| Case ID |
034cc32a-47ed-420f-9109-d6c8e3b1a30b |
| Body |
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| Case Number |
D-2741 of 1966 |
| Decision Date |
May 03, 1966 |
| Hearing Date |
May 03, 1966 |
| Decision |
The Madhya Pradesh High Court ruled that depreciation under section 10(2)(vi) is only allowable if the machinery is actually used in earning income. The Tribunal's interpretation, which suggested that 'used' could also mean merely ready for use, was rejected. The court clarified that the fundamental principle is that depreciation arises from actual usage in income generation. The court also ruled that a second question regarding expenditure could not be referred due to procedural requirements not being met by the assessee. The decision was in favor of the revenue, emphasizing strict adherence to legal provisions concerning applications for references in tax matters. |
| Summary |
In the landmark case of Commissioner of Income Tax v. Jiwaji Rao Sugar Co. Ltd., the Madhya Pradesh High Court addressed critical issues regarding depreciation allowances under the Income-tax Act, 1961. The case arose when Jiwaji Rao Sugar Co. Ltd., a public limited company involved in sugar manufacturing, sought to claim a depreciation allowance for the assessment year 1955-56 despite not operating its factory due to a strategic agreement with a sugar mill. The High Court examined whether the machinery's readiness for use, without actual operation, constituted grounds for claiming depreciation. The court underscored that the allowance for depreciation must be directly correlated to the actual usage of machinery in generating income. The ruling emphasized that merely being available for use does not satisfy the legal requirements for claiming depreciation. Furthermore, the court clarified procedural stipulations for referring additional questions to ensure adherence to the law. The decision ultimately favored the revenue, reiterating the importance of compliance with tax regulations. This case is pivotal for understanding the nuances of tax law and depreciation claims, providing clarity on the interpretation of 'use' in legal terms, and reinforcing procedural integrity in tax-related appeals. |
| Court |
Madhya Pradesh High Court
|
| Entities Involved |
Commissioner of Income Tax,
Jiwaji Rao Sugar Co. Ltd.
|
| Judges |
P.V. Dixit C.J.,
K.L. Pandey J.
|
| Lawyers |
Not available
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Jiwaji Rao Sugar Co. Ltd.
|
| Citations |
1969 SLD 73 = (1969) 71 ITR 319
|
| Other Citations |
Girdhardas & Co. Ltd. v. CIT [1957] 31 ITR 82 (Bom.),
Educational & Civil List Reserve Fund v. CIT [1964] 51 ITR 112 (Raj.),
CIT v. V. Bhaskar Sathe [1937] 5 ITR 621 (Bom.),
CIT v. Dalmia Cement Ltd. [1937] 5 ITR 626 (MP),
Liquidators of Pursa Ltd. v. CIT [1954] 25 ITR 265 (SC)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
32,
256
|