TMI Blog1951 (11) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ng no profits or gains chargeable for the year, or, owing to the profits or gains chargeable being less ,than the allowance. It was argued on behalf of the appellant that in the present case full effect could not be given to the unabsorbed depreciation not for the reasons stated in the section but on account of the failure of the assessee to take the matter in appeal against the assessment for 1940-41. In our opinion, this view is based on a misreading of the section. The words used in the section are :--" where full effect cannot be given ", and not "where full effect has not been given." It is not denied that the profits or gains were less than the depreciation allowance, and that being so the requirements of the section were satisfied. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company, referred the following question to the High Court for its opinion :-- " Whether on the facts and in the circumstances of this case the Tribunal was right in holding that the unabsorbed depreciation at the end of the year 1938-39, which was not given effect to, in the subsequent years, could not be treated as part of the allowable depreciation for the relevant assessment years which are assessment years 1941-42, 1942-43 and 1943-44." The High Court answered the question in favour of the company, and gave a certificate to the Commissioner of Income-tax under section 66A(2) of the Act to appeal to this Court and hence this appeal. Before stating the precise point which arises for determination in this appeal, it will be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains chargeable being less than the allowance, the allowance or part of the allowance, to which ...................................... effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following year ............................................. and deemed to be part of that allowance or, if there is no such allowance for that year, be deemed to be the allowance for that year, and so on for succeeding years ; and for succeeding years ; and (c) the aggregate of all such (c) No Change. allowances made under this Act or any Act repealed hereby or under the Indian Income-tax Act, 1886, shall, in no case, exceed the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion, to be decided in this case is whether the company can be allowed to carry forward the unabsorbed depreciation remaining at the end of 1938-39 and treat it as part of the depreciation for 1939-40. If so, it would necessarily be a part of the depreciation for 1940-41. The Appellate Assistant Commissioner of Income-tax answered the question in the negative and gave two reasons for not giving effect to the contention of the assessee. Firstly, he pointed out that in the course of the assessment for the year 1940-41, the question whether the unabsorbed depreciation remaining at the end of the year 1938-39 could or could not be carried forward and allowed in subsequent years had come up for consideration before the Income-tax Officer but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. They must be held to apply to the assessment year, because in income-tax matters the law to be applied is the law in force in the assessment year unless otherwise stated or implied. The first datum line therefore affected only the assessment year of 1940-41, because the amendment did not come into force till the 1st of April, 1940. That means that the old law applied to every assessment year up to and including the assessment year 1939-40. In the assessment year 1938-39, the assessee showed a certain unabsorbed depreciation in its accounts for the calendar year 1937, ,that being the assessee's accounting year for the assessment year 1938-39. Under the unamended section, he was permitted to carry that amount forward into the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-40 is an assessment year which ended prior to the 1st of April, 1939. It is evident that it is not, because it ended on the 31st of March, 1940. Therefore, it is not one of the excluded years. As it is not, and as, on the facts set out above, what must be regarded as the unabsorbed depreciation for the year 1939-40 could not be absorbed for the reason given in the amended section, it follows that it can be carried forward into the accounts of the assessment year 1940-41 and from there on to the accounts of the succeeding assessment years, if it is not absorbed meanwhile for the reasons given in the proviso. As has been pointed out already, the section provides that in order to enable the unabsorbed depreciation to be carried forward to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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