Law:

Section:

Section 32 of the Income-tax Act, 1961 [Corresponding to section 10(2)(vi) of the Indian Income-tax Act, 1922] - Depreciation - Unabsorbed depreciation - Assessment years 1941-42 to 1943-44 - For relevant assessment years, assessee company claimed that its unabsorbed depreciation at end of 1938-39 should be deemed to form part of depreciation allowance for 1939-40 and should be allowed to be further carried forward - Income-tax authorities and Tribunal negatived assessee's claim on ground that because of amendment of section 10(2)(vi) of 1922 Act in 1939, assessee was not entitled to carry forward unabsorbed depreciation at end of 1938-39 - Whether two datum lines, namely 1-4-1940 when amending provisions of section 10(2)(vi) of 1922 Act came into effect, and 1-4-1939 which was date mentioned in amended proviso to section 10(2)(vi) of 1922 Act, applied to assessment year and not to accounting year because in income-tax matters law to be applied is law in force in assessment year unless otherwise stated or implied - Held, yes - Whether, since amendment came into force only on 1-4-1940, old law applied every assessment year upto and including assessment year 1939-40 - Whether according to mandatory provisions of old section, allowance for 1939-40 was not only percentage allowed for that year but also unabsorbed depreciation for 1938-39 - Held, yes - Whether, if unabsorbed depreciation for assessment year 1939-40 could be carried forward to assessment year 1940-41 and thereafter to succeeding assessment year if it was not absorbed for reasons given in proviso to section 10(2)(vi) of 1922 Act - Held, yes FACTS The assessee was a company incorporated in the United States of America and owned steamships which visited India. The company's Indian profits were assessed to tax under the 1922 Act. In the course of the assessment for the years 1941-42, 1942-43 and 1943-44, the company claimed that its unabsorbed depreciation at the end of 1938-39 should be deemed to be a part of the depreciation allowance for 1939-40 and, therefore, such unabsorbed depreciation should be allowed to be further carried forward under section 10(2)(vi) of the 1922 Act. This claim was negatived…

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