S. H. KAPADIA, J. :- Being aggrieved by the order of the Tribunal dated 11-12-2000 in Appeal No. 5814/BOMl99, the Department has come by way of appeal under section 260A of the Income-tax Act for the Assessment Year 1996-97 with the following questions of law for our opinion.

(i). Whether on the facts and in the circumstances of the case, the Hon.

ITAT was justified in holding that the provisions of section 45(1) and (4) are not attracted even though there was transfer of assets from the firm to the newly constituted company on conversion of firm to company and part (IX) of the Companies Act, 1956?"

(ii) Whether on the facts and in the circumstances of the case and in law, the Hon. ITAT was justified in directing to allow depreciation for the year even though the W.D.V. of the block of the assets at the end of the year was NIL as per the provisions of section 32 read with section 43(6)(c)(1)(b) of the Act?"

Facts :-

2. A firm by the name M/s Texspin Engineering and Manufacturing Works was engaged in the business of manufacturing ball bearings. The said firm filed its return of income for the period 1-4-1995 upto 7-11-1995 stating that it had been thereafter converted