1. The question referred to this Court under Section 66 (I) of the Indian Income-tax Act was:
Whether the assessee is entitled to the depreciation on boats inherited by him from his late father?
2. The Tribunal agreeing with the Departmental Officers, answered that question in the negative on a construction of the statutory expression ' actual cost to the assessee ' in Section 10(5) of the Act. No attempt was made at any stage to verify what the quantum of depreciation allowance should be in case the assessee was entitled to a depreciation allowance despite the fact that the boats in question having been inherited by him, there was no actual expenditure incurred by the assessee himself in acquiring these boats. In Section 10(5), Clauses (a) and (b) define the written down value with reference to the 'actual cost to the assessee'. It was only subsequent to the assessment year with which we are now concerned, 1951-52, that Section 10(5)(c) was inserted by the Amending Act of 1953. Section 10(5)(c) provided for a further definition of the written down value, to mean:
In the case of assets acquired by the assessee by way of gift or inheritance, written down value as in the case of the previous owner or the market value thereof, whichever is less.
3. While we are unable to accept the contention of the learned Counsel for the assessee, that the scope of the amendment effected by Section 10(5)(c) was wholly explanatory of the law as it stood prior to 1953, we are unable to accept the contention of the learned Counsel for the Department, that it was only under Section 10(5)(c) any provision was made for granting depreciation allowance for assets which came to the assessee by way of gift or inheritance. We should like to make it clear that we are confining ourselves only to a question of inheritance now. We accept the contention of the learned Counsel for the assessee, that the principle laid down by the Rangoon High Court in In re Commissioner of Income-tax Burma v. E. Solo-man and Sons I.L.R. (1933) Rang. 514 should apply and that the assessee should be declared entitled to the depreciation allowance, the quantum of which is yet to be ascertained, though the allowance is claimed with reference to property, to acquire which the assessee himself did not incur any expenditure because he got it by inheritance from his father. It is true that the statutory expression Page, C.J., had to consider in In re Commissioner of Income-tax Burma v. E. Soloman and Sons I.L.R. (1933) Rang. 514 was the original cost thereof to the assessee. That was subsequently amended and the statutory expression that was in force in the year of assessment 1951-52 was 'actual cost to the assessee'. We do not think there is any real difference between these statutory expressions. Page, G.J., observed:. whereas in the present case the assessees acquired property otherwise than by purchase, in my opinion the original cost thereof to the assessee means and is the real value of the property at the time when the assessees acquired it....
4. We respectfully agree. Besides, that decision held the field without any dissent till Section 10(5) was amended in 1953, when the principle also underlying that decision was given statutory recognition. In our opinion that interpretation should also govern the statutory expression ' actual cost to the assessee '. The limitation subsequently imposed by Section 10(5)(c), that if the written down value in the hands of the predecessor was different from the market value on the date of inheritance, the lower of the two should prevail, was not applicable to assessments in 1951-52.
5. The learned Counsel for the assessee referred to the observations of Lord Atkin at pages 217-8 in Corporation of Birmingham v. Barnes 19 T.C. 195. But as pointed out by Page, C.J., in In re Commissioner of Income-tax Burma v. E. Solomon and Sons 19 T.C. 195 the wording in the English Finance Act differs materially, and the question at issue has to be determined really on the language of the Indian Income-tax Act.
6. We answer the question in the affirmative and in favour of the assessee. That in effect means the Tribunal will yet have to ascertain the quantum which as the Tribunal itself has pointed out, there was no occasion to determine so far.
7. The assessee will be entitled to the costs of this reference. Counsel's fee Rs. 250.