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Report No. 12

34. Conditions for depreciation allowance and development rebate.-

(1) The deductions referred to in sub-section (1) of section 32 [section 10(2)(vi) 10(2) (via), and (vii)] shall be allowed only if the prescribed particulars have been furnished; and the deduction referred to in section 33 [section 10(2)(vib)] shall be allowed only if the particulars prescribed for the purpose of clauses (i) and (ii) of sub-section, (1) of section 32 [section 10(2)(vi)] have been furnished by the assessee in respect of the ship or machinery or plant.

[Section 10(2)(vi), proviso (a) and section 10(2)(vib), proviso para. (a)]

(2) For the purposes of section 32 [10(2)(vi), (via) and (vii)]-

(i) if the buildings, machinery, plant or furniture have been used by the assessee for the purposes of his business, profession or vocation for more than a month, the deduction under section 32(1), clauses (i) (ii) and (iii), [10(2) (vi), (via)] shall be determined proportionately with reference to the complete months of user thereof by the assessee:

Provided, however, that if the total period of user is less than one month, it shall be deemed to be one complete month for computing the deduction proportionately.

Explanation.-In the case of a seasonal factory w,.;rIced by the assessee during all the working seasons of the previous year, the buildings, machinery, plant or furniture shall be deemed to have been used by the assessee throughout the period, he was the owner thereof during the previous year.

[New] [see rule 8]

(ii) the deduction provided for by section 32(1), clause (iii) [10 (2)(via)1 shall be allowed only in respect of a previous year relevant for the assessment years 1958-1959;

[Section 10(2)(via), part]

(iii) the aggregate of all deductions in respect of depreciation made under section 32(1), [10(2) (vi), (via) and (vii)] or under the Indian Income-tax Act, 1922, (11 of 1922) or under any Act repealed by that Act or under the Indian Income-tax Act, 1886 (2 of 1886), shall, in no case, exceed the original cost to the assessee of the buildings, machinery, plant or furniture, as the case may be;

[Section 10(2)(vi), Proviso (c)]

(iv) nothing in section 32(1)(i) or (ii) [10(2)(vi)] or 32(1)(iii) [section 10(2)(via)] shall be deemed to authorise the allowance for any previous year of any sum in respect of any building, machinery, plant or furniture sold, discarded, demolished or destroyed, in that year;

[Section 10(4B), inserted by the Finance Act, 1958]

(3)(a) The deduction referred to in section 33 [section 10(2) (vib), main para.] shall not be allowed unless-

an amount equal to seventy-five per cent, of the development rebate to be actually allowed is debited to the profit and loss account of the relevant previous year and credited to a reserve account to be utilised by the assessee during a period of ten years next following for the purposes of the business of the undertaking, except-

(i) for distribution by way of dividends or profits; or

(ii) for remittance outside India as profits or for the creation of any asset outside India. (Section 10(2)(vib), proviso (b), latter half]

Exception.-The provisions of clause (a) shall not apply where the assessee is a company, being a licensee within the meaning of the Electricity (Supply) Act, 1948, or where the ship has been acquired or the machinery or plant has been installed before the 1st day of January, 1958 (54 of 1948).

[Section 10(2)(vib), proviso (b), earlier half]

(b) If any ship, machinery or plant is sold or otherwise transferred by the assessee to any person other than the Government at any time before the expiry of ten years from the end of the previous year in which it was acquired or installed, any allowance made under section 33 [ section 10(2) (vib), main para.] in respect of that ship, machinery or plant shall be deemed to have been wrongly made for the purposes of this Act.

[Section 10(2)(vib), proviso, last para.]

Income-Tax Act, 1922 Back

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