CIT-IV, Coibatore v. Shiva Distilleries Ltd
|Shiva Distilleries Ltd.
|Date of Order
|depreciation on assets • commercial production • business of trading • rate of tax • amendment
|Ms. Radha Rangaswamy, AOR UPON hearing the counsel the Court made the following ORDER The following two main issues arise for consideration in this petition: 1.Whether the High Court was right in holding that the assessee is entitled to depreciation in respect of new textile unit or the entire transitional period of 21 Signature Not Verified months treating the business as an extension of the earlier business of trading in yarn, when the new Digitally signed by ASHWANI KUMAR Date: 2017.08.31 18:08:50 IST Reason: textile unit started commercial production only from 15.02.1989, and the depreciation is applicable in the ratio of 2:21. Insofar as first issue is concerned, it arose because of the reason that the assessee herein originally had his accounts made up from 01.07.1987 to 30.06.1989. On account of amendment brought forth to Section 3 of the Income Tax Act, 1961 by Direct Tax Laws Act, 1989 making it effective from 01.04.1989, the assessee had to close its accounts by 31.03.1989. The assessee claimed depreciation on assets for the aforesaid period of 21 months as previous year. The claim of the assessee was allowed originally by the Assessing Officer. The Commissioner of Income Tax, in exercise of his jurisdiction under Section 263 of the Act, revised the order of assessment as regards the depreciation claimed by the assessee, which was granted at the enhanced rate by applying the fraction of 21/12 as per Rule 5 of X Schedule of the Act. Without going into the legality of the matter, it comes on record that the assessment is tax neutral inasmuch as if the depreciation is allowed at lesser rate in the year in question it would be more in the subsequent years.