M/S. WILH, WILHELMSEN versus COMMISSIONER OF INCOME TAX, WEST BENGAL-I

Citation: [1996] SUPP. 3 S.C.R. 231 · Decided: 09-06-1996 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Dismissed

Judgment (excerpt)

M/S. WILH, WILHELMSEN 
v. 
COMMISSIONER OF INCOME TAX, WEST BENGAL-I 
JUNE 9, 1996 
[B.P. JEEVAN REDDY AND S.B. MAJMUDAR, JJ.] 
Income Tax Act, 1922: Section 10(2)(vi). 
A 
B 
Depreciati01t-Unabsorbed depreciation-Ays 1953--54 and 1958-
59-Time limit for claim of unabsorbed depreciation allowance on 
C 
ships-Central Board of Revenue iss!led lnst1Uctions under R. 33 of IT RZ1les 
that allowance of unabsorbed depreciation on ships ceased after expi1y of 
twenty years-Validity and binding nature of-Assessee, a foreign shipping 
company, instead of fumishing complete account of its world business s!lb-
mitted annual account for its Indian Trad&--Entit/ement of depreciation 
allowance for its ships-Held: S!lch l11st111ctions neither inconsistent with nor D 
ultra vires Section 10(2)(vi) of the 1T Act or R. 33 of 1T Rules read with S. 
5(8rSuch lnst1Uctions are clear and una111biguoZ1s and the lTO is bound to 
follow them-Hence, High Cowt 1ightly held that the assessee not entitled to 
get depreciation allowance in respect of ships which had fanned p01t of the 
assessee's fleet for more than twenty years-Income Tax Rules, 1922, R. E 
33-Finance Ac~ 1955, S. 24(2). 
Income Tax-Depreciati01t-Unabsorbed depreciation-Ays. 1953-54 
and 1958-59---Central Board of Revenue issued inst1Uctions under R. 33 that 
unabsorbed depreciation in respect of a p01ticular ship be allowed against that 
ship only in a subsequent ye01-Validity of-Assessee, a foreign shipping F 
conipany, instead of subn1itting co111plete account of its world business sub-
mitted annual account of its Indian Trad&--Assessee claimed set-off in AY 
1958-59 unabsorbed depreciation allotted in AY 1953-54 to some of its ships 
which did not come to India in the accounting year relevant to AY 1958-
59-Entitlement of-Held : Such lnst111ctions not ultra vires S. 10(2)(vi) of G 
IT Act or R. 33 read with S. 5(8) of the Act-Hence, High Cowt rightly held 
that assessee was not entitled set-off in the AY 1958-59 the unabsorbed 
depreciation in respect of some of its ships which did not come to India in 
the relevant accounting year. 
Section 5(8}-Income Tax-Central Board of Revemt&--Power of-To H 
231 
232 
SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R. 
A issue order, instmctions and directions-Held : such power confemd on the 
Central Board of Revenue has to be exercised for the purpose of and within 
the four comers of the Act and not contrary to the Act 011d Rules. 
The appellant·assessee was a foreign shipping company. The assess· 
B ment year concerned was 1958-59 for which the accounting year was the 
calendar year 1957. Instead of furnishing the annual accounts for its world 
business for the Assessment Year 1958-59, the assessee furnished separate 
complete annual accounts for its lndi.an trade. The assessment was made 
under the third method contained in rule 33 of the Income Tax Rules, 1922 
and the Instructions issued thereunder. The profits that were brought to 
C tax ultimately were the net Indian profits of each ship employed in the 
Indian trade in the Accounting Year 1957. Following the Instructions 
aforementioned, the Income Tax Ollicer disallowed depreciation of eight 
ships mentioned in his order on the ground that the said ships in the 
assessee's fleet were of more than twenty years. The unabsorbed deprecia· 
D tion of Rs. 97 ~47 for the accounting year relevant to the assessment year 
1953-54 pertained to seven ships, which did not come to India in the 
accounting year relevant to the assessment year 1958-59. In the books of 
the assessee, the said sum of Rs. 97, 547 was shown as a business loss 
brought forward from the earlier years. The Income Tax Ollicer allowed 
the assessee to set-off the said amounl against the profits for the account· 
E ing year relevant to assessment year 1953-54. 
On appeal, the Appellate Assistant Commissioner allirmed the 
order of the Income Tax Ollicer. Before the Appellate Assistant Commis· 
sinner, the Income Tax Ollicer contended that allowing the set-off of Rs. 
F 97,547 by him was a mistake. The assessee accepted the said contention. 
Accordingly, the Appellate Assistant Commissioner enhanced the assess· 
ment by disallowing the said sum of Rs. 97,547. 
The assessee appealed to the Tribunal where it contended that the 
Instructions insofar as they provided for disallowance of depreciation on 
G the said eight ships (which did not come to India during the accounting 
year relevant to assessment year 1958-59) were ultr

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