AJIT K. SENGUPTA,J. ( 1 ) IN this reference under Section 256 (2) of the Income-tax Act, 1961, for the assessment year 1967-68, the following question of law has been referred to this court:"whether, on the facts and circumstances of the case, the Tribunal misdirected itself in law in holding that depreciation amounting to Rs. 24,703 (rupees twenty-four thousand seven hundred and three only) even though not admissible as expenditure in working out the deficiency under Section 44a of the Income-tax Act, 1961, should be allowed as a deduction in computing the business income assessed to tax ?" ( 2 ) THE point of reference relates to the deductibility of depreciation for computing the deficiency under Section 44a of the Income-tax Act, 1961. The assessee is a trade association and the assessment year involved is 1967-68 for which the accounting period ended on December 31, 1966. Besides deriving business income which is taxed, the assessee has also income from payments made by the members by way of subscriptions or otherwise. Such receipts fell short of the expenditure incurred solely for the purpose of protection or advancement of the common interest of the members. In working out the deficiency, a sum of Rs. 24,703 representing depreciation was included by the Income-tax Office/ in the original assessment. Subsequently, the Income-tax Officer reopened the assessment under Section 147 (b) in the view that income chargeable to tax has escaped assessment by computing excess deficiency by way of depreciation of Rs. 24,703 and, consequently, reduced the deficiency to that extent in the reassessment made by him. ( 3 ) ON appeal by the assessee, the Appellate Assistant Commissioner upheld both the validity of the reassessment under Section 147 (b) and also the reduction of deficiency under Section 44a of the Income-tax Act, 1961. ( 4 ) ON second appeal by the assessee before the Tribunal, it upheld the validity of the reassessment proceedings under Section 147 (b) relying on the earlier decision of the Tribunal in the assessee's own case. However, on merits, the Tribunal held that though depreciation did not form part of the expenses for the purpose of working out the deficiency under Section 44a, it should be allowed as deduction in computing the business income which has been assessed to tax. However, on merits, the Tribunal held that though depreciation did not form part of the expenses for the purpose of working out the deficiency under Section 44a, it should be allowed as deduction in computing the business income which has been assessed to tax. ( 5 ) THE question which was posed by the Tribunal was whether depreciation, though not forming part of the expenses for the purpose of working out the deficiency under Section 44a of the Act, should be allowed as a deduction in computing the business income assessed to tax. ( 6 ) OUR attention has been drawn to the decision of this court in CIT v. Indian Jute Mills Association [1982] 134 ITR 68. In that case, the assessee, the Indian Jute Mills Association, registered under the Indian Trade Unions Act, 1926, which derived income from interest on securities, income from jute chronicle and interest, claimed the benefit of deduction of deficiency in accordance with the provisions of Section 44a in respect of depreciation on the furniture, air-conditioner, etc. , which was debited in its accounts. The Income-tax Officer disallowed the claim on the ground that the assessee was a non-trading association and, therefore, was not entitled to claim depreciation since the assets were not used in a business. On appeal, the Appellate Assistant Commissioner affirmed the order of the Income-tax Officer on the ground that depreciation was not an expenditure to be taken into account for computing the deficiency under Section 44a. On further appeal to the Tribunal, the assessee contended that the amount of depreciation which was calculated according to the provisions of the Act and which was not claimed in the computation of income under any other head was an expenditure incurred solely for the purpose of the protection or advancement of the common interests of the members of the assessee-association and that commercial principles must be applied in the determination of the deficiency. The Tribunal found that the assets on which depreciation was claimed were used for the purposes for which the assessee-association was set up, viz. , the purpose of protection or advancement of the common interests of the members of the assessee-association, and held that the provisions of Section 44a should be construed liberally and directed the Income-tax Officer to allow the claim of the assessee. , the purpose of protection or advancement of the common interests of the members of the assessee-association, and held that the provisions of Section 44a should be construed liberally and directed the Income-tax Officer to allow the claim of the assessee. ( 7 ) THERE, this court held (p. 77) :"the depreciation normally an association like the assessee-company would have been entitled to provide for if it was using those assets for the purpose of its business but as it was not carrying on any business as such it was not entitled to any depreciation. Therefore, it cannot be said it is not an expenditure deductible, which describe the quality and nature of the expenditure under the provisions of any Act. If that is the position, it appears to us that the word 'expenditure incurred' is capable of being construed in order to cover the deficiency which has been claimed for by the assessee. ""in any view of the matter, having regard to the purpose of the section, as indicated by the heading and having regard to the language used, in our opinion, it is possible to construe the depreciation claimed as expenditure incurred. " ( 8 ) IT may be mentioned that in Indian Jute Mills Association, the question before the court was whether the depreciation debited in the accounts was expenditure incurred by the assessee within the meaning of Section 44a of the Act and should be deducted in computing the deficiency under that section. There the assessee did not have any business income. In that case, the assessee was having other income. In the instant case before us, the assessee, admittedly, was deriving business income which was taxed. In the original assessment, depreciation was allowed as an admissible deduction. But in the reassessment, the said expenditure was disallowed. The Tribunal held that even if depreciation is an expenditure, it cannot be taken into consideration in computing the deficiency under Section 44a for determining the income of the assessee. This view is contrary to the decision of this court in Indian Jute Mills Association where it was held that depreciation debited in the accounts should be taken into account for computing deficiency under Section 44a. This view is contrary to the decision of this court in Indian Jute Mills Association where it was held that depreciation debited in the accounts should be taken into account for computing deficiency under Section 44a. ( 9 ) SECTION 44a provides that, in the case of a trade, professional, or similar association which does not distribute any part of its income to its members, the amount of any deficiency (being excess of expenditure, other than capital expenditure, incurred for the advancement of the common interest of the members of the association concerned, over receipts from its members, exclusive of remuneration for rendering any specific services to such members) will be allowed to be deducted from the assessable income of the association to the extent of 50 per cent. of the assessable income as arrived at before allowing the aforesaid deduction. The aforesaid deduction will be allowed at first from the income of the association chargeable under the head "profits and gains of business or profession", and the balance amount, if any, from the assessable income of the association under any other head. The said deduction will be allowable from the net assessable income of the association as computed after giving effect to the provisions in the Income-tax Act for the carry forward of depreciation, development rebate and past business losses. Where the assessee derives income from business, if the assets on which depreciation is claimed, are used for the purpose of the business carried on by the asses-see, the assessee will be entitled to depreciation. The Tribunal only held that since "the assessee has income from business, it is entitled to allowance of depreciation". We do not find that the Tribunal considered the question whether the assets were used for the purpose of business or not. The main ground on which the Income-tax Officer disallowed the depreciation was that the assets were not used in the business. ( 10 ) IN our view, where an assessee derives income from business and the assets on which depreciation is claimed are used for the purpose of business, in arriving at the net assessable income, depreciation has to be allowed. But where there is no business income, in working out the deficiency under Section 44a, the depreciation debited in the accounts should be allowed as laid down in Indian Jute Mills Association. But where there is no business income, in working out the deficiency under Section 44a, the depreciation debited in the accounts should be allowed as laid down in Indian Jute Mills Association. We, therefore, reframe the question referred to us as follows :"whether, on the facts and circumstances of the case, the Tribunal was justified in law in holding that depreciation amounting to Rs. 24,703 is not admissible as expenditure in working out the deficiency under Section 44a of the Income-tax Act, 1961 ?" ( 11 ) WE answer the reframed question in the negative and in favour of the assessee. There will be no order as to costs.