THE COMMONWEALTH TRUST LTD., CALICUT, KERALA vs THE COMMISSIONER OF INCOME TAX, KERALA II, ERNAKULAM

The Supreme Court addressed two questions from the Kerala High Court regarding the Income Tax Act, 1961. It overruled the High Court's decision on the first question concerning the deletion of house rent under Section 40(a)(v), siding with the assessee as per the precedent set in Commissioner of Income Tax, Bombay vs. Mafatlal Gangabhai & Co. (1996) 7 SCC 569. The second question, regarding the right to substitute market value for depreciable assets under Section 55(2)(i), was analyzed with reference to conflicting High Court decisions, ultimately favoring the assessee's interpretation of the statute.