SABYASACHI MUKHARJI, J.

( 1 ) IN this reference under Section 256 (1) of the I. T. Act, 1961, the following question has been referred to this court:"whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that depreciation under Section 32 (1) (ii) of the Income-tax Act, 1961, read with Rule 5 of the Income-tax Rules, 1962, was not admissible @ 100% on coal tubs of the value of Rs. 12,85,132, on winding ropes of the value of Rs. 32,663 and on safety lamps of the value of Rs. 1,19,565 ?"

( 2 ) IN order to appreciate this question, we have to refer to certain facts. It appears from the order of the ITO that for the assessment year the assessee claimed 100% depreciation on coal tubs, cap lamps and haulage ropes. The contention of the assessee can best be appreciated in the words of the ITO, which are as follows:"during the year the assessee claimed 100% depreciation on coal tubs, cap lamps and haulage ropes. Prior to the amendment of Rule 5, these assets were not considered as depreciable assets. Only the value of replacement and renewal is allowed as revenue charge. The assessee's claim for 100% depreciation on the said assets is unacceptable on the ground that these assets have already got the benefit of replacement or renewals from year to year. Further, 100% depreciation for the original cost of those assets cannot be allowed on the ground that those assets had no W. D. V. at the beginning of the accounting year. Section 43 (6) provides that depreciation will be allowed : (a) in the case of assets acquired in the previous year, the actual cost to the assessee ; (b) in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to him under this Act. Hence, 100% depreciation will be allowed on coal tubs, cap lamps and haulage ropes as per revised rule only if the assets are acquired during the accounting year. From the statement filed by the assessee it is found that the assessee brought into use coal tubs, cap lamps and haulage ropes to the extent of Rs. 57,452 during the accounting year. Hence, 100% depreciation will be allowed on this amount and the claim for the balance is ignored. "

( 3 ) BEING aggrieved by the order of the ITO, the assessee went up in appeal before the AAC. On this aspect, the AAC observed, inter alia, as follows:"the learned counsel for the appellant on the other hand submits before me that the ITO was not justified in disallowing depreciation on coal tubs, ropes, safety lamps and cap lamps. He further submits that under the rules in force in the assessment year 1969-70, no depreciation was allowable on coal tubs, cap lamps, etc. , and the cost of replacement was being allowed as revenue expenditure. In other words, once an asset has been replaced, the cost of the original asset is no longer material and what is to be considered is whether under the new rules applicable for 1970-71 assessment year any allowance by way of depreciation has been granted with reference to the replaced cost. I have given careful consideration to the various submissions made by the learned counsel but find that there is not enough force in the arguments advanced by him. The claim of depreciation on coal tubs, safety lamps, ropes and cap lamps is to the extent of Rs. 14,53,766 as against the actual use of those to the extent of Rs. 57,452 only during the assessment year 1970-71. The balance amount represents the so-called value of the cap lamps, ropes, safety lamps and cap lamps brought into use since the inception of the colliery. However, while the learned counsel has tried to claim depreciation on the amount incurred on the items referred to above he has not filed details as to the total number of tubs, ropes, safety lamps and cap lamps capitalised at the beginning of the colliery and, thereafter, details of year-wise purchase, additions, discarding and replacement allowed by the Revenue under the Rules existing at that

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