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TMI Blog2003 (2) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the subsequent years. This was confirmed by the Commissioner (Appeals). In further appeal, the Tribunal held that the Assessing Officer was not justified in allowing deduction by way of depreciation when the assessee had not made a claim. In para 4 of the order of the Tribunal it was noticed that after the, amendment of section 34(1) by the Taxation laws (Amendment and Miscellaneous Provisions) Act, 1986, with effect from April 1, 1986, it was not necessary for the assessee to furnish the prescribed particulars for claiming depreciation but still there was another implicit condition to be satisfied and that condition was that the assessee should have asked for it. The Tribunal also relied on the decision of the Bombay High Court in CIT v. Shri Someshwar Sahakari Sakhar Karkhana Ltd. [1989] 177 ITR 443. A similar view was also expressed by the Central Board of Direct Taxes in Circular dated August 31, 1965. The Commissioner of Income-tax, however, sought a reference of the question relying on the decision reported in Dasaprakash Bottling Co. v. CIT [1980] 122 ITR 9 (Mad) and Ascharajlal Ram Parkash v. CIT [1973] 90 ITR 477 (All). Income-tax Reference No. 216 of 1999 relate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the fact that if the Legislature had intended that the Income-tax Officer should give a deduction for depreciation whether or not the assessee wanted it, it would not have used such language in the provisions as to enable the assessee to frustrate the intention by the simple expediency of not furnishing prescribed particulars. The provisions, therefore, prescribe two pre-conditions to the allowance of a deduction for depreciation, the first being implicit that the assessee should have asked for it ; the second which is explicit is that the prescribed particulars should have been furnished. In the absence of either of these conditions fulfilled, the deduction cannot be allowed by the Income-tax Officer. Various case law on the point has been referred to and it was after referring to the rival submissions made and after referring to a number of decisions on this. point that this court finally held that unless asked for or applied for by the assessee the Income-tax Officer cannot allow the depreciation allowances. Thus the question was answered in the affirmative, i.e., in favour of the assessee and against the Revenue. Subsequently, the apex court in the case of CIT v. Mahendra Mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view. The decision of the Gujarat and Bombay High Courts were confirmed and the decision of the Calcutta High Court in CIT v. J. K. Industries Ltd. [2000] 241 ITR 537, the Bombay High Court in CIT v. Shri Someshwar Sahakari Sakhar Karkhana Ltd. [1989] 177 ITR 443 and the decision of the Karnataka High Court in Chief CIT (Admn.) v. Machine Tools Corporation of India Ltd. [1993] 201 ITR 101, were approved and the decision of the Allahabad High Court in Ascharajlal Ram Parkash v. CIT [1973] 90 ITR 477 and the Madras High Court in CIT v. Southern Petro Chemical Industries Corporation Ltd. (No. 2) [1998] 233 ITR 400 were overruled. Thus, by the aforesaid decision of the apex court, the position is settled that unless the assessee asked for depreciation allowance the Income-tax Officer cannot grant such depreciation allowances. Thus, the apex court declared the law by the aforesaid decision by its judgment dated March 15, 2000. Normally, the matter would have ended there. But according to Sri P. K. R. Menon, learned standing counsel appearing for the Revenue the Explanation inserted by the amendment to section 32 by the Finance Act, 2001, with effect from April 1, 2002, would take us bac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is to elucidate what was before uncertain or doubtful. When the statute is enured to put an end to the doubt as to what is the law or meaning it declares what it is and even has been. He referred to the meaning of the word, "declaratory" and "declaratory statutes" given in Black's Law Dictionary in support thereof. As we have noticed this Explanation was inserted as per the Finance Act, 2001, and the Explanation itself was given effect to only with effect from the 1st day of April, 2002, and when the Legislature has expressly given effect to the Explanation to commence from 1st day of April, 2002, only we do not see any force in the contention raised by learned counsel appearing for the Revenue that de hors the express provision the section should be given retrospective effect contrary to the legislative intention. The effect of an Explanation added with effect from a particular day has come up for consideration before the High Courts. In CIT v. Rajasthan Mercantile Co. Ltd. [1995] 211 ITR 400, the Delhi High Court considered the provision by way of Explanation added to the entertainment expenditure. The Explanation added, namely, for the removal of doubts entertainment expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the Revenue centred round the said Explanation. The argument of learned counsel for the Revenue relying on that the Explanation proposed to be added to this clause seeks to clarify that income chargeable under the head "Salaries" pay able for service rendered in India shall be regarded as income earned in India. According to the Revenue, the Explanation was inserted only by way of abundant caution and that it is only declaratory. Therefore, the purpose and impact of the Explanation introduced by the Finance Act with effect from April 1, 1979, was considered by this court and in that context, it was held as follows : "Even assuming that, by adding the Explanation, the Legislature has clarified or made clear or removed whatever ambiguity there was in section 9(1)(ii) of the Income-tax Act, 1961, the Finance Act, 1983, itself has proceeded to give retrospective effect to the Explanation only with effect from April 1, 1979. The clarification or declaration, if any, is only from that date. We are concerned in all these cases with the periods which are, admittedly, prior to April 1, 1979. The Legislature itself has clearly stated that the Explanation introduced by the Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect to the Explanation with effect from April 1, 1979, we cannot give any retrospective effect to the Explanation. To do otherwise will be contrary to the legislative intention. Even though learned counsel for the Revenue relied on the decision of this court in CWT v. Smt. B. Indira Devi [1994] 208 ITR 26, in support of his contention that the effect of an Explanation when it is taken as a declaration of what the law always was the same has to understood to be retrospective in operation, we do not find the said decision as having laid down the law as contended for. That was a case arising under the Wealth-tax Act. The question as to whether the Commissioner was justified in looking into the report of the Valuation Officer for coming to the conclusion that the order of assessment was erroneous and prejudicial to the interests of the Revenue arose for consideration. The word "record" has been given a wider interpretation as per the Finance Act, 1989, with effect from June 1, 1988, which amended section 25(2) of the Wealth-tax Act to the effect that "record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estriction of eight years for carry forward and set off of unabsorbed depreciation. It is further proposed to clarify that in computing the profits and gains of business or profession for any previous year, deduction of depreciation under section 32 shall be mandatory. The proposed amendments will take effect from the 1st April, 2002, and will, accordingly, apply in relation to assessment year 2002-03 and subsequent years." It is clearly provided that even with a view to enable the assessees to conserve sufficient funds to replace capital assets, the Bill proposes to dispense with the restriction of eight years for carry forward and set off of unabsorbed depreciation and also clarifies that in computing the profits and gains of business or profession for any previous year deduction of depreciation under section 32 shall be mandatory. But as we have already noticed, the memo itself explains that the provision will take effect only with effect from April 1. 2002, and shall apply in relation to the assessment year 2002-03 and subsequent years. Further, section 263 of the Income-tax Act wherein an Explanation was added was substituted by the Finance Act, 1988, with effect from June ..... X X X X Extracts X X X X X X X X Extracts X X X X
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