TMI Blog1989 (6) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act, 1961, should be allowed as deduction in computing the business income assessed to tax?" The point of reference relates to the deductibility of depreciation for computing the deficiency under section 44A of the Income-tax Act, 1961. The assessee is a trade association and the assessment year involved is 1967-68 for which the accounting period ended on December 31, 1966. Besides deriving business income which is taxed, the assessee has also income from payments made by the members by way of subscriptions or otherwise. Such receipts fell short of the expenditure incurred solely for the purpose of protection or advancement of the common interest of the members. In working out the deficiency, a sum of Rs. 24,703 represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dian Jute Mills Association, registered under the Indian Trade Unions Act, 1926, which derived income from interest on securities, income from jute chronicle and interest, claimed the benefit of deduction of deficiency in accordance with the provisions of section 44A in respect of depreciation on the furniture, air-conditioner, etc., which was debited in its accounts. The Income-tax Officer disallowed the claim on the ground that the assessee was a non-trading association and, therefore, was not entitled to claim depreciation since the assets were not used in a business. On appeal, the Appellate Assistant Commissioner affirmed the order of the Income-tax Officer on the ground that depreciation was not an expenditure to be taken into account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eficiency which has been claimed for by the assessee." "In any view of the matter, having regard to the purpose of the section, as indicated by the heading and having regard to the language used, in our opinion, it is possible to construe the depreciation claimed as expenditure incurred." It may be mentioned that in Indian jute Mills Association [1982] 134 ITR 68 (Cal), the question before the court was whether the depreciation debited in the accounts was expenditure incurred by the assessee within the meaning of section 44A of the Act and should be deducted in computing the deficiency under that section. There the assessee did not have any business income. In that case, the assessee was having other income? In the instant case before u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the association under any other head. The said deduction will be allowable from the net assessable income of the association as computed after giving effect to the provisions in the income-tax Act for the carry forward of depreciation, development rebate and past business losses. Where the assessee derives income from business, if the assets on which depreciation is claimed, are used for the purpose of the business carried on by the assessee, the assessee will be entitled to depreciation. The Tribunal only held that since "the assessee has income from business, it is entitled to allowance of depreciation". We do not find that the Tribunal considered the question whether the assets were used for the purpose of business or not. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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