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2016 (8) TMI 111 - GUJARAT HIGH COURTDepreciation computation - whether the depreciation should be allowed on the original value of assets even though certain assets were old and obsolete and the respondent had claimed depreciation in its books of accounts for the same? - Held that:- The depreciation provided in the books in the years when the income was exempt cannot be treated as the depreciation “actually allowed”. Accordingly, it was held that as the assessee was not required to compute profits and gains of business or profession under the Income-tax Act, mere passing of accounting entry made for depreciation in the books of accounts was not the depreciation “actually allowed” as there was no liability to tax and hence, no income-tax assessment for this period. It has further held that the written down value (WDV) for the purpose of assessment would be the original cost less nil, i.e., the original cost. This interpretation is not in conformity with the intent and purpose of the provisions of depreciation. Accordingly, Explanation 6 has been inserted in sub-section (6) of section 43 to clarify that in such a case - (a) the actual cost of the asset shall be adjusted by the amount attributable to the revaluation of such asset, if any, in the books of account of the assessee; (b) the total amount of depreciation on such provided in the books of account of the assessee in respect of such previous year or years preceding the previous year relevant to the assessment year under consideration shall be deemed to be the depreciation actually allowed under the Income-tax Act for the purposes of sub-section (6) of section 43; (c) the depreciation actually allowed as above shall be adjusted by the amount of depreciation attributable to such revaluation.- Decided against assessee Roads and boundaries, railway sidings, jetty pire, bouys, mooring and navigation structure can be considered as plant and machinery for the purpose of granting of depreciation under Sec. 32. See Commissioner of Income-Tax v. SLM Maneklal Industries Limited [1993 (6) TMI 51 - GUJARAT High Court] - Decided in favour of assessee.
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