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Section 32(1)(iii) of the Income-tax Act, 1961 - Depreciation - Terminal depreciation - Assessment year 1972-73 - Whether where assessee had never used nor could have used machinery for purpose of business in relevant assessment year because of having sold same, deduction could be claimed under section 32(1)(iii) for that year - Held, no FACTS During the assessment year 1972-73, corresponding to the previous year ending 25-9-1971, the assessee sold two assets, the sale deed of which was executed on 30-4-1971 although the possession of the assets had been given to the purchaser on 1-5-1970. The Assessing Officer rejected the assessee's claim for deduction under section 32(1)(iii) on the ground that the assessee had not used the machinery in question at any time during the previous year. On appeal, the Commissioner (Appeals) upheld the ITO's order. On further appeal, the Tribunal, however, allowed the claim of the assessee. On reference: HELD In the instant case, the fact that the machinery was not available for being used by the assessee was clear from the finding of the Tribunal that the purchaser was using it for his own business. Moreover, the assessee had delivered possession of the property on 1-5-1970 to the purchaser. Therefore, for the year ending 25-9-1971 the machinery had never been used nor could have been used by the assessee for the purpose of business. The Supreme Court in Liquidators of Pursa Ltd. v.CIT [1954] 25 ITR 265, has held that if the machinery and plant had not at all been used at any time during the accounting year, no allowance could be claimed. Therefore the Tribunal was not justified in allowing the assessee's claim. CASE REVIEW Liquidators of Pursa Ltd. v. CIT [1954] 25 ITR 265 (SC) followed and relied upon. CASES REFERRED TO Liquidators of Pursa Ltd v. CIT [1954] 25 ITR 265 (SC). P.K. Ravindranatha Menon and N.R.K. Nair for the Applicant. C.M. Devan and C.N. Ramachandran Nair for the Respondent. JUDGMENT Menon, J.-IT Reference No. 19 of 1989 is at the instance of the Commissioner whereas IT Reference No. 20 of 1989 is at the instance of the assessee. The question referred at the instance of the department reads: "Whether, on the…

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