TMI Blog1976 (6) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ntribution made by the private consumers in determining the actual cost of the house service connections which were given prior to April 1, 1961, for the purpose of allowing depreciation on the written down value for the assessment years 1962-63 to 1967-68 ? " The assessee is a company carrying on business in the distribution of electricity. In the return filed for the assessment year 1962-63, the assessee showed a sum of Rs. 7,07,990 as written down value of the capital expenditure incurred for laying house service connections prior to the previous year, relevant to the assessment year 1962-63, and claimed depreciation thereon at ten per cent. The Income-tax Officer found that this sum of Rs. 7,07,990 included a sum of Rs. 3,39,537 bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior to the coming into force of the Income-tax Act, 1961, on April 1, 1962. The Explanation to section 10(5) of the Indian Income-tax Act, 1922, stated ; " For the purposes of this sub-section, the expression 'actual cost' means the actual cost of the assets to the assessee reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by Government or by any public or local authority, and any allowance in respect of any depreciation carried forward under clause (b) of the proviso to clause (vi) of sub-section (2) shall be deemed to be depreciation 'actually allowed' . " However, section 43(1) of the Income-tax Act, 1961, made a departure in this behalf. That section, so far as it is relevant for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually allowed to him under this Act, or under the Indian Income-tax Act, 1922 (11 of 1922), or any Act repealed by that Act, or under any executive orders issued when the Indian Income-tax Act, 1886 (2 of 1886), was in force : ........... " Though it is only section 43(6)(b) that it is immediately relevant for the purpose of this case, because of the use of the expression " actual cost " occurring in that provision, we are thrown back on the definition of that expression occurring in section 43(1). The contention of the assessee before the Tribunal, which found favour with that Tribunal, was that the definition of " actual cost " occurring in section 43(1) of the Income-tax Act, 1961, should be applied only to assets coming into ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the actual cost to the assessee shall be the actual cost to him when he first acquired the assets less the depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income-tax Act, 1922, diminished by any loss deducted, or, as , the case may be, increased by any profit assessed, under the provisions of clause (iii) of sub-section (1), or clause (ii) of sub-section (1A) of section 32 or sub-section (2) or sub-section (2A) of section 41 of this Act or under the corresponding provisions of the Indian Income-tax Act, 1922, or the actual price for which the asset is re-acquired by him, whichever is the less. " It is conceded before us that there is no decision of any court of this country on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act for further application, there is no question of the definition contained in the old provision being applied for the purpose of arriving at the written down value as contemplated by section 43(6)(b) of the 1961 Act. We may make it clear in this context that it was not disputed before us by the counsel for the assessee that the written down value can be determined afresh in each year and what was determined in one year need not necessarily be taken to be the written down value in the next succeeding year. Therefore, we are of the opinion that there is nothing in the context of sections 28 to 41 or section 43 of the Income-tax Act, 1961, to compel the court to conclude that the definition of the term " actual cost " occurring in sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect of this Explanation (Explanation 4 to section 43(1)) is that where an assessee transfers an asset which was acquired by him when the 1922 Act was in force and later re-acquires it, the actual cost in respect of that asset 'shall be the actual cost to him when he first acquired the asset less the depreciation actually allowed' etc ....... Now, there can be no dispute that in such a case the actual cost when the assessee first acquired the asset would be the actual cost as defined in the 1922 Act. This Explanation in our opinion clearly indicates the intention of the legislature regarding the treatment to be given to assets acquired prior to the 1961 Act. Again there is no reason why an assessee who acquired an asset under the 1922 Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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