RAM NATH JINDAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) WE have two references made by the Tribunal at the instance of the two assessees viz., Shri Ram Nath Jindal and Shri Jagjiwan Kumar. The basic issue is whether depreciation can be deemed to have been granted despite the fact that the assessee had not claimed it during the relevant year ? The following two questions have been referred by the Tribunal for the opinion of this Court :

(2.) THE relevant facts as disclosed in the statement of the case in respect of one of the cases may be briefly noticed. Mr. Ram Nath Jindal had purchased truck No. HRN 345 in the asst. year 1978 -79 for Rs. 62,000. He had sold for Rs. 64,300 and claimed depreciation @ 30 per cent. This claim was allowed. From the asst. yrs. 1979 -80 to 1981 -82, the assessee did not claim any depreciation. On this basis, the assessee claimed that the written down value of truck No. HRN 345 was Rs. 43,400 (Rs. 62,000 minus Rs. 18,600). Thus, he claimed that the profit was Rs. 20,900 (Rs. 64,300 minus Rs. 43,400). The ITO did not accept this position. It was held that the Department had allowed the depreciation as per rules while completing the assessment proceedings". The assessee filed an appeal. It was dismissed by the AAC. He approached the Tribunal and contended that no depreciation having been claimed during the relevant years, it could not be deemed to have been granted. The Tribunal rejected this contention. Hence, the reference.

(3.) 'Depreciation' in its ordinary sense means 'loss of value'. In case of commercial vehicles, the loss usually occurs on account of wear and tear during use. Thus, the legislature has made provision allowing the benefit of depreciation to the assessee "on the written down value at the prescribed rate". Specific provision in this behalf has been made in S. 32 of the Act. It is implicit in the provision that the assessee has to disclose the value of the vehicle and can claim depreciation at the prescribed rate. However, the provision as it exists till today does not provide that depreciation shall be deemed to have been claimed and granted even when the assessee has made no claim in that behalf. To put the matter beyond any shadow of doubt, the CBDT had issued Circular No. 29 -D on 31st Aug., 1965. Paras 2 and 3 are relevant and deserve to be noticed. These read as under :