Written Down Value and actual cost can be revisited when fixing depreciation base under the income-tax scheme.

Depreciation was required to be computed on written down value linked to the assessee's actual cost and prior depreciation allowed, so the assessing officer could examine the original cost when necessary to fix the relevant base. The scheme did not confine the inquiry to the immediately preceding year's figure. On that footing, neither res judicata nor estoppel prevented reconsideration of the earlier accepted cost for depreciation purposes, and the officer was entitled to determine the actual cost afresh for the assessment year.

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Issues: Whether, for the purpose of depreciation assessment, the Income-tax Officer could go behind the original cost earlier accepted and determine afresh the actual cost of the machinery to the assessee.

Analysis: The statutory scheme of depreciation under Section 10(2)(vi) of the Indian Income-tax Act required allowance to be computed on the written down value. That expression, under Section 10(5)(b), was linked to the actual cost to the assessee less depreciation actually allowed in past assessments. The definition therefore contemplated reference back to the original cost and prior allowances, and did not confine the officer to the written down value of the immediately preceding year. On that footing, neither res judicata nor estoppel barred the officer from examining the correctness of the original cost if necessary for determining the written down value for the relevant assessment year.

Conclusion: The Income-tax Officer was entitled in law to go behind the earlier accepted figure of original cost and determine the actual cost afresh for computing depreciation.

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