column (2) of Part V of the return was obliged to take into account all the depreciation actually allowed to it including the initial depreciation and as the company computed the written value only by deducting the normal depreciation and not the initial depreciation, it failed to disclose fully a....
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....e assessment", and held that the notices were not liable to be quashed. Section 34(1)(a) of the Income-tax Act, 1922, provided : "(1) If-- (a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax have escaped assessment for that year, or have been under assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed, or .... he may proceed to assess or reassess such inc....