TMI Blog1962 (6) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... follows: (1) Whether the words 'all depreciation actually allowed' used in section 10(5)(b) of the Indian Income-tax Act refer only to the depreciation allowed for the purpose of determining the amount liable to Indian income-tax? (2) Whether the provisions of paragraph 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, apply and were correctly applied to the facts of the case? The assessee is a public limited company incorporated in the former Indore State. Up to and inclusive of the assessment year 1949-50, except for the assessment year 1948-49, the assessee was for a number of years taxed under the Indian Income-tax Act in the status of a nonresident on such income as fell within section 4(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oses of determining the income of the assessee under section 4(1)(a) or 4(1)(c) read with section 42, by the applications of rule 33, the total world income of the assessee had to be calculated and in making these calculations, the entire amount of depreciation had to be allowed. It was after the total world income was so calculated that on the basis of proportion, by the application of rule 33, the income taxable under the Indian Income-tax Act was computed. The Contention of the assessee was that although in the calculation of the total world income, the item of depreciation had to be taken into account, in the computation of the income that was taxed under the Indian Income-tax Act as the taxable income of the non-resident, no amount was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inus such depreciation as had entered into the computation of the income of the assessee taxable under the Indian Income-tax Act. It negatived the department's contention that the written down value was the cost minus full depreciation which was taken into account in determining the total world income. It was out of this decision of the Tribunal that the first question was raised on this reference at the instance of the department. In our opinion, the Tribunal is right in the view that it has taken. Section 10 of the Indian Income-tax Act provides for the computation of the profits or gains of business on which tax is to be paid under the Act. In the computation of these profits, certain deductions and allowances are allowed from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... world income. To the extent to which the depreciation had thus entered into the computation of the taxable income of the assessee, and to the extent to which he had thus obtained a deduction under section 10, it could be said that the said depreciation had been actually allowed to him under the provisions of section 10(5)(b). The Tribunal, therefore, in our opinion, was right in taking the view that it has taken. The contention of the department that, because the whole amount of depreciation was taken into account in calculating the world income, which was also a calculation under the Indian Income-tax Act, the assessee must be taken to have been allowed the full depreciation under section 10(5)(b), is untenable. The full depreciation was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable in the present case, and certain amounts of depreciation which were required to be allowed under the Industrial Tax Rules, which had the force of law in the State of Indore, were required to be deducted in arriving at the written down value of the assets of the assessee. The Tribunal permitted this contention to be raised by the department. It was pointed out by the counsel appearing for the assessee that the contention could not be entertained unless it was found as a fact that the depreciation was actually allowed under the Industrial Tax Rules to the assessee, and unless it was also further held that the Industrial Tax Rules were rules which related to income-tax or super-tax, or any law relating to tax on profits of business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The validity of this provision was at one time challenged. But that challenge has been set at rest by the decision of the Supreme Court in Commissioner of Income-tax v. Dewan Bahadur Ramgopal Mills Ltd. [1961] 41 I.T.R. 280; [1961] 2 S.C.R. 318 The validity of the provision having been thus established, the provision must apply wherever it has application. The Tribunal has directed the Income-tax Officer to consider whether the Industrial Tax Rules are a provision which relates to income-tax or super-tax or any law relating to tax on profits of business within the meaning of paragraph 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, i.e., on the basis that paragraph 2 of the said order has application to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
