DIPAK KUMAR SEN, J.

( 1 ) UNDER Section 256 (1) of the Income-tax Act, 1961 (" the Act "), the following questions have been referred as questions of law arising out of the order of the Tribunal for the opinion of this court at the instance of the assessee : "1. Whether, on the facts and in the circumstances of the case, in computing the capital employed for working out the deduction under Section 80j of the Income-tax Act, 1961, the depreciation in respect of the assets already allowed has to be considered ?

( 2 ) WHETHER, on the facts and in the circumstances of the case, in computing the capital employed for the purpose of deduction under Section 80j of the Income-tax Act, 1961, the written down value of the assets has to be considered as per the income-tax records and not as per the assessee's books ? "2. The following questions have also been referred for the opinion of this court as questions of law arising out of the order of the Tribunal at the instance of the Revenue : " 3. Whether, on the facts and in the circumstances of the case, an appeal preferred by an assessee who had not filed any objection to the draft assessment order as provided under Sub-section (2) of Section 144b of the Income-tax Act, 1961, is maintainable under Section 246 (1) of the Income-tax Act, 1961 ? 4. Whether, on the facts and in the circumstances of the case and on proper interpretation of Section 80j of the Income-tax Act, 1961, borrowed capital is to be included in the capital computation for the purpose of deduction under Section 80j of the Income-tax Act, 1961 ? 5. Whether, on the facts and in the circumstances of the case, the average capital and not the capital as it stood on the first day of the year under consideration should be taken as the capital employed for the purpose of deduction under Section 80j of the Income-tax Act, 1961 ? 6. Whether, on the facts and in the circumstances of the case, the current revenue liabilities constitute a part of the capital employed for the purpose of deduction under Section 80j of the Income-tax Act, 1961 ?"

( 3 ) IN Lohia Machines Ltd. v. Union of India [1985] 152 ITR 308, the Supreme Court has held that Rule 19a of the Income-tax Rules, 1962, does not suffer from any infirmity, is valid in its entirety and that by incorporating the provisions of the said Rule 19a in the amended Section 80j of the Act, with retrospective effect, the Finance Act, 1980, only clarified the law and is also valid.

( 4 ) RULE 19a (2) (i) provides that in determining the value of the assets for computation of the capital employed, if the assets are entitled to depreciation, their written down value would be taken into account. Therefore, the written down value of the assets has to be determined in accordance with the Act. It is settled that in the case of assets acquired in the accounting year, the written down value means the actual cost to the assessee. In the case of assets acquired before the accounting year, the written down value means the actual cost of acquisition less the aggregate of all deductions of depreciation actually allowed (not merely allowable) to the assessee in past years. To the extent as above, the depreciation already allowed would have to be considered.

( 5 ) THE answer to the two questions raised by the assessee is given as stated above.

( 6 ) FOLLOWING the decision of the Supreme Court in Lohia Machines Ltd. 's case [1985] 152 ITR 308, we answer question No. 4 referredat the instance of the Revenue in the negative and in favour of the Revenue. It is made clear that borrowed capital is not to be included in the capital computation.

( 7 ) QUESTION No. 5 referred at the instance of the Revenue is answered by stating that the capital as it stood on the first day of the year under consideration should be taken to be the capital employed. This answer is also on the basis of the decision of the Supreme Court in Lohia Machines Ltd. 's case [1985] 152 ITR 308.

( 8 ) IN view of the answer to question No. 4, question No. 6 referred at the instance of the Revenue has to be answered in the negative and also in favour of the Revenue. If borrowed capital cannot form part of the capital employed, there is no reason why revenue liabilities should be held to be part of the capital employed.

( 9 ) THE learned advocate for the Revenue has pressed for an answer to question No. 3 referred at the instance of the Revenue. The learned advocate submitted that inasmuch as the assessee in the instant case did not file any objection to the draft assessment under Section 144b (2) of the Act, it should be held that the assessee had accepted the assessment without any objection and was not entitled to file an appeal from the same. In support of his contention, the learned advocate cited the case of Sri Makant Barihar Gir v. CIT [1941] 9 ITR 246 (Pat ). In this case, the Patna High Court refused to give leave to the assessee to appeal to the Privy Council against an order passed by the High Court rejecting an application under Section 66 (3) of the Indian Income-tax Act, 1922, for a direction to the Commissioner to state a case before the High Court. This decision is of little relevance to the question before us.

( 10 ) THE learned advocate also cited Ramanlal Kamdar v. CIT [1977] 108 ITR 73, where it was held by a Division Bench of the Madras High Court that where the assessee did not object to the proposed revision of assessment, no appeal lay to the Appellate Assistant Commissioner from the revised assessment and, consequently, further appeal to the Tribunal and reference to the High Court should also be held to be incompetent. The High Court declined to answer the question referred. The learned advocate also cited a decision of the Allahabad High Court in M. K. Industries v. Union of India [1979] 119 ITR 286. In that case, the assessee had sought to impugn an order of transfer of the assessment circle of the assessee. It was found that after notices of the date of hearing had been duly served, the assessee did not appear at the hearing and no objection was filed to the proposed transfer. The Central Board of Direct Taxes proceeded on the basis that the assessee had no objection to the transfer. On that ground, the High Court refused to set aside the order of transfer in a writ petition filed by the assessee.

( 11 ) IN the instant case, it is not disputed that the order of assessment has been passed under Section 143 (3) of the Act, though a proceeding under Section 144b was initiated at the outset. At that stage, the assessee did not file any objection. Under Section 246 (c), a specific right has been given to the assessee to file an appeal against an order of assessment under Section 143 (3), where the assessee objects to the quantum of income of the assessee or to the quantum of tax determined. The right of appeal is a valuable right and unless expressly taken away or abandoned, it cannot be held that the assessee has abandoned or lost such right by implication. In the case of Ramanlal Kamdar, the assessee through its partner appeared before the Income-tax Officer and stated that the assessee had no objection to the proposed revision. In the instant case, the assessee never appeared nor accepted the proposed assessment at the draft stage. The decision is distinguishable from the instant case on facts. The decision in M. K. Industries' case has no application in the facts of the instant case as the said decision is on the question of allowability of a writ petition in the facts of that case.

( 12 ) FOR the reasons as aforesaid, we answer question No, 3 in the affirmative and against the Revenue.

( 13 ) THE reference is disposed of accordingly.

( 14 ) IN the facts and circumstances, there will be no order as to costs.