Depreciation claim rejected where replacement costs related to consumers' equipment, not assets owned by the assessee.

Depreciation under Section 10(2)(vi) of the Income-tax Act, 1922 was confined to buildings, machinery, plant or furniture owned by the assessee. Expenditure incurred for replacing consumers' fans, radios and other equipment during conversion of an electricity supply system from direct current to alternating current did not relate to the assessee's own assets. Although the outlay was connected with the working of the system and was treated as capital in nature, that did not satisfy the statutory requirement of ownership. Depreciation was therefore not allowable on the replacement expenditure, and the reference was answered against the assessee.

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Issues: Whether depreciation under Section 10(2)(vi) of the Income-tax Act, 1922 was allowable on expenditure incurred by the assessee for replacing consumers' equipment during conversion of an electricity supply system from direct current to alternating current.

Analysis: The allowance for depreciation under Section 10(2)(vi) applies only to buildings, machinery, plant or furniture that are the property of the assessee. The expenditure in question related to the consumers' fans, radios and other equipment, not to the assessee's own assets. Although the expenditure was incurred in connection with the working of the assessee's system and was treated as capital in nature, that by itself did not bring it within the statutory allowance for depreciation, which is confined to the assessee's own property.

Conclusion: Depreciation was not allowable on the expenditure incurred for replacement of the consumers' equipment, and the answer to the reference was against the assessee.

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