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1960 (9) TMI 114

This reference raises questions of interest. and importance and is bare of authority. It involves the following questions : "1.Whether by reason of the sale of motor-car for ₹ 4,025 the assessee sustained any loss thereon for the purpose of making the allowance spoken of in section 10(2)(vii) ? and 2.If the answer to the above question is in the affirmative, whether the said loss is ₹ 78 or ₹ 708 or another sum ?" The circumstances leading to this reference may be briefly stated. The assessee family is a dealer in tobacco. A new Vauxhall motor-car was purchased by this family on December 12, 1952, for ₹ 13,144 for the use partially of the family business and partially for non-business purpose, such as perso .....

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the sale of the car should have resulted in a profit and not in a loss. However, as there was no appeal by the department against the assessment made by the Income-tax Officer, the Tribunal opined that they could not enhance the assessment. In the result, the appeal was dismissed. The questions stated above have been referred to us under section 66(1). The point that calls for decision here is whether the written down value of the vehicle should be arrived at after taking into account the normal depreciation and additional depreciation to which an assessee is entitled under section 10(2), clauses (vi) and (vi-a) or the depreciation allowance that is actually allowed to him by reason of section 10(3) of the Act. This depends upon the langua .....

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lant and the initial depreciation allowance admissible under that clause for the first year of erection of the building or the installation of the machinery or plant) in not more than five successive assessments for the financial years next following the previous year in which such buildings are erected and such machinery and plant installed and falling within the period commencing on the 1st day of April, 1949, and ending on the 31st day of March, 1959;... (vii) in respect of any such building, machinery or plant which has been sold or discarded or demolished or destroyed, the amount by which the written down value thereof exceeds the amount for which the building, machinery or plant, as the case may be, is actually sold or its scrap value .....

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and (b) extracted above. We have to adjudicate upon the claim of the assessee on the basis of the definition of written down value of the vehicle, since section 10(2)(vii) contemplates the ascertainment of the loss in the light of the difference between its written down value and the price for which it is sold. The matter is a bit complicated by reason of the existence of section 10(3) which restricts the allowance admissible under clauses (iv), (v), (vi ) or (vii) of sub-section (2), when the asset envisaged therein is not wholly used for the purposes of the business, profession or vocation, to the fair proportional part of the amount which would be allowable if such building, machinery, plant or furniture was wholly so used. It is this su .....

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anguage, we do not think that we will be justified in taking into account the notional allowance that might be admissible under the clauses. The Legislature has advisedly used the words "actually allowed to the assessee". If the intendment of the Legislature was that the whole of the depreciation allowance permissible under those clauses were to be taken into account, surely it would have used appropriate language to convey that thought. We cannot assume that the Legislature was not aware of the distinction between "depreciation allowable to an assessee" and "depreciation allowed to him", as used in clause (b) of section 10(5). That the Legislature is aware of this difference is apparent from the language used .....

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as half the asset used for business purposes and, therefore, in calculating the original cost price of the asset, only half its price should be taken into account. We find it difficult to share this view as there is no basis for such division or the splitting up of the asset into two. On the other hand, the language of section 10(3) makes it plain that such a theory cannot be sustained. It is not the division of the asset as being used for business and non-business purposes that is contemplated by the section but only apportionment of the depreciation allowance as between the use of it for business purposes and its use for non-business purposes. However, that need not detain us any longer as we are not convinced that such a proposition can .....

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