TMI Blog2018 (2) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the total assets as written down value, allowing the depreciation for the relevant assessment year to that extent. The Assessing Officer shall deem the written down value to be the cost of the assets and compute the depreciation allowable at 35% of such deemed written down value and apply it to the portion of the income derived from the agricultural business, that is assessable under the IT Act. - ITA No.29 of 2008 - - - Dated:- 29-1-2018 - MR. K. VINOD CHANDRAN AND MR. ASHOK MENON, JJ. For The Appellant : Sri .E. K. Nandakumar (Sr.) For The Respondent : Sri.P.K.R.Menon,Sr.Counsel, GOI(Taxes), Sri. Jose joseph, SC, For Income Tax And Sri. Mohammed rafeeq [Sr. G.P] JUDGMENT Vinod Chandran, J. The appellant is engaged in the business of manufacture and sale of centrigued latex and rubber. The appeal is concerned with assessment for the year 2002-2003 when Rule 7A was introduced in the Income Tax Rules, 1962 ('Rules', for short). The appellant's income then assessed under the Kerala Agricultural Income Tax Act, 1991 ('AIT Act', for short) of the State, was assessable under the Income Tax Act, 1961 ('IT Act', for short) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e component of cost, to the extent of 35%. Hence, the written down value for the previous year was only permissible to be claimed as depreciation, was the specific ground on which such claim was rejected. The Commissioner of Appeals affirmed the view of the Assessing Officer. The appellant was before the Tribunal. The Tribunal, as is seen from Annexure-C order, relied on the decision in CIT v. Parry Agro Industries Ltd., [206 CTR 36 (Ker.)] to hold that there can be no claim for the assessee over and above the written down value as per the books of accounts. 5. The learned Counsel appearing for the appellant would at the outset submit that the decision relied on by the Tribunal is not applicable, insofar as the same having been rendered under Section 80HHC of the IT Act. Specific reliance is placed on the judgment of the Hon'ble Supreme Court in Commissioner of Income Tax v. Doom Dooma India Ltd. [(2009) 310 ITR 392 (SC)], wherein the actual meaning of the words actual cost to the assessee as found in Section 43(6) of the IT Act, was held to be the actual cost incurred by the assessee in acquiring the plant and machinery de hors the fact whether the acquisition was in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he report submitted by the Assistant Commissioner of State Tax, State Goods and Service Tax Department, Kottarakkara (who is now designated as the Assessing Officer under the AIT Act) is marked as Court exhibit Annexure-C1. The report of the Assistant Commissioner of Income Tax, Circle-I, Kollam, likewise is marked as Annexure-C2. 9. We see from Annexure-C1 report filed by the Assessing Officer under the AIT Act that the assessee has claimed depreciation in the earlier years when filing returns under the AIT Act. Annexure-C2 report of the Assessing Officer under the IT Act also indicates that the assets pertaining to the agricultural income has not been projected for depreciation under the IT Act for the previous years. The Assessing Officer points out that depreciation was claimed in the years 1998-99 to 2001-02 with respect to the building and plant machinery of rubber sheeting factory, the income derived from which, being a manufacturing activity, however is not covered under the AIT Act. In such circumstances, one has to look at whether in allowing the depreciation on the basis of the written down value as available in Section 43(6)(b), the entire cost of the building and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid provisions to the cases of these assessees. 11. The contention of the Department seems to be that there is a double taxation benefit granted to the assessee, insofar as the actual cost of the assets having been depreciated considerably in the years after its purchase, though not actually claimed under the IT Act. Admittedly the same was claimed under the AIT Act, and the allowance granted in computing the taxable agricultural income. The books of accounts as maintained by the assessee also discloses only the written down value of the assets, as available at the commencement of the financial year, after the depreciation claimed under the AIT Act for the previous years and that arrived at under the Companies Act. The question would be as to whether the depreciation already claimed for the very same assets under the AIT Act should be reduced to arrive at the written down value. 12. We extract herein below sub-Clauses (a) and (b) of Section 43(6) of the IT Act: 43(6) written down value means- ( a) in the case of assets acquired in the previous year, the actual cost to the assessee; ( b) in the case of assets acquired before the previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 35% of the income derived from the business. Hence, the assessee would be entitled to claim only 35% of the depreciation for the relevant assessment year. However, in computing such depreciation, should one adopt the entire cost of the plant and machinery or that shown as the written down value after reducing the depreciation allowed under the AIT Act, is the vexing question. 15. As we noticed, the deeming provision is very clear and there is nothing to exclude from the computation of the cost of the assets; the depreciation allowed under the AIT Act. The learned Senior Counsel appearing on behalf of the Revenue would contend that this Court has ample powers to iron out the creases and avoid a double benefit being conferred on the assessee. We have no doubt of such powers, but, whether it could be exercised in the present case is the question which troubles us. In ironing out creases we should not be accused of burning the cloth, by adding words into the statute to digress from the essential unambiguous intention. 16. The Rule providing division of income to be assessed respectively under the AIT Act and the IT Act was brought in, in the year 2002. The Government was qui ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
