JOSE KURUVILLA Vs. COMMISSIONER OF AGRICULTURAL INCOME TAX

JUDGEMENT

(1.) AT the instance of an assessee to agricultural income-tax, the Deputy Commissioner of Agricultural Income-tax and Sales Tax, Kozhikode, has referred the following question of law for the decision of this court :

(2.) THE matter relates to the assessment year 1982-83 for which the accounting period ended on March 31, 1982. For this assessment year, amongst other things, the assessee claimed depreciation on motor car KRD 57. THE car was purchased on November 29, 1978, for a sum of Rs. 38,256. THE Agricultural Income-tax Officer fixed the written down value of the car, for the purpose of allowing depreciation for this year (1982-83), at Rs. 19,039. This was so done after deducting the depreciation value at 20 per cent. per year for the previous years from 1978-79. THE depreciation amount for the previous year 1982-83 was Rs. 3,808 and 50 per cent. of the same, i.e., Rs. 1,904, was apportioned towards agricultural purposes and was allowed as deduction in computing the total income of the assessee. Depreciation was allowed only on the notional written down value of the car for the accounting year 1981-82 (assessment year 1982-83). An important aspect to be borne in mind in this connection is that no depreciation was either claimed or allowed for the assessment years 1979-80, 1980-81 and 1981-82. In revision, the above order of the Agricultural Income-tax Officer was upheld. THE Deputy Commissioner of Agricultural Income-tax and Sales Tax (Appeals) stated that the depreciation allowed on the car is in accordance with law. THE plea of the assessee that the question whether depreciation was not claimed nor allowed in the previous assessments is not a relevant factor and that the full value of the car ought to have been adopted by the assessing authority in calculating the amount of depreciation for the assessment year 1982-83 was repelled. It is thereafter at the instance of the assessee that the question of law formulated hereinabove has been referred for the decision of this court..

(3.) WE are of the view that rule 13 of the Agricultural Income-tax Rules, 1951, has no application to the present case. The said rule provides that the written down value shall be the actual cost of the assets so acquired less all depreciation actually allowed in respect of such assets, either under the Agricultural Income-tax Act, 1950, or the corresponding Act in force prior thereto. Under Section 5(1) of the Agricultural Income-tax Act, 1950, read with Explanation 1, in the case of assets acquired before the previous year, depreciation is allowed, and the basis is the actual cost to the assessce less such sum as may be prescribed. WE are not invited to any rule by which any prescription has been made for deducting any particular sum from the actual cost to the assessee. In the absence of any prescription in the case of assets acquired before the previous year, the actual cost of the assets to the assessee alone is the determining factor. A substantially similar provision that occurred in the Income-tax Act (section 10(5) of the Act of 1922) came up for consideration before the Calcutta High Court in CIT v. Kamala Mills Ltd. [1949] 17 ITR 130. Under the said Act, "written down value" means, in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to him. The court held that the words "actually allowed" means the allowance actually given effect to and the argument that the expression "actually allowed" means "allowable under the law in force" cannot be accepted. Similarly, in Dharampur Leather Cloth Co. Ltd. v. CIT [1965] 55 ITR 329, the Bombay High Court, construing Section 10(5)(b) of the Indian Income-tax Act, 1922, observed thus (at page 336) :