COMMISSIONER OF INCOME TAX Vs. SOBHARAM JOKHIRAM

JUDGEMENT

(1.) In this case the assessee derived income from property, business, share income from firms, etc., during the accounting year, which was Diwali year 2008, corresponding to the period from 9-11-1950 to 29-10-1951. On 22-6-1951, the assessee purchased a new car for a sum of Rs. 12,000/-. The car was admittedly used only for four months during the accounting year. The Income-tax Officer allowed an initial depreciation to the extent of Rs. 400/-He took into account the fact that the car was used for four months in the year and so the proportionate allowance should be one-third. The Income-tax Officer also took into account the circumstance that the car was also used for private purposes. The Income-tax Officer therefore held that deduction should be half for business purposes since the other half was for personal use. According to the Income-tax Officer the initial depreciation was 50 per cent of Rs. 2400/-, and one-sixth of this amount, namely, Rs. 400/-, was the proper amount of deduction to be allowed for initial depreciation. When the matter came up in appeal the Appellate Assistant Commissioner took the view that the assessee was entitled to a sum of Rs. 1200/-as the initial depreciation upon this car. The Appellate Assistant Commissioner held that the circumstance that the car was only used for four months in the accounting year was not relevant for the purpose of computation of initial depreciation. The Tribunal, however, fully allowed the deduction of Rs. 2400/- claimed by the assessee for the initial depreciation. The Tribunal was apparently of the view that in calculating the initial depreciation of the car the question of personal use was not a material consideration. At the instance of the "Income-tax Department the Appellate Tribunal has submitted the following question of law for the determination of the High Court: "Whether in the facts and circumstances of the case, the assessee was entitled to the entire claim of initial depreciation on the use of the car in the assessment year 1952-53? "

(2.) On behalf of the Income-tax Department Mr. R. J. Bahadur put forward the argument that the view taken by the Appellate Tribunal is erroneous in law because it has not taken into account the language of Section 10 (3) of the Income-tax Act and the bearing of that section on the calculation of initial depreciation claimed under Section 10 (2) (vi) of the statute. It was submitted by learned Counsel that the view taken by the Appellate Assistant Commissioner in this case is the correct view and the initial depreciation to be allowed to the assessee was properly fixed by him at the sum of Rs. 1200/-. We think that the submission of learned Standing Counsel is well founded and must be accepted as correct. The question of initial depreciation is dealt with in Section 10 (2) (vi) which reads as follows :

(3.) For these reasons, therefore, we hold that the view taken by the Appellate Tribunal in this case is erroneous in law and the assessee is entitled to a sum of Rs. 1200/- as initial depreciation for the assessment year 1952-53 and the view taken by the Appellate Assistant Commissioner is correct.