Whether assessee is entitled to claim depreciation on fixed assets taken over under a Scheme of Amalgamation on original cost of fixed assets or WDV?

Last updated: 26 August 2014

Court :
Bombay High Court

Brief :
The Assessee, an Indian Company, was a subsidiary of May and Baker Ltd., a U.K. Company which had an industrial undertaking in India. Under a Scheme of Amalgamation, the said industrial undertaking of the U..K. Company was hived off to the Assessee Company under a Scheme of Amalgamation that was approved by Court and the assets and liabilities of the said undertaking were taken over by the Assessee Company in the Scheme of Amalgamation.The question to be decided in this Reference is whether the Applicant –Assessee is entitled to claim depreciation on the fixed assets taken over by itunder a Scheme of Amalgamation with its Parent Company (May and BakerLtd.), on the basis of the original cost of the said fixed assets, or on the basisof the written down value thereof, which had been arrived at by theauthorities below by granting depreciation to the Parent Company on anotional or implied basis. Held that depreciation on the fixed assetstaken over by the Assessee Company under the Scheme of Amalgamation,ought to be granted by taking the written down value of the fixed assets.

Citation :
Rhone-Poulenc (India) Ltd. – Appellant – Versus – The Commissioner of Income Tax - Respondent