( 1 ) THE Income Tax Appellate Tribunal, Ahmedabad Bench a, has referred a question of law arising out of its order in I. T. A. No. 656/ahd/82 relating to A. Y. 1977-78 dated 27. 6. 1983. The question reads as under:-"whether, on the facts and in the circumstances of the case, the tribunal was right in law in coming to the conclusion that the depreciation allowed to the deceased Adie Contractor from whom the assessee had inherited the asset should not be taken into account and adjusted from the value of 1. 1. 54 for the purpose of computation of cost of asset for taking capital gain?"

( 2 ) THE facts and circumstances of the case in which the question has arisen are that late Shri Adie Contractor was the owner of a cinema theatre which he acquired prior to 1. 1. 54. He died on 16. 1. 72. The respondent assessee, along with two others, inherited the cinema theatre. The asset was sold during the previous year relevant to A. Y. 1977-78. The assessee opted to take fair market value of asset as on 1. 1. 54 as its cost of acquisition u/s 55 (2) read with sec. 49, read with sec. 50 (2) of the Income-tax Act 1961. The assessee computed the cost of acquisition to be fair market v