Law: Income Tax Act, 1922

Section: 66(1),10(2)(iv),(v)

Income tax Act (XI of 1922)--S. 66(1) read with S. 10(2) (iv) & (v) Depreciation on ship Decision of 'Tribunal on question of fact, about seaworthiness of ship, based on cogent reasons and neither arbitrary nor inconsistent with evidence produced Assessee failing to produce sufficiently reliable evidence¬ Certificate of seaworthiness of ship not produced by assessee Decision of Tribunal disallowing depreciation on such ship Held, justified ¬Reference application dismissed. (1963) 49 I T R 177 cited but not examined. (1959) 35 I T R and International Conventions on Merchant Shipping by Singh ref. JUDGMENT MUHAMMAD ZAHOORUL HAQ, J. This is an application under section 66(1) of the Income tax Act, 1922 challenging the orders passed by the Income tax Officer for the assessment year 1953 54 disallowing the depreciation for the ship s. s. Safina e Millat. The said order was confirmed in Appeal by the Appellate Assistant Commissioner of Income tax and eventually the same decision was upheld by the Income tax Appellate Tribunal, Karachi by its order dated 5t2h. January, 1971. 2. The relevant facts are that in February, 1952 the applicants purchased a Japanese Ship named Tsukushi Maru and got the same repaired. After the repairs the ship was surveyed by the surveyors, who found the ship in good and efficient condition and worthy of the classification 100 A 1. The ship was thereafter insured and then sailed for Kobe on its own steam The applicants alleged to have made efforts to obtain Cargo at Singapore, but before the ship could reach Singapore, the ship met with a typhoon at some distance from Hong Kong, which caused considerable damage to the ship and the ship, therefore, had to be towed to Karachi, where it reached in October, 1952. The ship was being repaired at Karachi, when it caught fire on 14th March, 1953, as a result of which the ship was scrapped. 3. The applicants claimed depreciation for the ship for assessment year 195'3 54 ending on 31 12 1952, but the Income tax Officer disallowed the same on the ground that depreciation was allowed as n consequence of earning the income and as the ship was not used, therefore, depreciation was not allowable. The…

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