HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Madhya Pradesh v. Nandlal Bhandari Mills Ltd.
Civil Appeals Nos. 629-632 of 1964
[1966] 2 SCR 925 ·
Indian Income-tax Act, 1922: sections 4, 4A, 10(2)(vi), 10(5)(b), 42 and 66(1) · Income-tax Rules, 1922: rule 33 · Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950: paragraph 2
Sources & disclosures includedDownload original judgment / order
3-judge bench; majority by K. Subba Rao, J.; J. C. Shah, J. dissenting. · K. Subba Rao, J. · J. C. Shah, J. · S. M. Sikri, J.
Assessment years: 1950-51 to 1953-54
01 · Facts of the case
The Indore company's opening written-down values depended on depreciation previously actually allowed. Under rule 33, taxable Indian income had been calculated as a fraction of world profit after deducting total depreciation (SCR pp.928-930; PDF pp.4-6).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
The majority held that only depreciation with practical effect in reducing Indian taxable income was actually allowed; applying the Indian-receipts fraction meant only that fraction counted. Shah J. dissented that the entire depreciation was exhausted in computing world profits and could not be allocated (SCR pp.931-943; PDF pp.7-19).
Source: Primary judgment: discussion
03 · Judicial decision
By majority all four Revenue appeals were dismissed with costs (SCR pp.935, 943; PDF pp.11, 19).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of the assessee by 2:1 majority (SCR pp.935, 943; PDF pp.11, 19).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: distinguish an intermediate world-profit deduction from the depreciation that actually reduced income taxed under the governing Act. Preserve the majority/dissent split and year-specific allocation regime (based on SCR pp.931-943; PDF pp.7-19).
Source: Primary judgment: review point
Source & verification
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Statutory scope
This Part B States transition ruling does not certify present section 43(6) or current written-down-value treatment.
Later treatment
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