Actual cost for development rebate includes full installation expenditure despite later consumer reimbursements.

Development rebate was available on the cost of mains, service lines and switch gears, following earlier Supreme Court authority on the point, so the claim on that asset cost was upheld against the revenue. On computation, the governing term was "actual cost": reimbursements received from consumers did not reduce the assessee's actual cost because the full expenditure incurred on installation remained the relevant figure. Development rebate was therefore admissible on the gross cost, and not only on the net amount after deducting consumer reimbursements.

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Issues: (i) Whether the assessee-company was entitled to development rebate on the cost of mains, service lines and switch gears. (ii) Whether the development rebate was admissible on the gross cost or only on the net amount after deducting reimbursements received from consumers.

Issue (i): Whether the assessee-company was entitled to development rebate on the cost of mains, service lines and switch gears.

Analysis: The answer to this issue was treated as concluded by an earlier Supreme Court decision on the same point. No independent departure from that authority was warranted.

Conclusion: The issue was answered in the affirmative and against the revenue.

Issue (ii): Whether the development rebate was admissible on the gross cost or only on the net amount after deducting reimbursements received from consumers.

Analysis: The governing expression was "actual cost" in the allowance provision. The Court held that the source from which part of the expenditure was ultimately recouped was irrelevant to the computation of actual cost. The amount expended on the installation remained the actual cost to the assessee even if a portion was later reimbursed by consumers. This view was supported by the prevailing line of authority following the principle that actual cost means the full amount laid out for the plant or machinery.

Conclusion: The issue was answered in favour of the assessee and development rebate was held admissible on the gross cost irrespective of reimbursement.

Final Conclusion: The reference was answered partly for the revenue and partly for the assessee, with the substantive relief relating to computation of development rebate decided in favour of the assessee.

Ratio Decidendi: For allowance of development rebate under the actual cost formula, any reimbursement received from consumers does not reduce the assessee's actual cost; the relevant figure is the full expenditure incurred by the assessee on the asset.

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