Law:

Section:

Section 43, read with section 32 of the Income-tax Act, 1961 [Corresponding to section 10(5), read with section 10(2)(vi) of the Indian Income-tax Act, 1922] - Actual cost - Assessment years 1946-47 and 1947-48 - Whether method enjoined by section 10(5)(b) of 1922 Act is not that Income-tax Officer should merely scale written down value of previous year down, but that he should take into consideration actual cost, determining it for himself, if necessary, take also into consideration allowance granted in past and then make his own computation as to written down value for assessment year in question with which he is concerned - Held, yes - Whether definition of term 'written down value' as contained in section 10(5) of 1922 Act completely excludes view as to nature of operation to be performed under latter part of section 10(2)(vi) of 1922 Act - Held, yes Interpretation of statutes: Principle of resjudicata and principle of estoppel. FACTS The assessee-company in 1938 acquired from one of its creditors some cinematograpahic machinery at the price, as was claimed, of Rs. 3,94,000. That figure of the cost of the machinery was accepted in successive assessment of the assessee, but in the course of the assessment for the year 1946-47, the Income-tax Officer made an enquiry into the circumstances in which the machinery had been acquired and he came to the conclusion that its real cost to the assessee had been not Rs. 3,94,000, but only Rs. 2,80,000. Since he found that depreciation allowance of the amount of Rs. 2,84,000 had already been allowed to the assessee, he came to the conclusion that the written down value had been reduced to a minus figure and, therefore, there was no further depreciation allowance to be allowed. In the next assessment also, that is for the year 1947-48, he made a similar order. On appeal, the assessee contended that the Income-tax Officer was not entitled to determine afresh, as it were, the original cost of the machinery to the assessee, but had merely to take the written down value of the previous year and to work out therefrom the written down value for the assessment year and then allow the statutory percentage of deduction. The AAC…

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