Hakeem, J.:—
In this Reference under Section 256(2) of the Income-tax Act, the Tribunal has referred the following questions of law for the opinion of this Court:
1) “Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in concluding that a revised return is totally in substitution of the original return and that return alone has to be taken into consideration in completing the assessment?”
2) “Whether the Appellate Tribunal was not in error in concluding that the claim for depreciation in the original return is to be ignored when no claim is made in a revised return filed subsequently?”
3) “Whether the Appellate Tribunal was not in error in concluding that claim for depreciation is a choice left to the assessee and cannot be allowed when not claimed in revised return?”
2. The assessee is a Company carrying on manufacture of grinders. For the assessment years 1973-1974 and 1975-1976, the assessee filed revised return whereby he withdrew its claim regarding depreciation. The Income-tax Officer, however, allowed depreciation to the assessee as per details furnished by the assessee along with the original return. On appeal, the Commissioner of Income-tax (Appeals) confirmed the I.T.O's order. On further appeal, the Appellate Tribunal has held that the I.T.O was not justified in allowing the depreciation. For coming to this conclusion, the Tribunal has relied upon the Decision in Boco Engineering Co., Ltd.,1 as also the instructions of the Board of Direct Taxes dated 4.9.72, to the effect that the Board will have no objection to the line of action suggested by the assessee, as there is nothing in law to hold that it is mandatory for the assessing authority to allow depreciation even if the assessee withdraws his claim. There is divergence of opinion between various High Courts on this question. While the Allahabad and Madras High Courts have decided the question in favour of the Revenue, in 90 ITR 4772 and 122 ITR 93, respectively, divergent view is taken by the Punjab and Harayana High Court in 148 ITR 478 and the Bombay High Court in 177 ITR 4434.
3. It is urged by Sri Raghavendra Rao, learned Counsel for the petitioner, that having regard to the language of Section 32 of the Act, it is incumbent upon the assessing authority to allow the depreciation if necessary materials are found on record. The learned Counsel seeks to place emphasis upon the expression ‘shall’ in the Section. On the contrary, Sri K.P Kumar, learned Counsel for the assessee, submitted that the provisions of Section 32 are clearly governed by Section 34(1), as it stood at the relevant period, which reads thus:
“Section 34(1) - the deductions referred to in sub-section (1) [or sub-section (1A)] of Section 32 shall be allowed only if the prescribed particulars have been furnished.”
4. There cannot be any doubt that allowing of the deductions as provided under Section 32 of the Act itself is subject to the provisions of Section 34. Here, the learned Counsel for the assessee laid emphasis upon the requirement under sub-section (1) of Section 34 to state that the furnishing of particulars by the assessee in his return is a condition precedent to claim the deductions, and if he does not choose to do so, it is not at all mandatory for the I.T.O to find something on the record to impose that benefit upon the assessee. It is further submitted by the learned Counsel that the Board instructions relied upon are traceable to the jurisdiction of the Board under Section 119 of the Act. There is considerable force in both these contentions.
5. In CIT v. Shri Someshwar Sahakari Sakhar Karkhana Ltd., the Bombay High Court has similarly interpreted the provisions of Section 32 read with Section 34 of the Act. Interpreting the provisions of Section 10(2)(vi) of the 1922 Act, (which is pari materia with Section 32 of the Act) it is held that the proviso to clause (vi) of sub-section (2) of Section 10 of the 1922 Act obliges the I.T.O to allow the deductions referred to in the Section “only if the prescribed particulars have been furnished.” Further it is stated that the use of words “allowed” and ‘allowance’ in the provisions would appear to contemplate a claim or application by the assessee for the deduction provided for them. In the absence of a claim or application by the assessee, the assessing authorities would not be “allowing” a deduction. Similar view has been taken by the Punjab and Harayana High Court in 148 ITR 478, which has been followed by the Tribunal. In that view of the matter, we prefer to follow the view of the Bombay High Court5 and the High Court of Punjab and Harayana.
6. The next point for consideration is regarding the effect of revised return. This aspect has been considered at length by the Gujarath High Court in CIT v. Arun Textile. It is held that once a revised return is filed under Section 139(5) the original return is substituted by the revised return. Consequently, the entries in the relevant column of the original return seeking depreciation, cannot be used for any purpose. It is therefore, not open for the Income-tax Officer to advert to the original returns or the statement filed along with it for the purpose of allowing deductions after such claim was expressly withdrawn under the revised return.
7. In that view of the matter, we answer all the questions in affirmative and in favour of the assessee.