S.P Bharucha, J.:— This is a reference under Section 256(1) of the Income Tax Act, 1961, made at the instance of the Revenue. It raises the following question:

“Whether, on the facts and in the circumstances of the case, and on a true interpretation of Section 32(1)(ii) read with Section 34(1) of the I.T Act, 1961, the ITO had any power or jurisdiction to ascertain and impose the depreciation allowance upon the assessee?”

2. The reference relates to the Assessment Year 1969-1970, the previous year whereof ended on 30th June 1968. The assessee filed a return claiming depreciation. It then filed a revised return, enclosed with a covering letter which stated that the depreciation claim made in the original return was withdrawn and no depreciation was claimed for the A.Y 1969-1970. The ITO took the view that if the assessee failed to furnish the particulars required by Section 34, two alternative courses were open to him: he could refuse to allow depreciation or he could make his own valuation of the assets and determine the amount of the allowance. The ITO followed the second course and allowed depreciation, observing that the claim of the assessee to the contrary could not be considered. The assessee appealed to the AAC and the appeal was allowed. The Revenue carried the matter to the Income Tax Appellate Tribunal. The Tribunal held that unless the assessee gave the prescribed particulars required by Section 34(1) the ITO could not allow depreciation. It also took the view that only the revised return of the assessee could be considered, not the original return. The reference raises two issues. The first and broader issue of some importance is whether the assessee has a choice in the matter of claiming a deduction on account of depreciation. The second issue is whether, having claimed it in an original return, the ITO is entitled to rely on the particulars furnished therein and allow a deduction on account of depreciation regardless of the fact that the assessee had stated in the revised return that it did not want it.

3. The first issue arises also in Income Tax Reference No. 126 of 1976, CIT (Central) Bombay v. Bennet Coleman and Co. Ltd., and we have heard the submissions on behalf of the Revenue and the assessee in that matter also before delivering this judgment. The question posed in Income Tax Reference No. 126 of 1976 reads thus:

“Whether, on the facts and in the circumstances of the case, the assessee-company had an option to claim depreciation in the year or years of its choice or not to claim it at all and whether the Income-tax Officer was entitled to force depreciation on an unwilling assessee?”

4. Income Tax Reference No. 126 of 1976 arises in the context of the Income Tax Act, 1922, being concerned with the A.Y 1955-1956. It is enough to mention that the assessee did not claim depreciation on its buildings, godowns and machinery for the year under assessment and did not file the prescribed particulars. The ITO, however, allowed the assessee a deduction on account of depreciation. The assessee appealed. The AAC took the view that the ITO was in error, but held that the appeal did not lie. The assessee carried the matter to the Income Tax Appellate Tribunal, which allowed the appeal.

5. Sub-section (1) of Section 10 of the Income Tax Act, 1922, deals with the tax payable by an assessee in respect of the profits or gains of any business, profession or vocation carried on by him. Sub-section (2) requires such profits or gains to be computed after making the allowances therein set out Clause (vi) thereof speaks of allowances in respect of depreciation of buildings, machinery, plant, etc., and the proviso to clause (vi) reads thus: “Provided that the prescribed particulars have been duly furnished”.

6. In the 1961 Act Section 28 deals with the profits and gains of business or profession. Under the provisions of section 29 such income is required to be computed in accordance with the provisions contained in Sections 30 to 43A. Section 32 provides for depreciation. The opening words of sub-section (1) of Section 32 read thus: “In respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, the following deductions shall, subject to the provisions of section 34, be allowed………..” Sub-section (1) of Section 34 reads thus:

“(1) The deductions referred to in sub-section (1) or sub-section (1) of Section 32 shall be allowed only if the prescribed particulars have been furnished; and the deduction referred to in section 33 shall be allowed only if the particulars prescribed for the purpose of clause (i) and clause (ii) of sub-section (1) of Section 32 have been furnished by the assessee in respect of the ship or machinery or plant.”

7. It is the construction of section 10(2)(vi) and its proviso under the 1922 Act and of section 34(1) of the 1961 Act which are relevant for the purposes of deciding the first issue. It will be noted that the provisions speak of “allowance” and “allowed”. The proviso to clause (vi) of sub-section (2) of Section 10 of the 1922 Act obliges the assessing authority to make an allowance for depreciation as therein stated “Provided that the prescribed particulars have been duly furnished.” Sub-section (1) of Section 34 of the 1961 Act obliges the ITO to allow the deductions referred to in section 32 “only if the prescribed particulars have been furnished”. The provisions of the 1922 and 1961 Acts are, therefore, pari materia in this regard.

8. The word “allow” is defined by the Shorter Oxford English Dictionary (Third Edition) to mean, inter alia, “to accept as satisfactory”; “to accept as true or valid”, “to admit”; “to concede, permit”. The word “allowance” is defined as, inter-alia, “the action of allowing; a thing allowed”. The use of the words “allowed” and “allowance” in the provisions would appear to contemplate a claim or application by the assessee for the deduction therein provided for. The claim or application could be allowed and the allowance given thereon. In the absence of a claim or application, by the assessee the assessing authorities would not be ‘allowing’ a deduction. The provisions, therefore, suggest that the assessee has the choice of seeking or not seeking the allowance of the deduction. This is all the more so because the provisions state explicitly that depreciation can be allowed provided or only if the prescribed particulars have been furnished. The words in this behalf in the provisions cannot be wished away and it is no answer to say, as counsel for the Revenue did, that Section 10(1) of the 1922 Act and Section 29 of the 1961 Act oblige the ITO to compute an assessee's business, income in accordance with the provisions contained therein and thereafter respectively. These words occur in the provisions of Section 10 of the 1921 Act and Section 34 of the 1961 Act and must be given a meaning. For the purpose of computing an assessee's business income under Section 10 of the 1922 Act and Section 34 of the 1961 Act, the ITO can allow the deduction by way of depreciation provided and only if the prescribed particulars in this regard have been furnished to him, that is to say, given to him. Ordinarily, the particulars would be available only to the assessee and only the assessee can furnish or give them to the ITO. Further, the only prescription of the particulars is in the proforma of the return, so that the furnishing or giving thereof would only be by the return filled in by the assessee. If the Legislature had intended that the ITO should give a deduction for depreciation whether or not the assessee wanted it, it would not have used such language in the provisions as enabled the assessee to frustrate the intention by the simple expedient of not furnishing the prescribed particulars.

9. The provisions, therefore, prescribed two pre-conditions to the allowance of a deduction for depreciation. The first, Which is implicit, is that the assessee should have asked for it. The second, which is explicit, is that the prescribed particulars should have been furnished. If either of these conditions is not fulfilled, the deduction cannot be allowed by the ITO.

10. Our attention was invited by counsel for the Revenue to the judgment of the Madras High Court in Dasaprakash Bottling Co. v. Commissioner of Income tax, Madras, 122 ITR 9. The judgment undoubtedly supports the Revenue. The learned judges noted the argument on behalf of the assessee that unless the prescribed particulars had been furnished by the assessee in the return, having regard to section 34, the allowance could not have been validly granted by the ITO. Having, under Section 29, made it a mandate on the part of the ITO to compute the income in accordance with provisions of Sections 30 to 43A, Section 34 enabled the learned judges said, the ITO not to grant the allowance if the prescribed particulars had not been furnished it was, in their view, a far cry from Section 34 to state that unless the prescribed particulars had been furnished by the assessee, the depreciation allowance could not be granted. With great respect to the learned judges of the Madras High Court we are, for the reasons already stated unable to agree.

11. We may now draw attention to the judgment of this Court in Dharampur Leather Cloth Co. Ltd. v. Commissioner of Income-tax, Bombay City, 55 ITR 329. The assessee was running a factory in the former Dharampur State. Before its incoporation it negotiated with the State and obtained in advance a total exemption from the State income-tax on its profits for a period of seven years from the commencement of its working. Upon merger of the State with the Union of India the exemption was limited upto the A.Y 1954-1955. In the course of the assessment proceedings for the A.Y 1955-1956 the assessee contended that since this was the first assessment after it commenced working and since no depreciation had been allowed to it in any earlier assessment year, depreciation should be computed on the original cost of the various items of plant, machinery and other assets. The claim was turned down by the ITO; the written-down value for the purposes of assessment for the year in question was computed by him as if the income of the assessee had been worked out properly in the years when the company was exempted, depreciation being allowed at the usual rates. The matter, ultimately, came up in reference to this court. The court, having regard to the unambiguous expressions used in clause (b) of sub-section (5) of section 10 of the 1922 Act, found it difficult to accept the contentions on behalf of the Revenue. The court said:

“Having regard to the aforesaid provisions it is clear that the assessee is entitled to an allowance on account of the depreciation on machinery at the prescribed rate on the written down value of the machinery, etc., and the written down value of the machinery, acquired prior to the previous year, is the actual cost minus depreciation actually allowed. It necessarily follows that if in the prior year no depreciation has been actually allowed, then the actual cost incurred by the assessee for acquiring the machinery would be the written down value of the machinery. It is further clear that if the assessee desired to claim depreciation, he must supply the required particulars. In the event the particulars are not supplied by the assessee then depreciation is not allowed to him. It is an admitted position that at no time prior to the assessement year 1955-1956 the assessee had filed any returns or that he had claimed any depreciation and in support of it supplied any particulars or that any depreciation on the machinery had actually been allowed. It is not shown to us that it is obligatory on the assessee to claim depreciation in every year of assessment, and in the event of his failure to do so, he forfeits the claim therefor or that the cost price gets automatically reduced by the allowable amount of depreciation. That being the position, it is difficult to hold that the assessee is not entitled to claim depreciation on the basis that the cost price of the machinery, etc., was the written down value thereof for the purpose of ascertaining the amount of depreciation allowable to him, and it was not open to the income-tax authorities to compute the depreciation on the basis that depreciation had been, as if, claimed in every year and allowed to the assessee.”

12. The view of this Court, therefore, is that the assessee has to make a claim for depreciation and it is not obligatory that he should do so.

13. The judgment in Dharampur Leather Cloth Co. Ltd.'s case was confirmed by the Supreme Court (60 ITR 165), but no reference was made to the finding which we have adverted to.

14. We may now refer to a judgment of the Punjab and Haryana High Court in Beco Engineering Co. Ltd. v. Commissioner of Income-tax, Rohtak, 148 ITR 478, the facts whereof are almost identical to those in Income Tax Reference No. 111 of 1976. The assessee claimed depreciation in its original return Later it filed a revised return in which it withdrew the claim for depreciation. The ITO took the view that it was statutorily binding upon him to compute the total income, which must take into consideration the deduction of depreciation allowance. The AAC and the Income Tax Appellate Tribunal concurred with the view taken by the ITO. The learned judges, on reference, referred to a circular of the Central Board of Revenue (No. 29-D (XIX-14) of 1965, F.No 45/239/65-ITJ dated 31st August 1965) which said that “where the required particulars have not been furnished by the assessee and not claim for depreciation has been made in the return, the ITO should estimate the income without allowing depreciation allowance”. The learned judges observed that it was evident from the circular that in case the assessee had not claimed depreciation allowance, he could not be granted the same by the ITO. In regard to the revised return the learned judges took the view that the original return could not be adverted to.

15. Our attention was invited by counsel for the assessees to the judgment of the Gujarat High Court in Chokshi Metal Refinery v. Commissioner of Income-tax, Gujarat-II, 107 ITR 63. Reference was there made to a circular of the Central Board of Revenue (Circular No. 14 (XL-35) of 1955 dated 11th April 1955). The circular required officers of the Department “to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs. ……Although, therefore, the responsibility for claiming refunds and reliefs rests with the assessees on whom it is imposed by law, officers should — (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other;…..” Counsel for the assessees rightly relied upon this judgment as saying that a claim had to be made by the assessee for a relief to which he was entitled and that the ITO's duty was only to advise him of it.

16. In the instant cases, therefore, the ITO could certainly have advised the assessees of their right to claim depreciation but he could not have given them the allowance on his own.

17. In our view, to sum up on the first issue, the assessee has a choice to claim or not to claim a deduction on account of depreciation. If he chooses not to claim it, the ITO is not entitled to allow a deduction on account of depreciation.

18. Having regard to this view it is not relevant that the assessee in ITR No. 111 of 1976 had in its original return claimed depreciation. It was entitled before the assessment was made to change its mind and choose not to claim depreciation. The choice having been exercised before assessment by filing the revised return and the letter accompanying it, the ITO was not justified in granting a deduction for depreciation based upon information gathered from the original return.

19. In this view of the matter, the question arising in ITR No. 111 of 1976 is answered thus: The ITO had no power or jurisdiction, in the circumstances of the case, to ascertain and impose depreciation allowance upon the assessee. No order as to costs.

Order accordingly.