Written down value for depreciation must be recomputed under the 1961 Act, and prior assessments do not bind later years.

Depreciation for assessment year 1963-64 under the Income-tax Act, 1961 had to be computed on written down value determined under the 1961 Act, not by carrying forward the earlier assessment basis under the 1922 Act. In calculating actual cost, any portion met directly or indirectly by another person must be deducted, and written down value must be recomputed for the relevant year under the governing statute. Prior assessments do not create res judicata or estoppel for the later year, so the earlier valuation could be reopened for the 1963-64 computation.

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Issues: Whether, for the assessment year 1963-64, depreciation on assets acquired before 1 April 1961 had to be computed with reference to the written down value determined under the Income-tax Act, 1922, or with reference to the definition of actual cost and written down value under the Income-tax Act, 1961.

Analysis: The relevant scheme under sections 29 and 32 of the Income-tax Act, 1961 requires depreciation to be computed on written down value, and section 43 defines written down value by reference to actual cost. The Court held that, under the 1961 Act, amounts met directly or indirectly by any other person are to be deducted in determining actual cost. It further held that the written down value for a later assessment year is not frozen by an earlier assessment and may be recomputed for that year in accordance with the governing statute, as prior determinations do not operate as res judicata or estoppel.

Conclusion: The reference was answered against the assessee and in favour of the revenue: depreciation for assessment year 1963-64 had to be determined by reference to written down value computed under sections 43(1) and 43(6) of the Income-tax Act, 1961.

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