R.S.PATHAK,J. - (1.) THE Tribunal has referred the following question for the opinion of this Court : "Whether, on the facts and in the circumstances of the case, the provisions of S. 23A(1) were rightly applied;"
(2.) BEFORE we come to the controversy itself, a few preliminary facts are necessary. M/s Ramchand and Sons, a partnership firm, owned a sugar mill and carried on the business of manufacturing and selling sugar. During the previous year relevant to the asst. year 1953 -54 the assessee was incorported as a private limited company for the purpose of carrying on the same business, the assets of which it acquired from the firm. Although the written down value of the assets was entered in the books of the firm at Rs. 11,53,612 they were purchased by the assessee at Rs. 41,69,681.
(3.) IN the assessment proceeding for the asst. year 1953 -54, the first year of assessment in respect of the assessee, the ITO declined to accept the valuation of Rs. 41,69,681 as the basis for allowing depreciation on the assets, and acting under the first proviso to S. 10(5)(a) of the Indian IT Act, 1922, he determined the cost of the assets to the assessee at Rs. 24,08,110 and allowed depreciation on that basis. The AAC set aside the assessment and directed the ITO to redetermine the cost after recording the evidence of an expert.;