The actual cost of assets for the purpose of depreciation and development rebate is the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority.

Ashwini Kumar Sinha, J.

1. These are five reference applications made u/s. 256(1) of the I.T. Act, 1961, bv the Income-tax Appellate Tribunal, Patna Bench "B".

T.C. No. 21 of 1975.

2. This is a reference application made under Sec.256(1) of the I.T. Act, 1961, by the Income-tax Appellate Tribunal, Patna Bench-A.

3. The assessment years in the first five reference applications involved are 1963-64, 1964-65, 1966-67, 1967-68 and 1968-69 and Taxation Case No. 21 of 1975, the assessment year in question is 1969-70. One identical question of law has been raised in all the assessment years. In Tax Cases Nos. 31 to 35 of 1975 the questions referred to for our opinion are as follows :

"(1) Whether under the provisions of Sec. 43(1) of the Income-tax Act, 1961, the two expressions actual cost and actual cost of the assets to assessee bear the same meaning ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that for the assessment years 1963-64, 1964-65, 1966-67, 1967-68 and 1968-69, depreciation and development rebate was allowable on the actual cost of the service lines to the assessee as reduced by the contributions by the consumers towards the cost of the said lines ?"

and in T.C. No. 21 of 1975 the question referred for our opinion is us follows:

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that for the assessment year 1969-70 depreciation and development rebate was allowable on the actual cost of the service lines to the assessee as reduced by the contributions made by the consumers towards the cost of the said lines ?"

4. Question No. 2 in T. Cs. Nos. 31 to 35 of 1975 and the question referred to in T.C. No. 21 of 1975 are the same except the assessment year. In T.C. No. 21 of 1975, the assessment year in question is 1969-70 whereas in T. Cs. Nos. 31 to 35 of 1975, the assessment years are as already mentioned above.

5. Thus, the question referred for our opinion in T. C. No. 21 of 1975 and question No. 2 in T.Cs. Nos. 31 to 35 of 1975 involve identical question of law.

6. The assessee is a company distributing electrical energy. At the time of giving new connections to new consumers, the company charges the consumers for a part of expenses which have to be incurred in installing service connection. Though the consumers have to pay for certain assets which are part of the service connections, they do not become the owners of these assets and the electric supply company continues to be the owner of those assets. While completing the assessment for the years involved in T. Cs. Nos. 31 to 35 of 1975 as well as for the year involved in T. C. No. 21 of 1975, the ITO allowed depreciation and development rebate on these service connections after deducting the cost of reimbursement by the consumers from the total cost of the service connections. Copies of these assessment orders of the ITO for the years involved in T. Cs. Nos, 31 to 35 of 1975 are annexs. A, A/1, A/2, A/3 and A/4 forming part of the statement of the case and annex. A in T.C. No. 21 of 1975.

7. The assessee went up in appeal before the AAC and the AAC has agreed with the view taken by the ITO and has rejected the plea of the assessee. The plea of the assessee was that such reimbursement by the consumers should not have been deducted and the depreciation and development rebate should have been allowed on the total cost without any deduction whatsoever. Copies of the orders of the AAC for the assessment years involved in T.Cs. Nos. 31 to 35 of 1975 are annexs. B, B/1, B/2, B/3 and B/4 forming part of the statement of the case and annex. B in T.C. No. 21 of 1975.

8. The assessee went up before the Tribunal. The Tribunal held that the contributions by the consumers had to be deducted in order to arrive at the actual cost for the purpose of determining the written down value on which the depreciation was allowed. The Tribunal further held that the position regarding de