SATISH CHANDRA, J. - (1.) THE assessee is a registered firm. It carries on the business of supply of electricity to the town of Budaun. It is governed by the Electricity (Supply) Act, 1948 (Act No. 54 of the 1948). It claimed depreciation allowance on the service connections valued at Rs. 1,02,776/- as on April, 1962. The ITO repelled this claim on the ground that for the year 1964-65, the Act of 1961 was applicable. In terms of S. 43 (1) r/w S. 43 (6) (b), written down value of the assets would be the actual cost of the asset to the assessee, reduced by that portion of the cost thereof as has been met directly or indirectly by any other person or authority. The assessee had admittedly recovered a sum of Rs. 1,44,157/- upto 31st March 1962 in respect of service connections. Since these recoveries exceeded the written down value as on 1st April 1962, no amount was deductible towards depreciation.
(2.) ON appeal, the AAC as well ad the Tribunal took the view that on 1st April 1962, the written down value of the service connections as calculated according to the provisions of 1922 Act have to be taken. Thus the value of the service connections for purposes of depreciation had to be fixed at Rs. 1.02,776/-. The definition given in the new Act was not applicable. At the instance of the CIT the Tribunal has referred the following question of law for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the AAC's order allowing depreciation on the basis of the written down value of the service connections being taken at Rs. 1,02,776/- as on 1st April 1962 ?
(3.) THIS very question came up for consideration before a bench of this Court in CIT vs. Saharanpur Electric Supply Co. 1976 CTR (All) 329 : 1976 UPTC 726 (All). In that case, the question was in respect of the asst. yr. 1963-64. This Court held that depreciation to be allowed for asst. yr. 1963- 64. This Court held that depreciation to be allowed for asst. yr. 1963-64 in respect of assets acquired before 1st April 1961 should be determined by a reference to the written down value as determined in accordance with the provisions of sub-s. (1) and (6) of S. 43 of the IT Act, 1961. In substance, they ruled that the provisions of the Act of 1961 were applicable to determination of the amount of the actual cost of the assets. This decision is binding on us. Following it, we answer this question in the negative in favour of the Department and against the assessee. The other question referred to us is : "Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the requirements of S. 34 (3) were satisfied by the assessee even though an amount equal to 75 per cent of the Development Rebate to the actually allowed was not debited to the P&L A/c the relevant previous year"? ;