- (1.) WHEN depreciation is neither claimed nor the requisite particulars thereof furnished by the assessee, is the Income-tax Officer competent to suo motu allow it even against the wishes of the assessee ? Herein lies the controversy raised in this reference.
(2.) THE matter here relates to the assessment year 1976-77. The assessee, Friends Corporation, which is engaged in transport business, owned three tankers. It filed a return showing a loss of Rs. 22,521 with a note at annexure D, para I, sub-para (c) of the return "as per chart allowed". The particulars in respect of which this note had been made do not appear to have been given anywhere in the return, but the Income-tax Officer, on the basis of this note, worked out depreciation on the tankers from what he gleaned from the assessee's accounts. The assessee objected to this and went up in appeal before the Commissioner of Income-tax (Appeals ). This appeal was dismissed, but on further appeal to the Tribunal, the assessee succeeded. The Tribunal held that as the requisite particulars for working out depreciation on the tankers had not been furnished by the assessee, the Income-tax Officer could not suo motu proceed to allow depreciation. It is this view of the Tribunal that has led to the following questions being referred for the opinion of this court : " (i) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the Income-tax Officer could not suo motu allow depreciation on the three tankers held by the assessee ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in accepting the contention of the assessee that he had not made an effective claim in the return for claiming depreciation ?"
(3.) THERE is no gainsaying that allowance for depreciation is a benefit available to the assessee to claim, but not one that can be thrust upon him against his wishes. At any rate, in order to claim depreciation, the assessee must furnish the requisite particulars as prescribed by the Income-tax Act and the Rules made thereunder. In the absence of such particulars, the assessee cannot avail of, nor indeed can he be held entitled to, depreciation. It would be pertinent in this behalf to advert to the judgment of this court in Beco Engineering Co. Ltd. v. CIT [ 1984] 148 ITR 478, where a reference was made to Circular No. 29d (XIX-14) of 1965, dated August 31, 1965, issued by the Central Board of Direct Taxes which provides that where the required particulars have not been furnished by the assessee and no claim for depreciation has been made in the return, the Income-tax Officer should estimate the income without allowing depreciation allowance. Further, it was held that from the language of sections 32 (1) (ii) and 34 (1) read with the circular, it was clear that in case an assessee had not claimed depreciation, the Income-tax Officer could not give him depreciation allowance.;