TMI Blog2003 (2) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... claim or a request for allowance of depreciation, whether the Assessing Officer would be justified in allowing the deduction ?" In Income-tax Reference No. 21 of 1999, for the year 1989-90, the assessee filed a return showing a loss of Rs. 9,30,59,275. In computing the loss, the Assessing Officer held that whether the assessee had claimed it or not depreciation was to be allowed as per the provisions of the Income-tax Act and accordingly, he computed the depreciation allowance at Rs. 2,02,79,334 and carried forward the same to be set off against the income 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Officer to allow the deductions referred to in section 32 only if the prescribed particulars have been furnished. The use of the words "allowed" and "allowance" in the provisions would appear to contemplate a claim or application by the assessee for the deduction therein provided for. In the absence of any such claim or application by the assessee the assessing authorities would not be allowing a deduction. Thus, the provisions suggest that the assessee has the choice of seeking or not seeking allowance of deduction. This court also took notice of 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 cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Actually allowed' does not mean 'notionally allowed'. If the assessee has not claimed deduction of depreciation in any past year it cannot be said that it was notionally allowed to him. A thing is 'allowed' when it is claimed. . . . . It is rightly said that a privilege cannot be to a disadvantage and an option cannot become an obligation. The Assessing Officer cannot grant depreciation allowance when the same is not claimed by the assessee." The apex court referred to various decisions on the point rendered by the High Courts some of which take a contrary 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so on for the succeeding previous years.'." According to learned counsel, the Explanation being clarificatory in nature, it would take us back to the same position as though the Explanation was there and the section read with the Explanation makes it clear that whether the claim is made by the assessee or not the allowances has to be allowed by the Income-tax Officer. According to him, the effect of an Explanation which is clarificatory in nature is retrospective in operation. According to learned counsel, the Explanation being declaratory in nature the effect of it 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies" if it is earned in India. The question arose as to whether the salaries and other allowances given to the foreign technicians can be brought to tax under the above section as "salary earned in India" ? An Explanation was added to section 9(1)(ii) of the Income-tax Act by Finance Act, 1983, which was inserted with effect from April 1, 1979, as follows : "For the removal of doubts, it is hereby declared that income of the nature referred to in this clause payable for service rendered in India shall be regarded as income earned in India ;" The entire argument on behalf 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the same manner as though the Explanation was there in the statute. If the Legislature actually intended to nullify the effect of the decision of the apex court rendered in the aforesaid decision, the Explanation added should have been given retrospective effect in express terms. On the other hand, the Legislature itself thought that the Explanation should work only prospectively and did not intend to render the decision rendered prior to the amendment relating to the earlier assessment years in question nullified. As against the express intention of the Legislature to give 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2002-03 and subsequent years." The memorandum explaining the provisions in the Finance Bill, 2001, is to the following effect : "Modification of provisions relating to allowance of depreciation Under the existing provisions of sub-section (2) of section 32 of the Income-tax Act, carry forward and set off of unabsorbed depreciation is allowed for eight assessment years. With a view to enable the assessees to conserve sufficient funds to replace capital assets, specially in an era where obsolescence takes place so often, the Bill proposes to dispense with the restriction 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 restrictio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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