Judgment

FAZL ALI J.: This is an appeal from a Judgment of the High Court at Calcutta in a reference under S. 66(1), Indian Income-tax Act, 1922.

2. The facts which are material for the purpose of deciding this appeal, may be briefly stated as follows :

The respondent, Messrs. Isthmian Steamship Lines (hereinafter referred to as the Company ) is a Company incorporated in the United States of America and owns steamships which visit India. The Company s Indian profits which are computed on the basis of "days on round voyage" are assessed to tax under the Indian Income-tax Act as a company through its agents, Messrs. Augus Co. Ltd. In the course of the assessment for the years 1941-42, 1942-43 and 1943-44, the company claimed that its unabsorbed depreciation at the end of 1938-39 should be deemed to be a part of the depreciation allowance for 1939-40 and therefore such unabsorbed depreciation should be allowed to be further carried forward under S. 10 (2) (vi) of the Income-tax Act.

This claim was negatived by the Income-tax Officer, the Appellate Assistant Commissioner of Income-tax and the Income-tax Appellate Tribunal. The Tribunal however, at the instance of the Company, referred the following question to the High Court for its opinion :

"Whether on the facts and in the circumstances of this case the Tribunal was right in holding that the unabsorbed depreciation at the end of the year 1938-39, which was not given effect to in the subsequent years, could not be treated as part of the allowable depreciation for the relevant assessment years which are assessment years 1941-42, 1942-43 and 1943-44."

The High Court answered the question in favour of the Company, and gave a certificate to the Commissioner of Income-tax under Section 66 (2) of the Act to appeal to this Court and hence this appeal.

3. Before stating the precise point which arises for determination in this appeal, it will be convenient to set out S. 10 (2) (vi) of the Income-tax Act, both as it originally stood and as it now stand after being amended in 1939. in parallel columns.

SECTION 10 (2) (vi)

A -BEFORE AMENDMENT B-AFTER AMENDMENT IN1939

"Such Profits or gains shall be computed aftermaking the following allowances namely : "Such profits or gains ......................................

In respect of depreciation of such building machinery, plant or furniture being the property of the assessee, a sum equivalent to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed: equivalent, (where the assets are ships other than ships ordinarily plying on inland water) to such percentage .. prescribed (and in any other case, to percentage on the written down value thereof as may in any case or class of cases be prescribed) :-

Provided that - Provided that -

(a) the prescribed particulars have been duly furnished: (a) No change.

(b) Where full effect cannot be given to any such allowance in any year owing to there being no profits or gains chargeable for the year, or owing to the profits or gains chargeable being less than the allowance, the allowance or part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following year and deemed to be the allowance to that year, and so on for succeeding years; and (b) where full .... any year, not being a year which ended prior to the lst day of April, 1939, owing ................................................ for succeeding years ; and

(c) the aggregate of all such allowances made under this Act or any Act revealed hereby or under the Indian Incometax Act, 1886, shall in no case, exceed the original cost to the assessee of the buildings, machinery, plant or furniture as the case may be." (c) No change

[The underlined (here italicized) words have been added by the Amending Act of 1939]

4. The Tribunal as well as the High Court have rightly pointed out that the material changes introduced in t