COMMISSIONER OF INCOME TAX DELHI AND RAJASTHAN Vs. BANARSI DASS AND SONS

JUDGEMENT

(1.) This is a reference made by the Appellate Tribunal undar section 63,1) of the Indian Income-tax Act, 1922.

(2.) The assessee is a registered firm with its headquarters at Chawri Bazar, Delhi. The firm had a workshop known as Grand Iron Works for the manufacture of kohlus (cane-crushers) and karhais (iron pans). These were let out on hire to the village cultivators who utilised them for the manufacture of gur. The business was seasonal and the kohlus were utilised by the villagers for a period of about six months. For the assessment year 1951-52 and 1952-53 the Income-tax Officer declined to allow depreciation for the whole year. He has disallowed certain taxes which had been imposed by the U. P. District Board. The Appellate Assistant Commissioner allowed depreciation for the whole year subject to certain minor modifications and he also held that the taxes were allowable under section 10(2). The Tribunal upheld the order of the Appellate Assistant Commissioner. Thereupon the Commissioner of Income-tax sought reference of the following questions of law which was allowed :-

(3.) Mr. Hardayal Hardy, who appears for the Commissioner, has rightly and properly not addressed us on the first question as it is covered by the decision of this Court in Commissioner of Income-tax, Punjab v. Sanefhwar Nath Nigam In that case it was held that the second proviso to rule 8 of the Indian Income-tax Rules governed the case and not the first proviso and the assessee was entitled to depreciation for the full year under section 10(2) (vi) of the Income-tax Act even though the kohlus were let out only for the season consisting of four months. It must, therefore, be held that in the present case the assessee was entitled to the depreciation as allowed by the Appallate Assistant Commissioner and the Appellate Tribunal.