COMMISSIONER OF INCOME TAX Vs. ASOKA CEMENT LTD

JUDGEMENT

(1.) THE Tribunal has referred the following question of law under S. 256(1) of the IT Act, 1961 to this Court:

(2.) IN this proceeding the assessment year involved is 1967-68 for which the relevant year of account is the year ended on 31st March, 1967. The ITO has stated in his assessment order that the original assessment was completed on 26th Aug.,1971 on the basis of the return and statements and claims made by the assessee. In the original assessment the assessee claimed depreciation of Rs.1,00,013 on addition of 50 jeeps made in December, 1966 and January, 1967 and the same was allowed by the ITO on the basis of the assessee's claim that these were used for the purpose of the assessee's business. Subsequently it came to the knowledge of the Department that until 1966 the assessee did not possess any jeep and these were purchased for election purpose only. Hence, the assessment was reopened under s. 147(a) with the approval of the CIT to withdraw the depreciation allowed in the assessment for not disclosing by the assessee truly and fully the material facts necessary for assessment.

(3.) THE ITO has observed in the assessment order that "the business of the assessee was production and sale of cement, castings and rendering services to different concerns and the same business is being continues till this date. Helping the voters in the election is not a business activity. These jeeps were never utilised in the business of the assessee, not did the assessee start any new business in which these jeeps could be utilised. Depreciation is allowed only for wear and tear of assets due to their use in the business. Unless the assets are used in the business no depreciation is allowable... In this case the assessee could not show that these jeeps were used for the purpose of its own business. These were utilised only for use of the voters during this year. By no stretch of imagination it can be said that helping the political parties in general election is for the purpose of the assessee's business. Even donation to political parties has been held as not an expenditure made for the purpose of the business. [Indian Steel & Wire Products Ltd. vs. CIT (1968) 69 ITR 379 (Cal)]