Chakravartti, C.J. - (1.) Only a few facts require to be stated in order to explain how the question referred in this case arises.
(2.) The assessee, Messrs. Kamani Industrial Bank is a limited company and on 6-4-1938, it acquired from one of its creditors some cinematographic machinery at the price, as was claimed, of Rs. 3,94,000/-. That figure of the cost of the machinery was accepted in successive assessments of the assessee, but was doubted for the first time in the course of the assessment for the year 1946-47. That year, the Income-tax Officer seems to have 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/-, as claimed and as also allowed in previous assessments, 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 assessed, 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. Necessarily, in the next assessment also, that for the year 1947-48, he made a similar order.
(3.) The assessee's contention is that the Income-tax Officer was not entitled to determine afresh, as it were the original costs of the machinery to the assessee, but had merely to take the written down value of the previous year and to work out there-bom the written down value for the assessment year and then allow the statutory percentage of deduction. The authorities below did not agree and decided against it. Thereupon, the Tribunal was required to refer the matter to this Court which has been done in the form of the I following question: Whether the Income-tax Officer, dealing with the assessments for the years 1946-47 and 1947-48, was entitled in law to go behind the original cost which was accepted by his predecessor ever since the assessment year 1939-40?;