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Judgment
Ramanujam, J.—At the instance of the Revenue, the following question has been referred to this court for its opinion by the Income Tax
Appellate Tribunal :
Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee is entitled to depreciation
in respect of the assets for which deduction u/s 35(2) was allowed in the earlier assessment years ?
In this case, the Tribunal has taken the view that the assessee is entitled to depreciation with reference to the assets for which relief had been
granted under s. 35(2) in the previous year on the ground that the statute prevents the assessee from claiming the benefit of depreciation in respect
of assets for which relief granted under s. 35(2) only for the same year had there is no prohibition from claiming the relief of depreciation in the
other years. Subsequent to the decision of the Tribunal, s. 35(2)(iv) had been enacted by the Finance (No. 2) Act of 1980 with retrospective
effect from April 1, 1962. Clause (iv) of sub-s. (2) of s. 35 which has been brought into force states that where a deduction is allowed for any
previous year under the said s. 35 in respect of expenditure represented wholly or partly by an the asset, no deduction shall be allowed under s. 32
for the same or other previous years in respect of the asset. In view of this amendment, the reasoning of the Tribunal that there is not bar on the
assessee claiming relief under s. 32 in respect of an asset for which deduction has been allowed in any previous year cannot hold good and since
the amendment has been brought into force from April 1, 1962, the same is applicable to the assessment year in this case. In view of the said
amendment, we answer the question referred to us in the negative and in favour of the Revenue. There will be no order as to costs.
The learned counsel for the assessee, however, makes an order application for leave to appeal to the Supreme Court against the judgment just
now pronounced on the ground that the Finance (No. 2) Act of 1980, in so far as it amended s. 35 of the I.T. Act, 1961, has been challenged
before the Supreme Court and the matter is pending consideration. In view of the said circumstance, we are inclined to grant leave. The assessee
is, therefore, granted leave to appeal to the Supreme Court against our judgment in this case.