JUDGEMENT
D.N. Sharma, Judicial Member -
(1.)IN this Departmental appeal filed for the asst. year 1982-83 the only ground raised is as follows:-
On the facts and in the circumstances of the case the learned AAC erred in allowing depreciation twice on the same set of machinery used in the same assessment year by the assessee before and after death of one of the partners?
(2.)In this case two returns were filed for the asst. year 1982-83. During the asst. year under consideration, one of the partners of the assessee firm died and a new partnership deed was executed. It was, therefore, a case of succession of one firm by another. Depreciation was claimed for both the periods. The first period commenced from 1-1-1981 up to 18-7-1981. The ITO, however, did not allow full depreciation but only allowed depreciation proportionately.
The assessee appealed to the CIT(A) before whom it was stated that the assessee firm was constituted by four partners namely, Smt. Bimla Jain, Smt. Satish Jain, Smt. Neelam Jain and Shri Rajesh Jain. On 18-7-1981 Smt. Bimla Jain died.
Since there was no clause in the partnership deed providing for continuation of partnership business in the event of death of any of the partners, the firm stood dissolved on the death of Smt. Bimla Jain on 18.7.1981 by operation of law and that on 20.7.1981 i.e. two days after the dissolution of the firm, a new firm came into existence under a fresh partnership deed in respect of the two periods i.e. from 1.1.1981 to 18.7.1981 and from 20.7.1981 to 30.12.1981, both relevant to the asst. year 1982-83, the assessee firm claimed full depreciation in respect of the assets admittedly owned by it and used for the purpose of business. The ITO framed two separate assessments for the two separate periods. The ITO vide his impugned order passed for the first period allowed only proportionate depreciation. Before the AAC it was contended that full depreciation should have been allowed for each period. The AAC of income-tax upheld the assessee's contention. He observed that when for the purpose of assessment the two firms have been treated as distinct and different entities and two separate assessments have been made by the ITO, there was no justification for not allowing full depreciation in respect of the assets in the case of each firm. The ITO was accordingly directed by the AAC to allow full depreciation to both the firms. Aggrieved, the Department has come up in appeal before the Tribunal.
(3.)THE learned Departmental Representative submitted before us that the AAC erred in allowing depreciation twice on the same assets during the same asst. year and that the depreciation could be allowed only once and not twice. THE learned authorised representative for the assessee, on the other hand, fully supported the impugned order of the AAC on the point and relied upon the decision of the Supreme Court in Malabar Fisheries Co. v. CIT [1979] 120ITR 49. Reliance has also been placed on the decision of the Tribunal in ITO v. Lalit Exhibitors [1987] 20 ITD 239 (Jp.) as also the decision of the Tribunal in Sita Ram Saluja v. ITO [1982] 1 ITD 754 (Chd.).
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