Initial depreciation

Adjudicating Authority, disallowed initial depreciation, claimed by the taxpayer in his return, being not in accordance with the provisions of S.23 of Income Tax Ordinance, 2001 with observations that no addition in assets had been made during the year, rather various parts of the existing plant and machinery were replaced

Appellate Authority, confirmed action of Adjudicating Authority

Contentions of taxpayer was that initial depreciation had been disallowed by Adjudicating Authority, with the observations that no new plant and machinery was added; that both authorities below had ignored the fact that every year, in sugar industry, complete overhauling of plants and machinery was carried out to bring same in serviceable condition and that Adjudicating Authority had failed to allow normal depreciation on the assets against which the initial allowance had been disallowed

Validity

Adjudicating Authority had made additions without specifying any instance

In absence of specific description, it could not be ascertained as to whether new plant and machinery was added, or addition in the existing plant and machinery were made

Case was remanded for de novo consideration, with the direction that disallowance on account of initial depreciation, would be examined as per law and after ascertaining facts, normal depreciation to the company could be allowed.