Law:

Section:

Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of - Assessment years 2000-01 and 2001-02 -Whether actual user of machinery is not required with respect to discarded machinery and condition for eligibility for depreciation under section 32, that machinery has been used for purpose of business, would mean that discarded machinery has been used for purpose of business in earlier years for which depreciation has been allowed - Held, yes - Whether in such a case depreciation is to be computed after reducing scrap value of assets which have been discarded and written off in books of account for year under consideration from written down value of block of assets - Held, yes Words and phrases : Expression 'used for the purpose of the business', as occurring in section 32 of the Income-tax Act, 1961 FACTS The assessee claimed depreciation on assets written off in the years under consideration. The Assessing Officer disallowed the depreciation on the said assets on the ground that they were not used for the purposes of the business. However, on appeal the Tribunal directed the Assessing Officer to re-compute the depreciation after reducing scrap value of the assets, which had been discarded and written off in the books of account in the years under consideration from the WDV of the block of asset. On the revenue's appeal to the High Court : HELD The issue involved in the instant case needed to be looked at from two perspectives, firstly, whether passive use is included in the expression 'used for the purposes of the business' as found in section 32 and, secondly, whether at all there is any need of use of machinery for the business when machinery has been discarded in the previous year and such machinery formed part of a block of assets. [Para 4] The Delhi High Court, in the cases of CIT v. Refrigeration & Allied Industries Ltd. [2001] 247 ITR 12 /[2000] 113 Taxman 103 and Capital Bus Services v. CIT [1980] 123 ITR 404/4 Taxman 309, has held that as long as the machinery is available for use, though not actually used, it falls within the expression 'used for the purposes of the business' and the assessee can claim the benefit of depreciation.…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492