TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 1157
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....ibunal (for short, 'Tribunal') as available in the memorandum of appeal are as follows:- "i) Whether on the facts and in the circumstances of the case, was the Income Tax Appellate Tribunal justified in restricting the depreciation allowed to the amount worked out on the written down value of the assets as against the original cost of the assets claimed by the assessee ? ii) In the facts and circumstances of the case ought not the Tribunal have held that applying the provisions of Rule 7A of the Income Tax Rules and Section 43(6) of the Income Tax Act, that the claim of depreciation of the appellant on the original cost was in order ?" 3. The assessee claimed depreciation of the entire cost of the plant and machinery to the extent of 35% treating it as the actual cost allowable on which is computed the allowable deduction for depreciation. The Assessing Officer found that the appellant had been providing for depreciation on assets used for the agricultural operations, in the profit and loss accounts prepared as per the Companies Act, 1956. The depreciation on assets used in the plantations, including for manufacturing activity, was found to have been claimed by the as....
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....ounsel. 6. Doom Dooma India Ltd. (supra) was a case in which under Rule 8 of the Rules, when depreciation was claimed, the same was disallowed to the extent of 100%. The claim of the assessee was that it could have been disallowed only to the extent of 60%. The Honourable Supreme Court in the aforesaid decision followed Madeva Upendra Sinai v. Union of India and Others [1975 (98) ITR 209 (SC)] and quoted the following paragraph with approval. "From the above conspectus, it is clear that the essence of the scheme of the Indian Income-tax Act is that depreciation is allowed, year after year, on the actual cost of the assets as reduced by the depreciation actually allowed in earlier years. It follows, therefore, that even in the case of assets acquired before the previous year, where in the past no depreciation was computed, actually allowed or carried forward, for no fault of the assessee, the "written-down value" may, under Clause (b) of section 43 (6), also, be the actual cost of the assets to the assessee." The Assessing Officer has also relied on the very same decision, but has looked at the minority dissenting opinion, is the contention raised. 7. The learned Senior Counsel....
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....nd Diu with effect from April 1, 1963. The question that arose before the Hon'ble Supreme Court was the constitutional validity of the Taxation Laws (Extension to Union Territories) (Removal of Difficulties) Order 2 of 1970. The Central Government by the aforesaid Regulation was empowered to cause issuance of General or Special Orders published in the official gazette to remove any difficulty arising in giving effect to the provisions of the Act. There was no law in force in the Union Territories of Goa, Daman and Diu for allowance in the nature of depreciation while computing the gross income. The law of income tax applicable earlier, levied tax at certain percentage of the gross receipts of an assessee. The issue was as to when the IT Act was introduced, the written down value could be that deemed as provided in Section 43(6)(b). We extract herein below the following paragraph: "We are unable to accept the contention that but for the impugned proviso, the provisions of Section 32 and Section 43(6) (b) of the 1961 Act on its extension to Goa, Daman and Diu could not be given effect to and applied to the assessees in those territories. There could be no difficulty in computin....
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....ning the written down value in respect of buildings, machinery or plant for the purposes of clause (ii) of sub-section (1) of section 32, "depreciation actually allowed" shall not include depreciation allowed under sub-clauses (a), (b) and (c) of clause (vi) of subsection (2) of section 10 of the Indian Income- tax Act, 1922 (11 of 1922 ), where such depreciation was not deductible in determining the written down value for the purposes of the said clause (vi)" 13. There need not be any controversy raised on the interpretation of the aforesaid provision at sub-Clause (b). What can be reduced from the actual cost to the assessee is all depreciation actually allowed under the IT Act, 1961 or the IT Act, 1922 or any Act repealed by that Act or any executive orders issued when the Indian Income Tax Act, 1886 was in force. The AIT Act having not been specifically noticed and the depreciation allowed with respect to the income assessed to tax under any other enactments having not been excluded, there is no reason for this Court to come to a different finding as to the written down value which could be claimed as depreciation on the first year in which the assessee is assessed under the I....
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....ed under the respective enactments of the State and the Union; amendments ought to have been brought in accordingly to ensure that no double benefit accrues on an assessee. 17. We find that such amendments were brought in with retrospective effect as is seen from Explanation 7 to Section 43(6) of the IT Act which got inserted by the Finance Act, 2009 with effect from 1.4.2010. We extract below Explanation 7, for easy reference:- "Explanation 7 to Section 43(6) of the IT Act: For the purposes of this clause, where the income of an assessee is derived, in part from agriculture and in part from business chargeable to income-tax under the head "Profits and gains of business or profession", for computing the written down value of assets acquired before the previous year, the total amount of depreciation shall be computed as if the entire income is derived from the business of the assessee under the head "Profits and gains of business or profession" and the depreciation so computed shall be deemed to be the depreciation actually allowed under this Act." The Explanation takes in the specific defect of double benefit being conferred on the assessee as argued by the learned Senior Co....