Law: Income Tax Act, 1961

Section: 32,34,34(1)

Law: Income Tax Rules, 1962

Section: 5,5AA

Income-tax--Depreciation---Depreciation on assets not claimed by assessee and required particulars not furnished ---ITO not justified in granting depreciation allowance without particulars---Income Tax Act, 1961, Ss.32 & 34---Indian Income Tax Rules, 1962, R.5AA. (b)Income-tax--- ----Capital gains---Computation of capital gains--Depreciation on asset not claimed and, therefore, depreciation allowed by ITO has to be withdrawn--­Capital gain to be computed on original cost or written down value after withdrawal of depreciation allowed by ITO in relevant year---Indian Income Allowance of depreciation is subject to the provisions of section 34(1) of the Income Tax Act, 1961. Subsection (1) of section 34 provides that the deductions referred to in section 32 shall be allowed only if the prescribed particulars have been furnished. For the assessment years 1977-78 and 1978-79, while computing the income, the Assessing Officer allowed depreciation though the assessee had neither claimed depreciation nor furnished particulars for allowance of depreciation under section 32 read with section 34 of the Act. The Tribunal held that the Income-tax Officer was not justified in granting depreciation allowance when no claim was made for the same. On a reference: Held, (i) that when there was no material before the Income-tax Officer which was necessary for grant of depreciation allowance, no depreciation could be allowed by the Assessing Officer. (ii) that consequently capital gain/loss had to be computed on the basis of the value of the original cost of the asset or written down value and the same had to be done after withdrawal of depreciation allowed by the Income-tax Officer, for the relevant year. Ascharajlal Ram Parkash v. CIT (1973) 90 ITR 477 (All.); CIT v. Shri Someshwar Sahakari Sakhar Karkhana Ltd. (1989) 177 ITR 443 (Born.) and Dasaprakash Bottling Co. v. CI T (1980) 122 ITR 9 (Mad.) ref. JUDGMENT Y.R. MEENA, J.---By this reference application made under section 256(1) of the Income Tax Act, 1961, the Tribunal has referred the following question for our opinion; "For the assessment years 1978-79 and 1979-80: Whether, on the facts and in the circumstances of the…

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