1984 (9) TMI 37

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....We are concerned with the assessment year 1970-71. During the previous year relevant to this assessment year, one of its ships " S. S. Dimitrios " touched the Port of Mangalore and for the cargo which it carried from that port, it had received freight earnings. In computing its income assessable to Indian income-tax for that year, the assessee claimed proportionate depreciation of pounds17,143. This claim was negatived by the ITO and in his order, the said ITO made the following observations: " The ship `S. S. Dimitrios' was built in 1944 and purchased by the assessee in 1962. At the time of purchase, as per I.T. Rules, anticipated life of the ship comes to 7 years. Therefore, depreciation could be allowed on it only in 7 assessments, from....

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....on allowance would be admissible after the expiry of the said period of seven years calculated from the date of purchase. The Tribunal opined that the language of the said rule did not lead to such a construction. According to the Tribunal: "What the rule says, in effect, is that in the case of second-hand ships, the depreciation allowance shall first be computed in the same manner as in the case of new ships and it shall then be multiplied by the fraction 20 / L, L being the expectation of life of the ship as at the date of its purchase as given in the appropriate table. We do not think that there is any scope for contending that rule 5(2), in its present form, restricts the grant of depreciation allowance to a period not exceeding the ex....