TMI Blog1950 (5) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... n the subsequent years, could not be treated as part of the allowable depreciation for the relevent assessment years which are assessment years 1941-42, 1942-43 and 1943-44. 3. The assessees, Messrs Isthmian Steamship Co. of New York, are assessed in India as a company through their agents, Messrs. Angus Co. Ltd. In the three relevant assessment years which are referred to in the question as also for the assessment year 1940-41, the unabsorbed depreciation as at the end of the assessment year 1938-39 was not allowed to be carried forward by the Income-tax Officer. For the assessment year 1940-41 the assessees did not appeal against this order and that assessment became final. In the three assessments from 1941 onwards three appeals wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch year a large amount as unabsorbed depreciation as the annual depreciation far exceeded their profits and gains. 6. The only question which was agitated before the Income-tax authorities was whether or not the assessee company was allowed to add the unabsorbed depreciation for the year 1938 to the depreciation allowed by statute for the year 1939. The contention of the assessees was that the depreciation permitted for the year 1939 was not only the percentage allowed by statute for that year, but that percentage plus the unabsorbed depreciation brought forward from the previous year. The taxing authorities on the other hand contended that all that could be allowed as depreciation in the year 1939 was the statutory percentage allowed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be the allowance for that year, and so on for succeeding years; and (c) the aggregate of all such allowances made under this Act or any Act repealed hereby or under the Indian Income-tax Act, 1886, shall, in no case, exceed the original cost to the assessee of the build ings, machinery, plant or furniture as the case may be. It is to be observed that Indian ocean going vessels are treated as plant , although that word is hardly a suitable one. 9. This section was amended by the Indian Income-tax (Amendment) Act, 1939. For the words original cost the words written down value were substituted, and also the words not being a year which ended prior to the 1st day of April 1939 were inserted between the words any year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. (c) No change. It will be seen that as a result of these amendments whereas before 1939 depreciation was based on original cost it was thereafter to be based on the written down value for all assets except ocean going steamers for which the old basis of original cost was retained. Further, by the amendments a limit was placed to the carrying forward of unabsorbed depreciation. 11. The short point in this case is what allowance for depreciation must be made for the year 1939 ? The amending Act did not come into force until 1st April, 1940, and it appears to me that the Act before amendment governs the matter. There can be no doubt that before the amending Act to the depreciation allowed for a particular year, namely, a perc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for depreciation for 1939 can therefore be added to the allowance for the succeeding years. But that leaves the question as to what was the allowance for 1939 still to be answered. As I have already said the allowance for depreciation for 1939 has to be calculated in accordance with the Act before the 1939 amendment and the mandatory provisions of the Act require that the allowance for 1939 should be not only the percentage allowed for 1939 but that percentage together with the unabsorbed depreciation for 1938. It appears to me that the view of the Appellate Tribunal that the allowance for 1939 referred in the section means only the percentage allowed for that year is erroneous. That to my mind overlooks the mandatory provisions of provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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