Ranganathan, J. - (1.) The appellants are all electric supply undertakings situated in various parts of the country. All the appeals relate to the assessment year 1962-63 or later. They raise a common question regarding the computation of depreciation on service lines installed by the assessees, a part of the expenditure incurred in connection with the installation of which is recovered by the assessees from consumers of electricity.
(2.) Depreciation, under the Income-tax Act, is computed as a percentage of the "written down value" of the asset in question. The Income-tax Act, 1961 came into force on 1-4-1962. Section 43(6) of the Act defines "written down value" thus: " Written down value means - "(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depreciation actually allowed to him under this Act, or under the Indian Income-tax Act, 1922 (11 of 1922, or any Act repealed by that Act, or under any executive orders issued when the Indian Income-tax Act, 1886 (2 of 1886, was in force." The Act also defines the expression actual cost in Section 43(1). It reads thus: "Actual cost" means 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.
(3.) It will be seen from the main paragraph of sub-section (l) of Section 43 that it does not really define what is meant by the actual cost of an asset to the assessee; it only contains a gloss that, whatever the expression may mean, that figure has to be reduced by that portion of it, if any, as has been met directly or indirectly by any other person or authority. The question before us arises partly due to this circumstances and partly due to the earlier legislative history of these provisions.;