TaxTMI 
TaxTMI 
1978 (7) TMI 73
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....ons of the Indian Income-tax Act, 1922, and not as per the provisions of the Income-tax Act, 1961 ? " We are concerned in this reference with the assessment year 1965-66, for which the accounting year is the financial year ended 31st March, 1965. In respect of the assessments made on the assessee under the Indian I.T. Act, 1922, the written down value of the various assets was determined in accordance with the provisions of the said Act. When the I.T. Act, 1961, came into operation as from the assessment year 1962-63, the written down value of the assets was taken as per the calculations made under the old Act and depreciation allowed on the assets accordingly. This was continued to be done up to the assessment year 1964-65. For the asse....
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....half of the assessee that the action of the ITO in applying the definition of " actual cost " to be found in the Act of 1961 was not correct. The AAC, however, observed that where the written down value of any particular asset would result in a negative figure after applying the definition of " actual cost " to be found in the Act of 1961, depreciation may cease to be allowed thereon but that the so-called negative figure was not required to be further adjusted thereafter against other assets which were yet required to be depreciated. In other words, the conclusion of the AAC was that, although the ITO had considered the statutory provision correctly, the proper result was to hold the assessee ineligible for depreciation of such assets wher....
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....as given in s. 43(1) of the new Act. That, in our opinion, is the only way of harmoniously interpreting the action as a whole," The Tribunal supported the view that it had taken by pointing out that the view which found favour with the ITO resulted in a negative figure of written down value in many cases, which, according to the Tribunal, resulted in an absurd situation. Accordingly, the submissions of the assessee were fully accepted. Aggrieved by this decision, the reference has been made to this court from the said order of the Tribunal. Mr. Joshi on behalf of the revenue has drawn our attention to three decisions of three different High Courts which have considered identical statutory provisions and came to the conclusion other than ....
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....assessment. ' Written down value ' and ' depreciation ' are not used as having ordinary dictionary meanings but have certain statutory meanings. 'Actual cost' and ' written down value ' have to be computed in accordance with the provisions of the Act of 1961, even with reference to assets in use in the previous year for the assessment year 1962-63 but which were acquired prior thereto. Where the assessee derived income from the business of distribution of electricity and depreciation was allowed to it under the Act of 1922, on the basis that ' actual cost ' would include contributions received from consumers for the installation of service lines but, after the passing of the Act of 1961, such contributions had to be excluded in comput....
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....mers towards the cost of house service connections would be required to be deducted in arriving at the actual cost thereof. The third decision in which a similar view has been taken was, that of the Allahabad High Court in CIT v. Saharanpur Electric Supply Co. Ltd. [1977] 109 ITR 545. The court noted the difference in the provisions between the Indian I.T. Act, 1922, and the I.T. Act, 1961, and rejected the contention of the assessee that in determining the actual cost to the assessee of the service lines in the assessment year 1963-64, the amounts received by it from the consumers were irrelevant. It was specifically held that depreciation to be allowed for the assessment year 1963-64 to the assessee even in respect of the assets acquir....
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....e emphasised the words as has been met directly or indirectly by any other person or authority to be found in s. 43(1) and the phraseology employed in s. 43(6)(a) and (b). When we were taken through the three judgments of the Calcutta, Madras and the Allahabad High Courts, we did not find that the said courts had failed to refer to or apply their mind to any relevant statutory provisions or any binding authorities. None of the judgments of the courts could, therefore, be regarded as Per incuriam. All that was urged before us was that the courts had failed to deal in their judgments with certain argument in the form and in the manner presented before us. In a number of cases this court has emphasised that in dealing with an all-India statute....