The cost to be considered for the purpose of calculating the depreciation allowance is the cost to the assessee and not to the person who makes the sale.

Judgement

J. L. KAPUR J. : These five appeals pursuant to special leave are directed against the order of the Income-tax Appellate Tribunal by which five appeals before, two in regard to Income-tax assessment for 1947-48 and 1948-49 and the other three against Business Profits Tax assessment for the three chargeable accounting periods covered by the same accounting periods, were disposed of. By the Income-tax Officer and by the Appellate Assistant Commissioner the matter was decided in the Income-tax assessment appeal relating to the year of assessment 1947-48. The question in all these appeals is common and it relates to depreciation under S. 10 (2) (vi) of the Income-tax Act (hereinafter termed the Act). The appellant before us is the Jogta Coal Company and the respondent, the Commissioner of Income-tax, West Bengal. The appellant company was incorporated on 14-9-1945.

2. The facts leading up to these appeals are that two brothers E. C. Agabeg and A. A. Agabeg were lessees of a coal mine situate in village Jogta in the Jharia coal field area which belonged to the Raja of Jharia. The two brothers installed on the land leased to them plant and machinery and erected buildings and inclines and started working the coal mine. On 10-4-1935 the two brothers constituted themselves into a private limited company called Agabeg Brothers Ltd. On 19-7-1945 Agabeg Brothers Ltd. agreed to transfer to S. K. Bajpai all its right, title and interest in the leasehold property with other mokarari pottahs (perpetual leases) and a decree, which was passed in its favour, together with all appurtenances including houses, huts and other erections belonging to the vendor, all machinery, plant, stores, furniture etc. and

"the benefit of the uncompleted balance of all orders and contracts for the supply of coal existing at the date of the completion of the sale."

To this agreement were attached two schedules giving the list of the properties which were to be sold. Rs. 1,00,000 were paid as earnest money and the balance was to be paid at the time of the sale. The allocation of the purchase money was this, that out of Rs. 23,00,000 Rs. 13,00,000 were to be deemed to be paid in respect of the price of the underground and surface rights and other appurtenances and benefit of the assignment of the balance of uncompleted orders and contracts and Rs. 10,00,000 as the value of the machinery, stores, furniture, stocks etc. Another clause of the contract was that the company was to go into voluntary liquidation to give effect to the agreement for sale. There were certain leasehold rights in favour of third parties. Under cl. 12 of the agreement those third parties were to attorn to the appellant on the completion of the sale. On October 15, Agabeg Brothers Ltd., went into voluntary liquidation and two liquidators were appointed. On 28-12-1945 an indenture evidencing the sale in favour of the appellant was executed to which the parties were, the liquidators, debenture-trustees, Bajpai and the appellant - (Jogta Coal Company). By the sale deed all the properties which were agreed to be sold under the agreement of July 19, were sold to the appellant. The balance of the sale price i. e. Rs. 22,00,000, which was remaining due was paid to the vendors in accordance with the terms of the agreement and acknowledged in the sale deed.

3. The accounting period were the two years ending 31-12-1946 and 31-12-1947 and the assessment years were 1947-48 and 1948-49. The point in controversy before us is the amount on which the appellant was entitled to calculate deduction allowance for purposes of depreciation under S. 10 (2) (vi) of the Indian Income-tax Act.

4. The Income-tax Officer held that the appellant paid the whole of the price as recited in the deed of sale, that is, Rs. 28,00,000 but he was of the opinion that the allocation of this sum on the different assets as mentioned in the sale deed was not correct and that a portion of the consideration was for the purchase of the go