KERALA STATE Vs. AITO

JUDGEMENT

(1.) Two questions have been raised in this tax revision case and they relate to (a) the disallowance of depreciation allowance of Rs. 23,403-11-0 in the computation of the petitioner's total agricultural income, under S.5(f) of the Madras Plantations Agricultural Income Tax Act, 1955 and (b) the disallowance of the petitioner's claim to deduction of the two sums of Rs. 9236-13-0 and Rs. 13,320/- in the computation of the petitioner's total agricultural income for the assessment year 1957-1958.

(2.) The assessee purchased an estate on the 1st March, 1956 for a total consideration of Rs. 14, 50,000/-. The depreciation that was claimed related to the value of buildings, plants and machinery. It was the assessee's case that the depreciation should be calculated on the sum of Rs. 3,66,180-0-9 and so calculated the depreciation would amount to Rs. 29, 266-11-0. This case of the assessee was not accepted. The depreciation was calculated on the written down value of the assets concerned as disclosed by the records of assessment of the estate for the previous year and fixed at Rs. 5863/-. The difference is the amount of Rs. 23, 403-11-0 to which we have already referred to.

(3.) That the depreciation has to be calculated on the 'written down value' is clear from S.5(f) of the Madras Plantations Agricultural Income Tax Act and the explanation to S.5 makes it clear that 'the written down value' in the case of assets acquired in the previous year is the actual cost of the assessee. The document of sale does not indicate in the document separately the prices of the buildings, plants and machinery on which depreciation has been claimed as distinct from the value of the land and other assets covered by sale deed. Even so, by virtue of the provision in the section it is clear that the actual cost to the assessee of these items of assets must be determined. In fact, the order of the Tribunal itself proceeds on the basis that it is not correct to take the written down value as seen from the assessment made on the vendor and the depreciation ought to be calculated on the costs to the assessee, the purchase having been made in the year of account. Though they said so, they came to the conclusion that there is justification for taking the written down value as seen from the assessment made on the vendor for the reason that the actual cost to the assessee was not evidence from the statement in the sale deed. This, we think, is not correct. The matter will have to be investigated and if necessary, evidence adduced and the actual cost of the assessee for the items in relation to which depreciation has been claimed found. We therefore set aside the order of the Tribunal in this regard and remit the case to the assessing authority for consideration of this aspect of the case as well as the matters to which we shall presently advert to.