STATE Vs. BHOPAL SUGAR INDUSTRIES LTD.

JUDGEMENT

(1.) THIS is a reference under Section 23 (2) of the Bhopal Agricultural Income -tax Act, 1953, and the question is referred for decision are: -

(2.) DURING the assessment year 1954 -55 the assessee claimed that he was entitled to carry forward a loss of 7,82,183 -11 -9 incurred in the year 1952 -53 against the profits of the relevant previous year 1953 -54. The assessing authority disallowed this claim on the ground that there was no provision in the Act or in the rules framed thereunder for carrying forward losses of one year to be set off against the profits of the following year. It is not necessary to consider whether in the absence of any provision in the Act or in the Rules for the carrying forward of losses the losses incurred in any year can be carried and set off against the Agricultural income of another year. The reason is that here the assessee claims to carry forward the loss which it says was incurred during the year 1952 -53. It has been recently held by this Court in The State of Madhya Pradesh vs. M/s Jethmal Girdharlal (1960 JLJ 577) that the Bhopal State Agricultural Income -tax Act, 1953 came into force on the 15 July 1953 and that therefore as there was no assessment year within the meaning of the Act beginning from 1 June 1953 to 31 may 1954 there could be no previous year commencing on 1 1952 and ending on 31 May 1953. Thus, the agricultural income received during the period from 1 June 1952 to 31 May 1953 is not liable to tax under the Act, and if this income is not liable to tax it necessarily follows that any loss incurred by a person in that year cannot be set off against the income received in the following year. Shri Mehta appearing for the assessee did not dispute this position.

(3.) THE argument advanced on behalf of the assessee that depreciation allowance is a permissible deduction under sub -clause (v) cannot be acceded to. This sub -clause speaks of a deduction on account of any expenses Incurred in the previous year on the maintenance of any capital asset. There must be an expenditure before any deduction on account of the expenditure can be claimed under sub -clause (v). As in a depreciation allowance there is no question of incurring any expenditure, a deduction on account of depreciation cannot be claimed under sub -clause (v). We do not think that it is necessary to consider in this case the general question whether even if depreciation allowance does not fall within any of the sub -clauses of clause (b) of sub -section (2) of section 6 it can be allowed on the connotation of the word 'income' according to the ordinary commercial principles. For, even if it held that on general principles depreciation allowance must be deducted in computing income, it is clear that the assessee cannot get a deduction for deterioration twice over, first deducting the actual expenses of repair, maintenance, and replacement, and then by deducting an additional estimate for the same thing under the head of deprecation. Here, the assessee has been allowed to deduct Rs. 42,328 under sub -clauses (v) and (vi) of clause (b) on account of expenses incurred in the previous year on the maintenance of tractors and pick -ups and on replacement of some parts of these implements no question, therefore, of the assessee getting a reduction again of Rs. 20,469 for deterioration can arise.