Actual cost governs depreciation claims, and estimated construction cost justified remand for proof of expenditure.

Depreciation on a holiday resort under section 32 of the Income-tax Act had to be computed with reference to actual cost, not a mere estimate. Because the construction cost was shown only on an estimated basis, the matter could not be finally determined without allowing the assessee to prove the actual cost incurred. The remand therefore preserved the Assessing Officer's ability to rely on the District Valuation Officer's report if the assessee failed to substantiate the cost. The challenge to the remand failed.

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Issues: Whether depreciation on construction for a holiday resort could be determined on the basis of an estimated cost, or whether the matter had to be remitted to enable proof of the actual cost incurred.

Analysis: Depreciation under section 32 of the Income-tax Act, 1961 had to be computed on the basis of the actual cost of the asset. Since the cost of construction had been shown only on an estimated basis, the matter could not be finally determined without giving the assessee an opportunity to lead evidence of the actual cost. The remand ordered by the Tribunal preserved the Assessing Officer's liberty to rely upon the District Valuation Officer's report if the assessee failed to substantiate the actual cost.

Conclusion: The remand was and the challenge failed.

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