Depreciation cost and conveyance valuation: Tribunal cannot ignore a sale deed on conjecture without raising a question of law.

Depreciation under section 10(2)(vi) is computed on the assessee's original cost, but the Tribunal could not, on conjecture, ignore the conveyance and reallocate the stated consideration by treating part of it as payment for an asset not described in the deed. That dispute concerned the Tribunal's power to go behind the apparent terms of the sale deed and substitute its own valuation, which raised a question of law. The Supreme Court held that such a legal question did arise and that the Tribunal should have referred the matter to the High Court.

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Issues: Whether, for depreciation under section 10(2)(vi), the taxing authority could disregard the sale deed and determine its own valuation of the assets on the footing that part of the price represented something other than the assets described, and whether that gave rise to a question of law requiring reference to the High Court.

Analysis: Depreciation under section 10(2)(vi) is computed on the original cost to the assessee. The controversy was not about the abstract principle that depreciation must be based on the assessee's cost, but about whether the Tribunal could treat the consideration recited in the conveyance as not representing the real price of the particular assets and, on that basis, split the price by conjecture to include another asset not mentioned in the deed. In those circumstances, the dispute raised a legal question as to the Tribunal's power to go behind the conveyance and fix its own valuation.

Conclusion: A question of law did arise, and the Tribunal should have referred the matter to the High Court.

Ratio Decidendi: Where the issue is whether the taxing authority can ignore the apparent terms of a conveyance and substitute its own valuation for the actual consideration paid, the matter raises a question of law for reference; depreciation remains referable to the original cost to the assessee.

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