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Kanshi Ram Wadhwa Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Reference No. 104 of 1976
Judge
Reported in(1982)27CTR(P& H)4; [1982]138ITR830(P& H)
ActsIncome Tax Act, 1961 - Sections 32, 41(2) and 43(6)
AppellantKanshi Ram Wadhwa
RespondentCommissioner of Income-tax
Appellant Advocate B.S. Gupta, Adv.
Respondent Advocate D.N. Awasthy and; B.K. Jhingan, Advs.
Cases ReferredIn Union of India v. T.R. Varma
Excerpt:
.....of refusal passed to the persons concerned, the period of limitation for filing an appeal would commence from the date when the parties concerned acquire knowledge of passing of the said order. - the ito, however, took into consideration the assessment order in the case of the assessee for the year 1971-72, which reads like this :the assessee has shown income from various old trucks at rs. gupta submitted that we should either call for a better statement or remand the case to the tribunal for a fresh decision on the second question......it is clear that the essence of the scheme of the indian income-tax act is that depreciation is allowed, year after year; on the actual cost of the assets as reduced by the depreciation actuallyallowed in earlier years. it follows, therefore, that even in the case of assets acquired before the previous year, where in the past no depreciation was computed, actually allowed or carried forward, for no default of the assessee, the 'written down value' may, under clause (b) of section 43(6), also, be the actual cost of the assets to the assessee.'6. we, therefore, answer the first question in favour of the assessee and against the revenue.7. on the second question it has been vehemently argued by mr. gupta that for the assessment year 1971-72 the assessee had filed a detailed return which.....
Judgment:

M.R. Sharma, J.

1. The Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh, has referred the following questions of law to us for our opinion :

'(1) Whether, on the facts and in the circumstances of the case, the profits under Section 41(2), second proviso, should be computed by deducting depreciation actually allowed under Section 32 and not any notional depreciation allowable under Section 32 from the written down value of trucks within the meaning of Section 43(6)(b) ?

(2) Whether the Tribunal was right in law in holding that depreciation was computed and allowed actually in 1971-72 assessment year on the trucks sold in the assessment year 1972-73 ?'

2. The assessee is an individual deriving rental income from property and income from the business of plying trucks. For the assessment year 1972-73, the assessee sold 3 trucks for a sum of Rs. 93,000. The said trucks had been purchased by the assessee during January, 1971, i.e., during the accounting period relevant to the assessment year 1971-72 at a total cost of Rs. 79,000. The assessee accordingly surrendered by way of revised return an amount of Rs. 14,000 to be taxed as capital gains. The ITO, however, took into consideration the assessment order in the case of the assessee for the year 1971-72, which reads like this :

'The assessee has shown income from various old trucks at Rs. 9,100. After discussion, the income from truck is taken at Rs. 12,350, after considering the depreciation allowed (as agreed to by the assessee). Here the assessee also concealed true particulars of his income.'

3. From this order, he concluded that total depreciation of Rs. 23,700 had been allowed to the assessee for the assessment year 1971-72. Consequently, he held that for the assessment year under consideration the assessee would be deemed to have earned a profit of Rs. 23,700 and was liable to be taxed in accordance with the provisions of Section 41(2) of the I.T. Act.

4. The appeal filed by the assessee before the AAC and the Income-tax Appellate Tribunal were dismissed.

5. We have heard the learned counsel for the parties. The decision onthe first point does not admit of any difficulty because it stands concludedagainst the Revenue because of the view taken by the Supreme Court ofIndia in Madeva Upendra Sinai v. Union of India : [1975]98ITR209(SC) .Therein it was observed (p. 224) :

'From the above conspectus, it is clear that the essence of the scheme of the Indian Income-tax Act is that depreciation is allowed, year after year; on the actual cost of the assets as reduced by the depreciation actuallyallowed in earlier years. It follows, therefore, that even in the case of assets acquired before the previous year, where in the past no depreciation was computed, actually allowed or carried forward, for no default of the assessee, the 'written down value' may, under Clause (b) of Section 43(6), also, be the actual cost of the assets to the assessee.'

6. We, therefore, answer the first question in favour of the assessee and against the Revenue.

7. On the second question it has been vehemently argued by Mr. Gupta that for the assessment year 1971-72 the assessee had filed a detailed return which indicates that no depreciation had been allowed to the assessee for that year and since it had not been actually determined on the basis of the material furnished by the assessee, the ITO and the appellate courts should have taken into consideration the return filed by the assessee and come to the conclusion that no depreciation was actually allowed to the assessee.

8. We are unable to agree with this submission made by the learned counsel. It is a matter of common knowledge that at the time of final arguments the assessee sometimes prefer to have an agreed order passed by the ITO and the orders passed is sometimes not strictly in accordance with the return. A reference to the order passed by the ITO extracted above would indicate that the income was taken at the figure of Rs. 12,350 after considering the depreciation allowed as agreed to by the assessee. In Union of India v. T.R. Varma : (1958)IILLJ259SC , it was laid down that where there was a dispute as to what had happened before a court or tribunal, the statement of the presiding officer in regard to that should be generally taken to be correct. That being so, it is not open to the assessee to contend at this stage that the ITO did not allow any depreciation during the relevant assessment year. Had the assessee not consented to have an agreed order of assessment, the ITO would have perhaps held an enquiry for determining his actual income for that year. The assessee having derived the benefit of an agreed order cannot be allowed to turn round and urge that such an order was incorrect or unwarranted.

9. Faced with this situation, Mr. Gupta submitted that we should either call for a better statement or remand the case to the Tribunal for a fresh decision on the second question. We are unable to accept this submission either. If the statement of the case had not been properly drawn up, the assessee could have filed an application for rectification before the Appellate Tribunal or it could have filed a petition before this court, which application could have been disposed of at this hearing. The assessee did not adopt that course and in view of the admission made by him before the ITO, we are not inclined to allow the assessee to lead evidence on the point that the ITO did not actually allow any depreciation for the relevant year. The second question is, therefore, answered in the affirmative, i.e., in favour of the Revenue and against the assessee. The reference stands disposed of accordingly.


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