The phras~ 'actually allowed' is limited to the depreciation ac111a/ty 1akt11 imo acco11nt or gra11ted or given e/}ect tn and •Cannot be stretched to mean 'notionally allowed'. In th.is Union Territory, under the Portuguese law no depr<X:iation was ever computed or actually allowt'Ci to the assees. e impugned proviso, by replacing depreciation 'actually allowed' with depreciation 'deemed to have been allowed,' by a fiction of law, eve:n where no depreciation was at all aHowed, in effect, attempts to change the fundamental scheme of the Indian Act in its application to the assessees in the Unio11 Territory of Goa, Diu and Daman. [658B·El ( 6 ) Under s. 32 (2) of the Indian focome Tax Act an assessee is entitled to 'carry iorward' unabsorbed depreciation in case of loss or inadequate profits, with· out any time limit, For ensuring this right to an assessee, assessments for ascer· taining losses or insufficiency of profits of his business, since the acquisition and use of the assets by him, will have to be made. In the Union Territory of Goa etc., during the interregnum between Dec. 19, 1961, and April I, 1963, there was no law authorising the levy of inr.ol,1\e tax. Even under the Portuguese law, the tax was in reality a 'turn over' tax irrespective of the assessee making profit or loss. Retrospective assmments for the purpose, oing back to a period prior to 1963, could have been made onde:r a law of Pathament but not under an cxecu· tive fiat. But, in the Indian Income Tax Act as extended to these territories, there is no provision for aking assessment in respect of those past years. In the absence of such law, it is impossible to work the Proviso without riding rough shod over the rights of the asscssec:s to have their unabsorbed depreciation relating to. the pre-1963 period, carried forward. Therefore a Goan asses.sec, who· suffered losses and depreciation of his assets will never get the benefit of such carry forward, as ocl machinery exists for determining the inadequacy of profits or the factum of losse<J in those years. Viewed from this angle, the impugned. proviso would, in the implementation of the Act,· create difficulties rather than remove them. [6S9A-E] (Per A/afiiris11·a111i. J., dissenting). HELD : Dismissing the petition, (I) The provision regarding written down value and allowance of depreciation under tho Indian Income Tax law proceeds on the basis of depreciation al· lowed year br year with tho result that the written down value goes down year after yoat and similarly the depreciation. If, therefore, because there was no provi,ion under the Income Tax law applying to the former Poduguese territories providing for depreciation the written down value of an asset is taken as the actual co't even after many years of its acquisition it would mean putting the assessees in those territories at an advantage compared to the assessees in th rest of India. More important, it would not accord with realities and would not be in accord· ance with the scheme of depreciation under the Indian Income-tax Act. A certain plant and machinery purchased 10 years earlier and now worth half its original value would be taken to be worth its original cost aoa depreciation allowed on that basis. It is, therefore, ny to devise some method by which 'both the asse55ees in the Indian Territory and the erstwhile Portuguese territory could be put on the same footing and the normal scheme of depreciation under the Indian Incom-tax Act made applicable t.o all. A simila.r problem 8I05e in the case dealt with in Commissioner of Income Tax, Hyderabad v. Dewan Bahadur lfamgopa/ Mills Ltd. [1961] 2 S.C.R. 318 dealing with assessecs in Hyderabad govern· ed by the Hyderabad Income True Act before the Indian Income tax Act was eKtended to the Hyderabad area and the decision given therein is exactly to the point. [6610-H; 663H] (2) Jn that case, this Court held that if depreciation actually allowed under the Hyderabad Income-tax Act alone was taken into account in c;omputing the aggregate depreciation allOWiJICll and the written down value an anomalous result would follow, namely, depreciatiop allowance to be allowed to the assessee in the accounting year under the Indian Income Tax Act would be more than what was allowed in previoos yem under the Hyderabad Income-tax Act, that thii would create a disparity arid /,. azaimt the scheme of the lndJan Income tax Act, that it was therefore ~ to exJl&jn par&gn.ph 2 of the lt$Oval of Difficullie1 omer. 1950, (comideml to that ca:e) to uaimilate or he.rll!Olli=e the position reprding depreciation &llowuce. Thia is exactly what wu propoxd to .be dco lu the case ot die tor=r Portup:~ territories by tb llllP>all3Cl Order. {6638-H]
