Actual cost basis for depreciation applies where no prior depreciation was claimed or allowed on pre-year asset acquisition.

Depreciation on a motor car acquired before the previous year had to be computed on its actual cost where no depreciation had been claimed or allowed in earlier years. Under the Agricultural Income-tax Act, the written down value for such assets is based on actual cost less any prescribed reduction, and Rule 13 could not displace that statutory basis on the facts. Because no prior depreciation was in fact claimed or allowed, and no valid prescription justified a different computation, the actual cost remained the proper base for depreciation.

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Issues: Whether depreciation on a motor car acquired before the previous year had to be computed on its actual cost to the assessee where no depreciation had been claimed or actually allowed in earlier assessment years.

Analysis: Under Section 5 of the Agricultural Income-tax Act, 1950, depreciation is allowed on the written down value of eligible assets, and for assets acquired before the previous year the written down value is the actual cost to the assessee less such sum as may be prescribed. Rule 13 of the Kerala Agricultural Income-tax Rules, 1951, which speaks of reduction by depreciation actually allowed, was held inapplicable on the facts because the controlling statutory language required a valid prescription for any reduction from actual cost in the case of such assets. In the absence of any prescription showing a different basis, and since no depreciation had in fact been claimed or allowed for the earlier years, the actual cost remained the proper base for depreciation.

Conclusion: The assessee was entitled to depreciation on the actual cost of acquisition of the motor car, and not on a reduced written down value based on unclaimed or unallowed prior depreciation.

Ratio Decidendi: Where the statute fixes actual cost as the basis for assets acquired before the previous year unless a prescribed reduction applies, depreciation cannot be curtailed by treating unclaimed and unallowed prior depreciation as if it had reduced the written down value.

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