Depreciation cost basis follows the successor assessee's purchase cost, not the former owner's cost.

Under the Indian Income Tax Act, 1922, depreciation is computed by reference to the original cost to the assessee who is chargeable to tax, not the cost to a previous owner when one business succeeds another. The statutory definition of "assessee" supports the successor's own acquisition cost, and the Indian wording was held distinct from the English depreciation language relied on in the contrary view. Depreciation was therefore correctly allowable on the purchasing company's cost.

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Issues: Whether, where one business succeeds another, the words "on the original cost thereof to the assessee" in the depreciation provision refer to the original cost to the successor assessee or to the cost to the former owner.

Analysis: The allowance for depreciation under the Indian Income Tax Act, 1922 is computed with reference to the original cost to the assessee who is chargeable to tax. The definition of "assessee" applies to the person by whom income tax is payable, and the statutory language does not support importing the cost to a previous owner. The language of the Indian Act differs from the English depreciation provisions relied upon in the contrary decision, so the plain words of the Indian statute must govern.

Conclusion: The expression refers to the original cost to the successor assessee, not to the cost to the previous owner; the depreciation allowance was correctly claimable on the assessee's purchase cost.

Final Conclusion: The reference was answered in favour of the assessee, and depreciation was held to be computable on the cost to the purchasing company.

Ratio Decidendi: Under Section 10(2)(vi) of the Indian Income Tax Act, 1922, depreciation is allowed with reference to the original cost to the person actually assessed to tax, and not to the cost borne by a prior owner of the business.

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