COMMISSIONER OF INCOME TAX versus MAHENDRA MILLS

Citation: [2000] 2 S.C.R. 465 · Decided: 15-03-2000 · Supreme Court of India · Bench: D.P. WADHWA · Disposal: Dismissed

Judgment (excerpt)

COMMISSIONER OF INCOME TAX 
v. 
MAHENDRA MILLS 
MARCH 15, 2000 
[D.P. WADHWAAND S.S. MOHAMMED QUADRI, JJ.] 
Income Tax: 
Sections 32, 34, 28 and 29-Depreciation allowance-Grant of-Claim 
for depreciation and furnishing of prescribed particulars by assessee is nec-
essary-In its absence, there is no mandate on the income-tax officer to 
compute the income by allowing depreciation-Circular No. 29D(XIX-14) of 
1965, F. No. 451239165.JTJ dated August 31, 1965 and Circular No. 14(SL-35) 
of 1955 dated April 11, 1955. 
Section 139(5)-Assessment based on revised return-Claim of depre-
ciation cannot be granted on the original return. 
Worru and Phrases : 
Actually allowed-Meaning of-In the context of Sections 16, 34 and 37 
of the Income-tax Act. 
Respondent-assessee did not claim any depreciation for the assess-
ment year, Income-tax officer allowed the depreciation. Both the Commis-
sioner of Income-Tax (Appeals) and the Tribunal decided in favour of the 
assessee and against the appellant. High Court held that in the absence of 
claim by the assessee, the income-tax officer could not grant depreciation 
allowance. Hence the present appeals. 
Dismissing the appeals, the Court 
HELD : 1.1. Section 34 of the Income-tax Act provides that deprecia-
tion as deduction under Section 32 of the Act shall be allowed only if 
prescribed particulars have been furnished. Further, Section 34 of the Act 
is not in the nature of merely an enabling provision. In the absence of 
particulars of depreciation as required by Section 34, there is no mandate 
on the Income Tax Officer under Section 29 to compute the income by 
allowing depreciation under Section 32 of the Act. Thus, it cannot be 
accepted that since Section 32 provides for depreciation it has to be allowed 
465 
A 
B 
c 
D 
E 
F 
G 
H 
466 
SUPREME COURT REPORTS 
[2000] 2 S.C.R. 
A 
in computing the income of the assessee. [ 491-F, 492-D] 
1.2. Rule SAA of the Income Tax Rules though deleted provides for 
particulars required for the purpose of deduction under Section 32 of the 
Act. In the absence of rule SAA, return of income in the form prescribed 
itself requires particulars to be furnished in great detail if the assessee 
B 
claims depreciation. [ 491-G] 
c 
D 
E 
F 
1.3. Circular No. 29D(XIX-14) of 196S, F. No. 4S/239/6S.ITJ dated 
August 31, 1965 provides that depreciation cannot be allowed where the 
required particulars have not been furnished by the assessee and no claim 
for the depreciation has been made in the return. Income-Tax Officer in 
such a case is required to compute the income without allowing the depre-
ciation. Further, Circular No. 14(SL-3S) of 1955 dated April 11, 19SS 
merely imposes a duty on the officers of the department to assist the tax 
payers by advising the assessee to claim or not to claim depreciation if 
either course is beneficial to the assessee. If he does not wish to avail that 
benefit for some reasons, benefit cannot be forced upon him( [ 472-D-E] 
1.4. When revised return is a valid return and the assessee has 
withdrawn the claim of depreciation it cannot be granted relying on the 
original return when the assessment is based on the revised return. [ 493-D] · 
1.S. Allowance of depreciation is calculated on the written down 
value of the assets, which written down value would be the actual co!>t of 
acquisition less the aggregate of all deductions "actually allowed" to the 
assessee for the past years. "Actually allowed" does not mean notionally 
allowed. If the assessee has not claimed deduction of depreciation in any 
past year it cannot be said that it was notionally allowed to him. A thing is 
"allowed" when it is claimed. There is subtle distinction when one examines 
the language used in Section 16 and that in Sections 34 and 37 of the 
Income-Tax Act. [ 493-E-F] 
CITv. Dharampur LeaJher Co. ud., (1966) 60ITR16S; Beco Engineer-
ing Co. ud. v. CIT, (1984) 148 ITR 478; CIT v. Shri Someshwar Sahakari 
G 
Sakhar Karkhana Ltd., (1989) 177 ITR 443; CIT v. Friends Corporation, 
(1989) 180 ITR 334; CIT v. Arun Textiles, (1991) 192 ITR 700; Chief CIT 
(AdministraJion) v. Machine Tool Corporation of India Ltd., (1993) 201 ITR 
101; CIT, v. Andhra Cotton Mills Ltd., (1996) 219 ITR 404; CIT v. J.K. 
Industries Ltd., (2000) 241ITR537, approved. 
H 
Garden Silk Weaving Factory v. CIT, (1991) 189 ITRS12; CIT, Calcutta 
C.I.T. v. MAHENDRA MILLS [D.P. WADHWA, J.] 
467 
v. Jaipuria China Clay Mines (P) Ltd., (1966) 59 ITR 555, distinguished. 
A 

Excerpt shown. Read the full judgment & AI analysis in Lexace.