COMMISSIONER OF INCOME-TAX, MADHYA PRADESH ETC. vs M/S. STRAW PRODUCTS LTD., BHOPAL

The Supreme Court held that the expression 'actually allowed' in the Taxation Laws (Merged States) (Removal of Difficulties) Order, 1949, refers to depreciation that was actually granted, not merely what could have been allowed. The Court affirmed the High Court's ruling that the 1962 Amendment, which retrospectively defined 'actually allowed' to include depreciation that would have been permitted had income not been exempted, was valid. Consequently, the Income-tax Officer's original assessment allowing depreciation based on actual allowances was upheld, and the appeal by the Revenue was dismissed.