Written down value and limitation under the 1922 Income-tax Act: initial depreciation counts, and timely-made assessment orders remain valid.

Initial depreciation allowed under section 10(2)(via) of the Indian Income-tax Act, 1922 forms part of "depreciation actually allowed" and must be included in computing written down value for balancing charge purposes under section 10(2)(vii); the exclusion of such initial depreciation was rejected. An assessment order made within the statutory limitation period is valid even if communicated after expiry, because section 34(3) turns on the date the order is made, not the date of service or knowledge; the limitation objection therefore failed.

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Issues: (i) Whether initial depreciation allowed under section 10(2)(via) of the Indian Income-tax Act, 1922 is to be included in computing the written down value for the purpose of profit computation under section 10(2)(vii); (ii) Whether an assessment order made within the statutory period but communicated after expiry of the period is barred by limitation under section 34(3) of the Indian Income-tax Act, 1922.

Issue (i): Whether initial depreciation allowed under section 10(2)(via) of the Indian Income-tax Act, 1922 is to be included in computing the written down value for the purpose of profit computation under section 10(2)(vii).

Analysis: The expression 'depreciation actually allowed' in the scheme governing written down value encompasses all depreciation allowances granted under the Act. Initial depreciation under section 10(2)(via) is itself a depreciation allowance and, when the written down value is computed for the purpose of the balancing charge under section 10(2)(vii), it cannot be excluded. The statutory language and the structure of the depreciation provisions do not support a distinction that would leave initial depreciation out of account.

Conclusion: Initial depreciation allowed under section 10(2)(via) must be taken into account in ascertaining the written down value for computing profit under section 10(2)(vii), against the assessee.

Issue (ii): Whether an assessment order made within the statutory period but communicated after expiry of the period is barred by limitation under section 34(3) of the Indian Income-tax Act, 1922.

Analysis: Section 34(3) requires that the assessment or reassessment order be made within four years from the end of the year in which the income first became assessable. The provision speaks of the making of the order and does not make communication to the assessee a condition for validity within the limitation period. Accordingly, the relevant date is the date of the order, not the date of service or knowledge.

Conclusion: An assessment order made within the statutory period is not barred merely because it was communicated after the period expired, against the assessee.

Final Conclusion: Both referred questions were answered in favour of the revenue, and the assessee failed on the limitation objection as well as on exclusion of initial depreciation from written down value.

Ratio Decidendi: For computing written down value under the depreciation scheme, all depreciation actually allowed, including initial depreciation, must be included; and for limitation under section 34(3), the decisive act is the making of the assessment order within time, not its communication to the assessee.

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