Law:

Section:

Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/rate of - Whether when AAC and Tribunal had found that assessee had set up its business in relevant assessment year, assesses would be entitled to depreciation even if actual business of commercial production had not started - Held, yes Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Whether, when AAC and Tribunal had found that assessee had set up its business in relevant assessment year, assessee would be entitled to deduction of expenses, even if actual business of commercial production had not started - Held, yes Facts For the assessment year 1966-67, the ITO held that the assessee had not commenced manufacturing and, that production, if any, during the period was only on an experimental basis and, thus, disallowed depreciation and deduction of business expenditure claimed by the assessee. For the assessment year 1969-70, the ITO found that the assessee's factory had worked for less than thirty days and, therefore, the assessee's claim for depreciation was disallowed. The AAC held for the assessment year 1966-67 that the assessee had set up its business during the relevant accounting year and the ITO was not justified in disallowing the depreciation and expenditure of the assessee's business and further on the basis of the aforesaid finding for the assessment year 1966-67 held that in the assessment year 1969-70 the assessee having set up its business earlier, the ITO should have allowed depreciation. The Tribunal confirmed the AAC's order. On reference: Held The AAC and the Tribunal had come to a finding that the assessee had set up its business in the assessment year 1966-67. That finding had not been challenged and had become final. The Supreme Court has held in CWT v. Ramaraju Surgical Cotton Mills Ltd. [1967] 63 ITR 478 that where a business unit had been set up by the assessee which was ready to commence production, the assessee was entitled to claim deduction of the expenditure which could not be disallowed on the ground that the same had been incurred prior to the commencement of the actual business of commercial production. In view of this…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492