LexMAHARANA MILLS PVT. LTD. versus INCOME TAX TRIBUNAL, AHMEDABAD & ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
-~- MAHARANA MILLS PVT. LTD. v. INCOME TAX TRIBUNAL, AHMEDABAD & ORS. MAY 3, 1989 [R.S. PATHAK, CJ. AND M.H. KANIA, JJ.] Income Tax Act 1922-Sections. I0(2)(vi) and 60A-Depreciation allowance and written ·down value-Computation of-Saurashtra Income Tax Ordinance 1949-Effect of. A B The appellant-assessee is a company carrying on the business of manufacturing and selling Textile at Porbunder (formely a princely State) in Saurashtra in the State of Gujarat. No income tax was levied by the former Porbunder State prior to 1948. In 1949 the princely State C of Porbunder integrated into newly formed Saurashtra State. In 1949 the State of Saurashtra promulgated the Saurashtra Income Tax Ordinance wherein provision for grant of depreciation based on written down value was made. On 26.1.1950, StateofSaurashtra became a part of the Union of India as a Part 'B' State and thus the Income Tax Act, 1922 became appli- o cable to the State of Saurashtra from 1st April 1950 under the Finance Act, 1950. The said Saurashtra Income Tax Ordinance was repealed under Sec. 13 of the Finance Act, 1950. Section 12 of that Act provided for removal of difficulties, if any, arising in giving effect to the Income Tax Act. The Central Govt. on 2.12.50 issued an order known as "Taxation Laws (Part B States) Removal of Difficulties) Order 1950". Clause 2 of the said order provided E the manner in which the aggregate depreciation allowance and written down value were to be computed. On March 9, 1953, the Central Govern- ment in the exercise of its powers under Sec. 60A of the Indian Income Tax Act, 1922, added an Explanation to the said clause (2). The vires of the said Explanation was challenged before the Andhra Pradesh High Court which held that the Explanation referred to above was ultra vires the powers of F the Central Government under Sec. 60A oftbe Income Tax Act. Commissioner of Income-Tax, Hyderabad v. D.B.R. Mills Ltd., [1956] 29 I.T.R. 210. Thereupon, the Central Government issued another notification dated the 8th May, 1956 in exercise of its powers under Section 12 of the G Finance Act 1950, whereby an Explanation in identical terms as the earlier Explanation was added to Clause (2) of the Removal of Difficulties Order, 1950. The validity of the said Explanation added by the '!otilica- tion dated 8th May, 1956 was upheld by this Court in The Commissioner of Income-tax, Hyderabad v. Dewan Bahadur Ramgopal Mi/is Ltd., [1961] 2 SCR 318. On the appeal from the said decision of the High Court H . I A B c D E F ' G H 2 SUPREME COURT REPORTS [1989] 3 S.C.R. of the Andhra Pradesh in Commissioner of Income-tax, Hyderabad v. D.B.R. Mills, [1956] 291.T.R. 210. The assessee was assessed under the Indian Income Tax Act from 1940-41 in respect of the income arising or deemed to arise in British India from 1940-41 onwards. For these years its income was assessed on receipt basis but in calculating the world income depreciation was taken into consideration for arriving at the income outside British India. The assessee was also assessed for the assessment year 1949-50. under the Saurashtra Income Tax Ordinance, 1949. From 1950-51 it was assessed under the Income 'f'.ax Act. The assessment years concerned in this case are 1957-58, 1958-59 and 1959-60, the corresponding previous years being the Calender years 1956, 1957 and 1958 respectively. The case of the assessee is that during the course of the assessment of its income, depre- ciation was allowed for the assessment year 1950-51 and thereafter on the original cost of the assets as reduced by the depreciation allowance given under the Saurashtra Income Tax Ordinance 1949. The respec- tive written down values for the assessment years 1951-52 and 1952-53 were fixed on the basis of the written down value for the assessment year 1950-51. But later the concerned Income Tax Officer rectified the calculations of depreciation allowance by further reducing the written down value of the assets of the assessee. The Income Tax Officer took the written down value for the assessment years 1940-41 as the starting point. The assessee was not satisfied with this rectification. Its conten- tion was that the depreciation for the previous years should have been calculated only on the basis of Clause (2) of the Taxation Laws (Part B States) (Removal of Difficulties) Order 1950, which provided for com- putation of the aggregate depreciation allowa
Excerpt shown. Read the full judgment & AI analysis in Lexace.