1986 (7) TMI 132

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....ssessment year 1982-83. The ITO granted this permission subject to the following condition: "Depreciation claim will not be allowed for the period of 5 months, i.e., for the assessment year 1982-83 and that full depreciation will be allowed for the assessment year 1983-84." The assessee agreed to this condition but later on demanded the depreciation for the period of five months on the ground that the condition was illegal, relying upon the decision in the case of J.K. Synthetics Ltd. v. O.S. Bajpai, ITO [1976] 105 ITR 864 (All.). The ITO rejected this demand. 3. The Commissioner (Appeals) confirmed that order on the ground that if the condition was not acceptable to the assessee it could have challenged it under section 264 of the Incom....

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....sion has also observed that "it is not disputed that the conditions which the Income-tax Officer can impose must be valid and legal besides being reasonable. He cannot impose conditions which are contrary to the provisions of the Income-tax Act". The ITO has not disclosed any such purpose while the Commissioner has merely made a guess as follows : "The appellant's industrial undertaking had changed hands insofar as the shares were transferred from one group to another and but for the continuity of the company as a legal entity this would have been otherwise a case of transfer of plant and machinery and no depreciation is admissible in the year of transfer. This fact may have weighted with the ITO while stipulating this condition." Moreov....