TMI Blog1978 (11) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... livered by PATHAK J.-- This appeal by special leave is directed against the judgment of the High Court of Delhi disposing of a reference made to it by the Income-tax Appellate Tribunal on the following question : "Whether, on the facts and in the circumstances of the case, the sum of Rs. 24,252 is an item taxable in the previous year under the provisions of s. 10(2)(vii) ? The appellant is a partnership firm carrying on business as forest contractors. The partners are Thakur Dan Singh and his son, Thakur Mohan Singh. The appeal relates to the assessment year 1958-59, for which the previous year is the financial year ending March 31, 1958. The business was originally carried on by HUF consisting of the aforesaid father and son. There wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant, a reference was made to the High Court of Delhi. The High Court took the view that inasmuch as the partners of the appellant were the same individuals who were members of the HUF and as the business was taken over as a running concern by the appellant from the family "there was merely a change in the style and nature of the HUF on March 22, 1956". In the opinion of the High Court, the original cost of the trucks to the appellant would be the same as it was to the HUF and it rejected the contention that the original cost of the three trucks in the hands of the appellant must be taken as nil. In the result, the High Court affirmed that the sum of Rs. 24,252 was taxable in the hands of the appellant by virtue of the second pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt could not have been allowed any depreciation allowance for the reason that from the outset when the three trucks became its property, the written down value was nil. No question can arise of imposing a balancing charge under the second prov. to s. 10(2)(vii). It is contended by the revenue that the business was taken over as a running concern by the appellant and, therefore, account should be taken of the depreciation allowed in the hands of the HUF. In our opinion, it is immaterial that the business was taken over as a running concern. Where a business is taken over as a running concern by an assessee, the cost to it of the assets must ordinarily turn on the value of the assets as on the date of acquisition. There is no material befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very individuals who constituted the HUF now constitute the appellant firm. When depreciation allowance was allowed to the HUF in its assessment proceedings, it was a step taken in determining the taxable income of the family. The depreciation allowed to the family cannot be regarded as depreciation allowed to the appellant. We must ignore entirely the circumstance that depreciation has been allowed to the HUF in the past. On these considerations, it is not possible to say that the second proviso to s. 10(2)(vii) is attracted. Accordingly, we hold that the sum of Rs. 24,252 is not taxable in the hands of the appellant for the assessment year 1957-58, by virtue of the second prov. to s. 10(2)(vii) of the Indian I.T. Act, 1922, and we ans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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