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TMI Blog1970 (9) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... net amount (gross expenditure less reimbursement) ? " Learned counsel for the parties are both agreed that the answer to the first question is concluded by the decision of their Lordships of the Supreme Court in Commissioner of Income-tax v. Raju and Mannar. In accordance with that decision we return the answer to the first question in the affirmative and against the revenue. It is, therefore, necessary to advert to matters relevant to the second question only. The assessee--The Ambala Cantt. Electric Supply Co. Ltd. is a private limited company, carrying on the business of generation and distribution of electricity. The relevant assessment years are 1958-59 and 1959-60. During the years above-said there was expansion and development in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; Rs. 35,435 In consideration of the issue involved, the Tribunal found that the view expressed in Commissioner of Income-tax v. Ranchi Electric Supply Co. Ltd. needed reconsideration in the light of the Observations of the Supreme Court in the Hoshiarpur Electric Supply Co. v. Commissioner of lncome-tax. However, it found itself bound to follow the Ranchi Electric Supply Co.'s case, as it was a binding precedent directly on, the point and accordingly held that the depreciation was to be allowed on the entire gross cost. Mr. D. N. Awasthy, on behalf of the revenue, first referred to clause 2 of the specimen agreement between the consumers and the assessee-company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising from a tortious act involving conversion and trespass for which the suit for damages was filed. In that case the dispute had arisen between the consumer and the electric supply company regarding the ownership of the materials and the part of the service-line for which allegedly the consumer had paid and this dispute led further to a sub-inspector and a few constables trespassing on to the permises and removing the disputed material, It was in the light of these facts that the Division Bench opined that the consumer had paid for the service-line and, unless there was anything to the contrary in any particular case, property normally belonged to one who paid for it. The Bench noticed the observations to the contrary in Delhi Electric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day of January, 1958, and in the case of any machinery or plant, twenty-five per cent. of the actual cost of the ship or machinery or plant to the assessee." 10. (5) In sub-section (2) 'paid' means actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under this section ; 'plant' includes vehicles books, scientific apparatus and surgical equipment purchased for the purposes of the business, profession or vocation ; and 'written down value' means....." In the light of the foregoing provisions the crux of the question, therefore, is whether the development rebate to the assessee-company is to be allowed on the "actual cost" incurred by it for the installation of the main s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stance. It serves, as Mr. Latter suggested, to give emphasis, to the word following. It is to be the cost, the whole cost, and nothing but the cost ...... What a man pays for construction or for the purchase of a work seems to me to be the cost to him ; and that whether someone has given him the money to construct or purchase for himself, or before the event has promised to give him the money after he has paid for the work, or after the event has promised or given the money which recoups him what he has spent. In the present case the Corporation paid the whole of the cost of the tramways out of their funds unless the first half of the Dunlop contribution was so applied : as to which there is no evidence, nor is it material. I myself should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was to be computed irrespective of any consideration as to the amount actually contributed by the company or the amount actually recouped ultimately, from the consumers. Consequently, it was held that under section 10(5)(a), the amount paid by the consumers on account of service connection should not be taken into account in calculating the actual cost to the company. A Division Bench of the Kerala High Court in Commissioner of Income-tax v. Cochin Electric Co. Ltd. also arrived at a similar conclusion in holding that the words "actual cost" meant the cost accurately ascertained and it did not mean that the cost should necessarily be defrayed from the assessee-company's own resources. We are in agreement with the above view which appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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