TMI Blog1988 (9) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... The first accounting year of the Company was from 1-8-1981 to 31-7-1982. In respect of the second accounting period, the ITO, by his letter dated 3-8-1982, allowed the company to adopt the period from 1-8-1982 to 31-10-1983 as its "previous year". Thus, the accounting period, relevant to A.Y. 1984-85, which is under consideration, consists of 15 months, i.e., from August 1, 1982 to October 31, 1983. 3. During the accounting period under consideration the Company installed new machineries worth Rs. 1,40,01,907 in respect of which it claimed normal depreciation u/s 32(1)(ii) of the IT Act, 1961 (the Act) read with Rule 5(1) of the IT Rules, 1962 (the Rules) and also additional depreciation u/s 32(1)(iia) of the Act. The ITO accepted the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional depreciation to an assessee only once, i.e., either in the previous year in which the machinery or plant is installed, or, if the machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that year ; but the quantification, of the additional depreciation, irrespective of the claim to it in either of the two previous years as pointed out above, is directly related to and dependent upon the quantum of the normal depreciation and not upon the duration of the period of any previous year. 6. We feel impressed with the logical argument of Mr. Patel as it leads to harmonious construction of the language of section 32(1)(iia) and consequently feel inclined to uphold the order under appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provided that . . . . . . Provided further that . . . . . . Explanation : . . . . . . Rule 5(1) --- Depreciation. "5. (1) Subject to the provisions of sub-rules (2) and (3) the allowance under clause (i) or clause (ii) of sub-section (1) of section 32 in respect of, depreciation of buildings, machinery, plant or furniture or the allowance under clause (i) of sub-section (1A) of section 32 in respect of depreciation of any structure or work referred to in that sub-section shall be calculated at the percentage specified in the second column of the Table in Part I of Appendix I to these rules on the actual cost or, as the case may be, the written down value of such of the assets aforesaid as are used for the purposes of the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation in accordance with the mandate contained in the proviso to Rule 5(1). This would be the third and final step in working out "normal depreciation" in respect of a business asset contemplated by section 5(1)(ii). 9. Now, where in a given case, as is the position in the case on hand, the question of allowability of "additional depreciation" u/s 32(1)(iia) arises, the answer to such question shall have to be found on a reading of section 32(1)(iia) with sec. 32(1)(ii) and Rule 5(1) along with the proviso thereto. For, section 32(1)(iia) cannot be read in isolation and independently of section 32(1)(ii), as the very quantification of the relief intended to be given to an assessee under sec. 32(1)(iia) depends upon the amount of nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (iia) of section 32(1), shall 'have necessarily' to take their meanings from the meanings of the expression "previous year" used in the language of proviso to Rule 5(1) of the Rules. Once these expressions are construed in that manner a harmony would establish in the purport of the provisions of clause (iia) and clause (ii) of section 32(1) of the Act. Reading of these provisions of the Act and Rules in that manner would also be in conformity with the object of departmental circular, referred to by the learned Departmental Representative. 10. It was with a view to stimulating investment during the Sixth Five year Plan period that the Finance (No. 2) Act, 1980, inserted clause (iia) (since omitted w.e.f. 1-4-1988) in sub-section (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of normal depreciation in this case was required to be worked out as per proviso to Rule 5(1) of the Rules by taking the income of the assessee for more than 12 months for the purposes of computing its total income for the "previous year" under consideration and that he, in fact, did. Further, he did not also dispute that the provisions of sec. 32(1)(iia) were applicable hereto and which, indeed, he complied with by accepting assessee's claim for additional depreciation. Having once proceeded on these lines, it was not proper on his part, while working out the amount of "additional depreciation", to have adopted a figure of normal depreciation different from the one arrived at by him for the purposes of section 32(1)(ii) read with Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
