COMMR. OF INCOME TAX, DIBRUGARH versus DOOM DOOMA INDIA LTD.

Citation: [2009] 2 S.C.R. 733 · Decided: 18-02-2009 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Dismissed

Judgment (excerpt)

[2009] 2 S.C.R. 733 
COMMR. OF INCOME TAX, DIBRUGARH 
v 
DOOM DOOMA INDIA LTD. 
Civil Appeal No. 1094 of 2009 
FEBRUARY 18, 2009 
[S.H. KAPADIA AND H.L. DATTU, JJ.] 
A 
8 
... 
Income Tax Act, 1961: s. 43(6)(b) -
Expression 
" 
'depreciation actually allowed' - Meaning of - Held: Means 
depreciation actually debited against the income of business 
in computing taxable income - Income Tax Rules, 1962 - r. 8. C 
t 
Income Tax Rules, 1962 - r. 8 - Depreciation - Manner 
of computation - Held: Depreciation deducted in arriving at 
taxable income alone to be taken into account and not 
depreciation taken for arriving at composite income. 
D 
The questions which arose for consideration in these 
appeals are what is the meaning of expression 
"depreciation actually allowed" in Section 43(6)(b) of 
Income Tax Act, 1961 and what is the manner of 
computation of depreciation in cases falling under Rule 8 E 
of Income Tax Rules, 1962 which deals with taxability of 
composite income. 
Dismissing the appeals, the Court 
HELD: 1. The words "actually allowed" in Section F 
43(6)(b) mean - "limited to depreciation actually taken into 
account or granted and given effect to, i.e. debited by the 
Income-tax Officer against the incomings of the business 
in computing the taxable income of the assessee". [Para 
9] [ 739-C] 
G 
Madeva Upendra Sinai v. Union of India and Others 
(1975) 98 ITR 209 - relied on. 
733 
H 
734 
SUPREME COURT REPORTS 
[2009] 2 S.C.R. 
A 
Commissioner of Income-tax v. Suman Tea and Plywood 
'-7--
4 
lndusries (P) Ltd. (1993) 204 ITR 719 - referred to. 
2. The depreciation deducted in arriving at the taxable 
income alone could be taken into account and not the 
depreciation taken into account for arriving at the world 
8 
income (composite income). Assessee is engaged in the 
business of growing and manufacturing of tea. As per the 
provisions of Section 10(1) of the 1961 Act read with Rule 
8, 40 per cent of the business income derived from the 
sale of tea grown and manufactured in India by the 
C assessee was liable to tax. In cases where Rule 8 applies, 
the income which is brought to tax as "business income" 
is only 40 per cent of the composite income and 
consequently proportionate depreciation is required to 
be taken into account because that is the depreciation 
D "actually allowed". [Paras 10, 11 & 16] [ 739-E; 740-G-H; 
742-F-G] 
E 
F 
G 
Commr. of Income-tax, Madhya Pradesh, Nagpur and 
Bhandara v. 'Nandlal Bhandari Mills Ltd. - ( 1966) 60 ITR 173 
...:... relied on. 
Commissioner of Income Tax v. Willamson Financial 
Services and Others· (2008) 297 ITR 17 - held inapplicable. 
Case Law Reference 
(1975) 98 ITR 209 
relied on 
Para 8 
(1993) 204 ITR 719 
referred to 
Para 6 
(1966) 60 ITR 17 
relied on 
Para 9 
(2008) 297 ITR 17 
held inapplicable Para 17 
CIVILAPPELLATE JURISDICTION: CivilAppe~J No. 1094 
of 2009 
From the Judgement and Order dated 22.11. 2006 of the 
Hon'ble High Court of Assam, Na.galand, Meghalya, Manipur, 
H 
Tripura, Mizoram; andArunachal Pradesh in LT.A. No. 28of2004 
1 
.... 
t 
COMMR. OF INCOME TAX, DIBRUGARH V. 
735 
DOOM DOOMA INDIA LTD. 
WITH 
A 
·-y 
Civil Appeal No. 1093 of 2009 
Civil Appeal No. 1095 of 2009 
Civil Appeal No. 1096 of 2009 
Civil Appeal No. 1097 of 2009 
B 
V. Shekhar, Arijit Prasad, Arti Gupta, B. V. Balaram Das, 
...; 
for the Appellant. 
'! 
Percy J. Pardiwala, Satyen Sethi, Johnson Bara, 
Rameshwar Prasad Goyal, for the Respondent. 
c 
The Judgement of the Court was delivered by 
S. H. KAPADIA, J. 
1. Delay condoned. 
D 
l( 
,... 
2. Leave granted. 
3. This batch of civil appeals is directed against judgments 
dated 22.11.06 and 8.1.07 of the High Court of Guwahati, 
Assam, in appeals under Section 260A of the Income-tax Act, 
1961 in respect of assessment years 1988-89, 1989-90, 1990-
E 
91 and 1991-92. 
~ 
4. What is the meaning of the expression "depreciation 
actually allowed" in Section 43(6)(b) of the 1961 Act (as it stood 
t· 
at the relevant time)? How is the depreciation to be computed F 
in cases falling under Rule 8 of the Income-tax Rules, 1962, 
which deals with taxability of composite income? These are the 
two questions which arise for determination in this batch of civil 
appeals. 
Background facts in Civil Appeal No. of 2009 (Arising G 
J 
out of S.L.P(C) No.13070 of 2007) 
5. The facts in all these civil appeals are similar. 
Respondent-assessee, at the relevant time, was in the business 
of growing and manufacturing of tea. In th

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