TMI Blog1976 (8) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee before April 1, 1961, should be determined by reference to the written down value as determined in accordance with the provisions of the Act of 1922, or by reference to the written down value as determined in accordance with sections 43(1) and 43(6) of the Act of 1961 ? " The material facts are these : The respondent-assessee is a limited company which was running an electricity supply undertaking at Saharanpur. The reference relates to the assessment year 1963-64, the corresponding previous year being the year ending on March 31, 1963. The controversy relates to the depreciation on the service lines installed by the assessee to give electrical connection to consumers of electricity up to March 31, 1961. The assessee use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he actual cost to it (the assessee) of such service lines, as determined up to the end of the assessment year 1961-62 under the old Act. In the appeal preferred by revenue against the order of the Appellate Assistant Commissioner, the Tribunal upheld his order on the question of depreciation. The controversy between the parties is whether for the purpose of allowing depreciation to the assessee for the assessment year 1963-64 the written down value of such service lines should be based on the actual cost thereof to the assessee according to the provisions of the old Act or the present Act. Shri Deokinandan, learned standing counsel for the income-tax department, contended that since the assessment for the year 1963-64 is governed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -62, it was not open to the Income-tax Officer to reopen the matter and to redetermine the written down value as on March 31, 1961, merely because of the change in the definition of 'actual cost ' in the Act." In order to appreciate the rival contentions of learned counsel, it is necessary to set out the relevant provisions of the Act. Section 29 of the Act provides that income under the head " profits and gains of business or profession " shall be computed in accordance with the provisions contained in sections 30 to 43A. Section 32 of the Act provides for allowing depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, subject to the provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Atkin was, no doubt, followed by the Bombay High Court in Commissioner of Income-tax v. Poona Electric Supply Co. Ltd. [1946] 14 ITR 622 (Bom), in which practically the same question as in the present case arose for determination. But, as pointed out by the Patna High Court in Commissioner of Income-tax v. Ranchi Electric Supply Co. Ltd. [1954] 26 ITR 89 (Pat), the effect of this decision of the Bombay High Court was nullified by amending section 10(5)(c) of the Indian Income-tax Act, 1922, by adding a new Explanation in the following terms : " 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 directl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, it was not permissible for him to determine the written down value for the assessment year 1963-64 by ascertaining afresh the actual cost of such service lines, adopting the definition of " actual cost " under the present Act. Sri Kacker maintained that the legislature could not have intended that the determination of the actual cost, on the basis of the definition in the old Act, should be reopened and that the definition of " actual cost " in the present Act should be applied retrospectively when the plant or machinery had been acquired before the commencement of the present Act. It was also submitted by him that it was not the case of the revenue that the determination of the actual cost in the assessment year 1961-62 was vitiated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of making the assessment for the year 1963-64, the Income-tax Officer could not ascertain afresh the actual cost to the assessee of such service lines, in accordance with the definition of " actual cost " in the present Act. The view we have taken receives support from the decision of the Gujarat High Court in Commissioner of Income-tax v. Hides Leather Products Pvt. Ltd. [1975] 101 ITR 61 (Guj). There, the assessee had acquired the plant in the year 1955, and its written down value had to be determined for the assessment years 1961-62 to 1965-66. Divan C.J., who spoke for the Bench, observed thus at page 70 : "These decisions clearly show that, so far as the Income-tax Officer is concerned, he has to determine the wr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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