COMMISSIONER OF INCOME TAX Vs. WILH WILHELMSEN LINES LTD

JUDGEMENT

(1.) In this reference the years involved are assessment years 1947-48 to 1957-58. The assessee is a non-resident shipping company registered in Norway and doing business in India also. In the original assessments for these 11 years, depreciation has been allowed in respect of certain ships which were on its fleet for more than 20 years. The assessee had not, in those proceedings, furnished in respect of each ship the number of years for which it was borne on its fleet. The ITO, who reopened the assessments, thought that if a ship was borne on the fleet for more than 20 years, the assessee was disentitled to depreciation in respect of that ship. Hence, the proceedings for all these years were reopened under Section 34(1)(a) of the Indian I.T. Act, 1922, after due formalities. The contention of the assessee-company was indicated and the ITO disallowed the depreciation for certain ships of each of these years. The assessee filed appeals before the AAC. The assessee challenged the orders of the ITO. The AAC disposed of all these appeals by an order dated 12th April, 1971. He held, inter alia, as follows :

(2.) After discussing the legal propositions, the AAC further held as follows:

(3.) Therefore, on the basis of the principles enunciated by the Supreme Court, the AAC felt that the appellant had disclosed all primary facts. Therefore, the AAC held that the necessary conditions for taking action under Section 34(l)(a) were not satisfied in this case. He further held that according to the ITO the only income which had escaped assessment in this case was that the appellant was allowed depreciation in respect of the ships which were borne on its fleet for more than 20 years. But this view of the ITO was not upheld by the Income-tax Appellate Tribunal in the appeal for the assessment year 1958-59. Therefore, there was no escapement of income either. On this ground, the AAC set aside the orders of the ITO. Thereafter, there was an appeal to the Tribunal. The Tribunal, following its earlier decision, held that there was no excessive depreciation and regarding the reopening, as there was no excessive depreciation, the Tribunal held that there was no escapement. The Tribunal, however, did not go into the question whether, even if there was any escapement, such escapement was due to failure on the part of the assessee to disclose fully or truly any material or relevant fact, as the Tribunal thought it was not necessary. Upon these, the Tribunal came to the conclusion that the AAC was right in his decision and the appeals were dismi'ssed. On this, the following two questions were referred to this court :