TMI Blog1989 (9) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal, Nagpur Bench, has referred the following question of law to this court for its opinion: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in directing the Income-tax Officer to allow depreciation to the assessee-trust as claimed by it ?" The material, facts giving rise to this reference, briefly, are as follows The assessee is a religious and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law has been referred to this court for its opinion. Having heard learned counsel for the petitioner, we have come to the conclusion that the reference must be answered in the affirmative and against the Revenue. It was contended on behalf of the Revenue that depreciation under section 32 of the Act could be allowed only when income was computed under the head "Business" falling under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the asset, over its effective lifetime ; the amount of the provision, made in respect of an accounting period, is intended to represent the proportion of such expenditure, which has expired during that period. At the end of its effective life, the asset ceases to earn revenue, i.e., the capital value has expired and the asset will have to be replaced or substitute found. Provision for deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance-sheet will not present a true and fair view of the state of affairs ; assets should be shown at a fIgure which represents that part of their value on acquisition which has not yet expired'." It was not disputed that the mercantile system of accounting was followed by the assessee. In that case, as held in CIT v. Society of the Sisters of St. Anne [1984] 146 ITR 28 (Kar), if depreciation is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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