1951 (11) TMI 1 - SUPREME COURT

Whether on the facts and in the circumstances of this case the Tribunal was right in holding that the unabsorbed depreciation at the end of the year 1938-39, which was not given effect to, in the subsequent years, could not be treated as part of the allowable depreciation for the relevant assessment years which are assessment years 1941-42, 1942-43 and 1943-44?

Held that:- The section provides that in order to enable the unabsorbed depreciation to be carried forward to the succeeding year, it must be shown that full effect was not given in the previous year, owing to there being no profits or gains chargeable for the year, or, owing to the profits or gains chargeable being less ,than the allowance. It was argued on behalf of the appellant that in the present case full effect could not be given to the unabsorbed depreciation not for the reasons stated in the section but on account of the failure of the assessee to take the matter in appeal against the assessment for 1940-41. In our opinion, this view is based on a misreading of the section. The words used in the section are :--" where full effect cannot be given ", and not "where full effect has not been given." It is not denied that the profits or gains were less than the depreciation allowance, and that being so the requirements of the section were satisfied.

In our opinion, the view taken by the High Court on the limited question referred to it is correct, and we accordingly dismiss this appeal