TMI Blog1991 (6) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Assistant Commissioner, adopting the reasons contained in the decision of the Allahabad High Court in Ascharajlal Ram Parkash v. CIT [1973] 90 ITR 477, to the effect that depreciation was a statutory charge and the correct profit cannot be computed without allowing depreciation, upheld the order of the Income-tax Officer in allowing depreciation to the assessee. The assessee challenged the said order before the Income-tax Appellate Tribunal which held that there were two courses open to the assessee, one, of claiming depreciation allowance in which event it would be charged tax on a higher amount of balancing charge and, two, of forgoing the claim for depreciation, the result of which would be that the tax payable on the balancing charge would be less. The Tribunal found that it was open to the assessee to pursue the course which leaves it with a lighter burden particularly when there was no effect on the profits and gains which were required to be determined for the year under reference. The Tribunal found that it was open to the assessee to reduce the incidence of tax by forgoing the claim for deduction though, in law, it may be entitled to the same. The Tribunal, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein subject to the provisions of section 34 of the Act. He submitted that the use of the word "shall" in section 32(1) clearly indicated that the provision was mandatory in nature and that the Income-tax Officer was bound to allow the deductions listed therein, whether claimed or not. In support of his argument, he also referred to the provisions of section 143(1)(b)(ii) of the said Act as were applicable at the relevant time pointing out that, in making an ex parte assessment under section 143(1)(a), the Income-tax Officer was empowered to allow any deduction which may not have been claimed in the return. Mr. Shelat also argued that, even if the prescribed particulars were not furnished in connection with the depreciation under section 32, the Income-tax Officer had not only jurisdiction but was duty bound to allow the deductions under the said provision for arriving at the real income of the assessee. Learned counsel, Mr. Mehta, appearing for the assessee, on the other hand, submitted that the Income-tax Officer cannot impose a deduction when no claim is made. He submitted that it was open to the assessee to revise his return by withdrawing the claim for depreciation and, once t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished. The form prescribed by rule 12 required particulars to be given for the purpose of the claim for deductions under the said provision. Under clause (ii) of sub-section (1) of section 32, such percentage on the written down value of the specified assets is to be allowed as a deduction in respect of the depreciation of the assets. It appears that allowance in such cases is, therefore, to be calculated on the written down value of the assets. The written down value of assets is defined in section 43(6) of the Act and, in respect of the assets acquired prior to the accounting year, the written down value would be the actual cost of acquisition less the aggregate of all the deductions "actually allowed" to the assessee in the past years. It would follow that, where depreciation may be merely allowable but which is not computed, it cannot be said to have been "actually allowed". Therefore, depreciation which is not claimed cannot be made to reflect in the written down value of the assets. If the idea behind the provisions was to provide for compulsory deductions for depreciation, then the written down value of assets acquired before the previous year would have been defined so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulars, there would hardly be any occasion for the Income-tax Officer to "allow" any claim. In the context in which the word "allowed" is used in section 32(1), it is clear to us that the meaning intended is "to admit something claimed". The word "allowed" means "to accept as true or valid, to acknowledge admit, grant", "to admit something claimed, to acknowledge grant, concede" (See the Oxford English Dictionary, Volume I, 1970 Reprint, page 2392). There is nothing in the provisions of section 32(1) read with section 29 of the Act to indicate that even when no claim is made for allowing deduction in respect of the depreciation under section 32(1), the Income-tax Officer is bound to allow a deduction. In our view, it is implicit in the said provisions that the assessee should have made a claim for deduction under the said provisions co enable the Income-tax Officer to consider the same. The argument of learned counsel for the Revenue is that, unless the depreciation is taken into account, the Income-tax Officer cannot arrive at the correct taxable income of the assessee. It is difficult to accept this argument for, under the scheme of the Act, income is to be charged regardless of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o allow the loss, it was held that the allowance of depreciation under section 10(2) of the Act of 1922 was mandatory and not a matter depending on the genuineness of the books of account and that the Income-tax Officer could not, therefore, have refused to allow the depreciation. The authority cannot be read to lay down a proposition that Income-tax Officers are bound in all cases to make deductions even when no deductions are claimed and when the assessee makes it clear that he does not want to claim the benefit. Mr. Shelat also relied on the decision of the Allahabad High Court in Ascharajlal Ram Parkash v. CIT [1973] 90 ITR 477 which lays down the proposition that though the assessee in his return did not claim depreciation nor gave the necessary particulars in the form of return, if the Income-tax Officer, in the course of assessment proceedings, comes to know of the relevant particulars necessary for the grant of deduction for depreciation, he was bound to give effect to it and allow depreciation, as he was bound to arrive at the correct figure of profits and gains of the business of the assessee. This decision cannot help the Revenue because in the instant case, there were n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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