TaxTMI 
TaxTMI 
1997 (12) TMI 48
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion for the assessment year 1980-81? (ii) Whether the Tribunal's further finding that the Income-tax Officer cannot impose any condition while allowing change of previous year is sustainable in law ?" The assessee is a public limited company engaged in the spinning of yarn, textiles, etc. The assessee was following the financial year as the previous year and in its application dated February 11, 1980, the assessee-company desired a change of its accounting year ending on the month of June of every subsequent year. The Income-tax Officer by his letter dated February 21, 1980, acceded to the request of the company on the following conditions : (i) The company can close their accounts for 15 months up to June 30, 1980, and offer prop....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he matter in appeal before the Commissioner of Income-tax (Appeals) and the Commissioner of Income-tax (Appeals) held that under the provisions of the proviso to rule 5(1) of the Income-tax Rules, 1962, the Income-tax Officer was justified in allowing one fourth of the depreciation and dismissed the appeal. The assessee went up on appeal before the Income-tax Appellate Tribunal. The Appellate Tribunal held that the proviso to rule 5(1) of the Income-tax Rules, 1962, has no application and the same would apply only to a case where change in the previous year exceeds a period of 12 months or more. The Tribunal held that the conditions imposed by the Income-tax Officer for the change of previous year that the depreciation for 1980-81 would ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd the assessee is entitled to full depreciation. An assessee is not entitled to vary the expression "previous year" as is applicable to him except with the consent of the Income-tax Officer and upon such conditions as the Income-tax Officer may think fit to impose. Sub-section (4) of section 3 of the Act provides that it is impermissible for the assessee to change his previous year except with the consent of the Income-tax Officer and it is open to the Income-tax Officer to stipulate such conditions as the Income-tax Officer may think fit to impose in law for change of the previous year. In our view, the conditions imposed by the Income-tax Officer for the change of the previous year should be legal, valid and reasonable and should not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Rules curtailing the grant of deduction, we are of the view that it is impermissible to curtail the amount of depreciation allowance only on the ground that the previous year fixed was three months, especially where the assessee is entitled to full depreciation even if the machinery or plant was used for the purpose of his business for a single day during the previous year. The anomaly pointed out by learned counsel for the Revenue is inherent in the statute granting the normal depreciation and the condition imposed cannot be against the provisions of the statute. Though the assessee has initially agreed that it will restrict its claim to depreciation for a period of three months, the condition imposed by the Income-tax Officer is again....