WDV of resulting comaony -Sec 32

IN THE ITAT MUMBAI BENCH ‘H’ Godrej Industries Ltd. v. Assistant Commissioner of Income-tax, Range-10(2), Mumbai J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND R.S. PADVEKAR, JUDICIAL MEMBER IT APPEAL NOS. 4196 and 4197 (MUM.) OF 2006 [ASSESSMENT YEARS 2002-03 and 2003-04] SEPTEMBER 30, 2008 Section 32, read with section 43(6), of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of - Assessment years 2002-03 and 2003-04 - Whether for purpose of computing depreciation, only tax written down value of transferred assets of demerged company would constitute written down value of block of assets of resulting company - Held, yes Facts The question that came up for consideration was whether the assessee, which was the resulting company in a demerger, should have its block of assets transferred from a demerged company, at the tax written down value as per the Act or the written down value of such assets that was appearing in its books of account for the purpose of computing the depreciation. Held For the current assessment year, i.e., 2002-03, the applicable wordings in the Explanation 2B to section 43(6) are ‘written down value of the transferred assets as appearing in the books of account of the demerged company’. The issue was whether book value for tax written down value was to be taken into account. The Legislature has made it clear with effect from 1-4-2004 by the Finance Act, 2003, where the wordings ‘as appearing in the books of account’ have been omitted, then what is to be taken into account is the ‘tax written down value’ as opposed to written down value as appearing in the books of account. [Para 6] In the instant case, subsequent omission of certain words, i.e., ‘as appearing in the books of account’ has to be interpreted as if such words were never there in the section, as its omission is without a saving clause. Written down value has to be taken as per the meaning of definition given in the Act. [Para 7] Even before the omission of the terms ‘as appearing in the books of account’ the emphasis of the Legislature in the Explanation 2B to section 43 was the written down value of the transferred asset. The omission of the words ‘as appearing in the books of account’ with effect from 1-4-2004, was curative and, thus, retroactive. Hence, the finding of the revenue authorities, that only the tax written down value of the transferred assets of the demerged company would constitute the written down value of the block of assets of the resulting company was to be upheld. [Para 8] In the result, said ground of the assessee was to be dismissed. [Para 10] Editor’s Note 1. Where the Tribunal in the assessee’s own case relating to earlier assessment year had found that the Assessing Officer had himself