TMI Blog1988 (12) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... to furnish the particulars required by section 34, two alternative courses were open to him : he could refuse to allow depreciation or he could make his own valuation of the assets and determine the amount of the allowance. The Income-tax Officer followed the second course and allowed depreciation, observing that the claim of the assessee to the contrary could not be considered. The assessee appealed to the Appellate Assistant Commissioner and the appeal was allowed. The Revenue carried the matter to the Incometax Appellate Tribunal. The Tribunal held that unless the assessee gave the prescribed particulars required by section 34(1), the Income-tax Officer could not allow depreciation. It also took the view that only the revised return of the assessee could be considered, not the original return. The reference raises two issues. The first and broader issue of some importance is whether the assessee has a choice in the matter of claiming deduction on account of depreciation. The second issue is whether, having claimed it in the original return, the Income-tax Officer is entitled to rely on the particulars furnished therein and allow a deduction on account of depreciation regardle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to the provisions of section 34, be allowed- . . ." Sub-section (1) of section 34 reads thus : "(1) The deductions referred to in sub-section (1) or sub-section (lA) of section 32 shall be allowed only if the prescribed particulars have been furnished ; and the deduction referred to in section 33 shall be allowed only if the particulars prescribed for the purpose of clause (i) and clause (ii) of sub-section (1) of section 32 have been furnished by the assessee in respect of the ship or machinery or plant." It is the construction of section 10(2)(vi) and its proviso under the 1922 Act and of section 34(1) of the 1961 Act which are relevant for the purpose of deciding the first issue. It will be noted that the provisions speak of "allowance" and "allowed". The proviso to clause (vi) of subsection (2) of section 10 of the 1922 Act obliges the assessing authority to make an allowance for depreciation as therein stated "Provided that the prescribed particulars have been duly furnished." Sub-section (1) of section 34 of the 1961 Act obliges the Income-tax Officer to allow the deductions referred to in section 32 "only if the prescribed particulars have been furnished". The prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ient of not furnishing the prescribed particulars. The provisions, therefore, prescribe two preconditions to the allowance of a deduction for depreciation. The first, which is implicit, is that the assessee should have asked for it. The second, which is explicit, is that the prescribed particulars should have been furnished. If either of these conditions is not fulfilled, the deduction cannot be allowed by the Income-tax Officer. Our attention was invited by counsel for the Revenue to the judgment of the, Madras High Court in Dasaprakash Bottling Co. v. CIT [1980] 122 ITR 9. This judgment undoubtedly supports the Revenue. The learned judges noted the argument on behalf of the assessee that unless the prescribed particulars had been furnished by the assessee in the return, having regard to section 34, the allowance could not have been validly granted by the Income-tax Officer. Having, under section 29, made it a mandate on the part of the Income-tax Officer to compute the income in accordance with the provisions of sections 30 to 43A, section 34 enabled, the learned judges said, the Income-tax Officer not to grant the allowance if the prescribed particulars had not been furnishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim depreciation, he must supply the required particulars. In the event the particulars are not supplied by the assessee, then depreciation is not allowed to him. It is an admitted position that at no time prior to the assessment year 1955-56 the assessee had filed any returns or claimed any depreciation and in support of it supplied any particulars or any depreciation on the machinery had actually been allowed. It is not shown to us that it is obligatory on the assessee to claim depreciation in every year of assessment, and in the event of his failure to do so, he forfeits the claim therefor or that the cost price gets automatically reduced by the allowable amount of depreciation, That being the position, it is difficult to hold that the assessee is not entitled to claim depreciation on the basis that the cost price of the machinery, etc., was the written down value thereof for the purpose of ascertaining the amount of depreciation allowable to him, and it was not open to the income-tax authorities to compute the depreciation on the basis that depreciation had been, as if claimed in every year and allowed to the assessee." The view of this court, therefore, is that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to claim for some reason or other , . . ." Counsel for the assessees rightly relied upon this judgment as saying that a claim had to be made by the assessee for a relief to which he was entitled and that the Income-tax Officer's duty was only to advise him of it. In the instant cases, therefore, the Income-tax Officer could certainly have advised the assessees of their right to claim depreciation but he could not have given them the allowance on his own. In our view, to sum up on the first issue, the assessee has a choice to claim or not to claim a deduction on account of depreciation. If he chooses not to claim it, the Income-tax Officer is not entitled to allow a deduction on account of depreciation. Having regard to this view, it is not relevant that the assessee in ITR No. 111 of 1976 had in its original return claimed depreciation. It was entitled before the assessment was made to change its mind and choose not to claim depreciation. The choice having been exercised before assessment by filing the revised return and the letter accompanying it, the Income-tax Officer was not justified in granting a deduction for depreciation based upon information gathered from the orig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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