The Income-tax Officer can determine the written down value of any plant or machinery in each assessment year by ascertaining afresh what was the original cost to the assessee of such plant or machinery, and the determination of the actual cost in an earlier assessment year is not final and binding for all times to come.

D.M. Chandrashekhar, J.

1. AT the instance of the Commissioner of Income-tax, the Income-tax Appellate Tribunal (Delhi Bench "C") (shortly referred to as the Tribunal) has referred to this court the following question of law :

"Whether, on the facts and in the circumstances of the case, depreciation to be allowed for the assessment year 1963-64 in respect of the assets acquired by the assessee before April 1, 1961, should be determined by reference to the written down value as determined in accordance with the provisions of the Act of 1922, or by reference to the written down value as determined in accordance with Sections 43(1) and 43(6) of the Act of 1961 ?"

2. THE material facts are these: The respondent-assessee is a limited company which was running an electricity supply undertaking at Saharanpur. The reference relates to the assessment year 1963-64, the corresponding previous year being the year ending on March 31, 1963. The controversy relates to the depreciation on the service lines installed by the assessee to give electrical connection to consumers of -electricity up to March 31, 1961.

The assessee used to recover from consumers the whole or a part of the expenditure incurred by it for installation of such service lines. Under the Indian Income-tax Act, 1922 (shortly called the "old Act"), which was applicable to assessments up to and including the assessment year 1961-62, the amounts so recovered by the assessee from consumers, could not be deducted in determination of the actual cost to the assessee of such service lines because under Clause (c) of Explanation II to Sub-section (5) of Section 10 of the old Act, only the amounts paid by the Government or by any public or local authority to the assessee for installation of such service lines could be so deducted.

3. FOR the assessment year 1963-64, the Income-tax Officer did not allow any depreciation for such service lines. He held that having regard to the definition of the term "actual cost" in Sub-section (1) of Section 43 of the Income-tax Act, 1961 (shortly called "the Act") there was no actual cost to the assessee of such service lines since it (the assessee) had recovered from consumers the cost thereof including the labour charges. In that view he did not allow any depreciation in respect of such service lines.

4. IN the appeal preferred by the assessee, the Appellate Assistant Commissioner held that the assessee was recovering only a part and not the entire cost of laying such service lines and that, in view of the earlier rulings of the Tribunal, the assessee was entitled to depreciation on the basis of the actual cost to it (the assessee) of such service lines, as determined up to the end of the assessment year 1961-62 under the old Act.

In the appeal preferred by revenue against the order of the Appellate Assistant Commissioner, the Tribunal upheld his order on the question of depreciation.

5. THE controversy between the parties is whether for the purpose of allowing depreciation to the assessee for the assessment year 1963-64 the written down value of such service lines should be based on the actual cost thereof to the assessee according to the provisions of the old Act or the present Act.

6. SHRI Deokinandan, learned standing counsel for the income-tax department, contended that since the assessment for the year 1963-64 is governed by the provisions of the Act, the actual cost to the assessee of such service lines should be taken as defined therein and not as defined in the old Act. He further submitted that even though the written down value of such service lines had been determined in the assessment year 1961-62 on the basis of the definition of "actual cost" in the old Act, there was no impediment for the Income-tax Officer determining afresh the written down value for the assessment year 1963-64 on the basis of the definition of "actual cost" in the present Act and that the determination of the written down value in earlier assessment years w