1984 (8) TMI 47 - HC - Income Tax

Summary

Issues:
- Interpretation of section 32(1)(iv) of the Income-tax Act, 1961 regarding initial depreciation for buildings completed after March 31, 1961.
- Determination of whether the date of commencement of construction is essential for claiming initial depreciation under section 32(1)(iv) of the Act.

Analysis:
The case involved a question of law referred to the court regarding the claim of initial depreciation under section 32(1)(iv) of the Income-tax Act, 1961 for buildings completed after March 31, 1961. The dispute arose when the Department contended that both the completion and commencement of construction after March 31, 1961 were necessary to claim the benefit of initial depreciation. However, the Tribunal held that only the completion date was relevant for granting initial depreciation, not the commencement date. The court analyzed the relevant provisions of the Act and compared them with past legislation to interpret the term "newly erected" in section 32(1)(iv).

The court examined section 32(1)(iv) of the Act, which allows depreciation on buildings newly erected after March 31, 1961, used for specific purposes. The central issue revolved around the interpretation of the term "newly erected." The petitioner argued that the term should encompass both the commencement and completion of construction after March 31, 1961. However, the court disagreed, emphasizing that the statute did not require the commencement date for granting initial depreciation, focusing solely on the completion of the building process.

Further, the court compared the language of section 32(1)(iv) with section 23 of the Act, which explicitly mentioned both the commencement and completion dates for certain provisions. This comparison led the court to conclude that the omission of the commencement date in section 32(1)(iv) indicated legislative intent to only consider the completion date for initial depreciation eligibility. The court also highlighted past legislation, where the law-makers specifically included both commencement and completion dates when required, demonstrating a deliberate change in the wording for the 1961 Act.

In conclusion, the court ruled in favor of the assessee, stating that the date of commencement of the buildings was irrelevant for claiming initial depreciation under section 32(1)(iv) of the Act. The judgment clarified that the completion date alone was sufficient to determine eligibility for initial depreciation, rejecting the Department's argument requiring consideration of both commencement and completion dates.