Pre-production expenditure counts toward actual cost, supporting depreciation and development rebate; corrected Tribunal figures were accepted.

Pre-production expenditure capitalised as part of actual cost was treated as eligible for depreciation allowance and development rebate, applying the governing principle that such expenditure enters the asset's actual cost for tax purposes. The reference was answered in favour of the assessee on that point. The court also clarified that the figures set out in the reference question were incorrect, and that the figures recorded in the Tribunal's statement of case were the correct and binding figures for the reference.

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Issues: Whether the assessee was entitled to depreciation allowance and development rebate in respect of the disputed expenditure, and whether the figures mentioned in the reference question were to be treated as correct and binding.

Analysis: The reference concerned capitalisation of pre-production expenditure for assessment year 1957-58. The question had already been concluded by the governing legal principle that such expenditure forms part of the actual cost for the purpose of depreciation and development rebate. The court also clarified that the figures stated in the reference question were incorrect and that the figures recorded in the Tribunal's statement of case were to be treated as correct.

Conclusion: The question was answered in the affirmative, in favour of the assessee, and the Tribunal's corrected figures were accepted as binding for the reference.

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