Written down value of pre-previous-year assets must be computed under section 10(5)(b), despite no earlier depreciation claim.

For assessment year 1956-57, the written down value of assets acquired before the relevant previous year had to be computed under section 10(5)(b) of the Indian Income-tax Act, 1922, on the basis of actual cost less depreciation actually allowed. The fact that depreciation was not claimed in the earlier year did not change the character of the assets as pre-previous-year acquisitions. The court therefore held that section 10(5)(a) did not apply independently to that computation, and the assessee succeeded on the valuation method.

---

---

Issues: Whether, for the assessment year 1956-57, the written down value of the assets had to be computed under section 10(5)(b) of the Indian Income-tax Act, 1922, independently of section 10(5)(a).

Analysis: The assets in dispute were acquired during the previous year relevant to assessment year 1955-56 and not during the previous year relevant to the year under consideration. Depreciation for assets acquired before the previous year falls within section 10(5)(b), which applies the actual cost less depreciation actually allowed. The fact that depreciation was not claimed in the earlier year did not alter the character of the assets as pre-previous-year acquisitions.

Conclusion: The written down value was required to be computed under section 10(5)(b), and not independently under section 10(5)(a), in favour of the assessee.

---