Dipak Kumar Sen, J. - (1.) The controversy in this reference arises out of calculation of depreciation of capital assets of a company transferred pursuant to an amalgamation.
(2.) Cheviot Jute Co. Ltd., previously known as the Delta Jute Mills Co. Ltd., is the assessee. By an order of this court dated the 26th September, 1961, another company named Belvedere Jute Mills Co. Ltd., had amalgamated with the assessee with effect from the 30th November, 1961. In the assessment year 1967-68, the previous year being the year ended on the 30th November, 1966, the assessee in its assessment to income-tax claimed that depreciation should be allowed on the assets taken over by it on amalgamation calculated at the book value at which they were taken over. The ITO, however, allowed depreciation on the said assets on their written down value in the books of Belvedere Jute Mills Co. Ltd.
(3.) Being aggrieved, the assessee preferred an appeal against the said order of the ITO. The AAC held that Expln. 7 to Section 43(1) of the I.T. Act, 1961, was not applicable in the facts of the case inasmuch as the same which was inserted by the Finance (No. 2) Act, 1967, was made effective from the 1st April, 1967. He held further that in the instant case the amalgamation had taken place long before and, as such, the assessee was entitled to depreciation on the written down value worked out in its books on the cost at which the asseesee acquired such assets, namely, the book value shown in the records of Belvedere Jute Mills Co. Ltd., less the depreciation allowed from year to year. The appeal of the assessee was accordingly allowed.;