| Case ID |
23815a1d-3c29-4dc5-9716-4836b56f6bd1 |
| Body |
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| Case Number |
IT REFERENCE NO. 181 OF 1971 |
| Decision Date |
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| Hearing Date |
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| Decision |
The court ruled that for the purposes of computing capital employed under section 84 of the Income Tax Act, the initial depreciation allowable under section 32(1)(iv) should be included in determining the written down value of the assets. The court clarified that the provisions of Chapter IV and Chapter VII of the Act operate independently, and the exclusion of initial depreciation only pertains to the calculation of usual depreciation under section 32(1)(ii). The Tribunal's decision was upheld, emphasizing that the initial depreciation is part of the definitions adopted for computing capital employed as per rule 19. |
| Summary |
In the case referenced, the Bombay High Court addressed the computation of capital employed for newly established industrial undertakings under section 84 of the Income Tax Act, 1961. The key issue was whether the initial depreciation allowable under section 32(1)(iv) should be included in the written down value of assets when determining capital employed. The court found that the provisions of the Income Tax Act, specifically sections 32 and 84, operate in different realms. The ruling clarifies that while initial depreciation is excluded for calculating usual depreciation, it must be included for capital computation under section 84. This case underscores the importance of understanding the nuances of tax law and the interpretation of provisions for accurate tax relief claims. The decision set a precedent for future cases involving capital employed deductions, emphasizing the need for careful consideration of statutory definitions and their application. Keywords: Income Tax Act, capital employed, written down value, initial depreciation, tax law. |
| Court |
Bombay High Court
|
| Entities Involved |
Commissioner of Income Tax,
Zenith Steel Pipes Ltd.
|
| Judges |
S.K. Desai,
D.M. Rege
|
| Lawyers |
R.J. Joshi,
S.V. Naik,
L.K. Chatterjee,
V.H. Patil,
R.H. Toprani,
R.R. Toprani
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Zenith Steel Pipes Ltd.
|
| Citations |
1982 SLD 1236 = (1982) 137 ITR 34
|
| Other Citations |
Burmah Shell Refineries Ltd. v. ITO [1968] 67 ITR 653 (Bom.),
CIT v. Lucas T.V.S. Ltd. (No. 1) [1977] 110 ITR 330 (Mad.)
|
| Laws Involved |
Income Tax Act, 1961
|
| Sections |
84,
32(1)(iv),
19,
43(6)
|