2002 (2) TMI 13 - HC - Income Tax

Depreciation allowance - staff selection expenses pre-operative expense - commencement of production Department contended that u/s 32 depreciation is available only in respect of building, machinery, plant or furniture owned by the assessee. It is also submitted that if the amount has been spent which is not liable to the cost of building, machinery, plant or furniture then no depreciation is allowable and it raises a question of law - we allow this application and direct the ITAT, to state the statement of case and refer the following question of law Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that except the staff selection expenses of Rs.13,124 all the other pre-operative expenses were to be capitalised for the purposes of depreciation allowance?

Summary

The High Court of Rajasthan allowed the reference application under section 256(2) of the Income-tax Act, 1961, for the assessment year 1977-78. The court directed the Income-tax Appellate Tribunal to refer a question of law regarding the capitalization of pre-operative expenses for depreciation allowance. The court found a referable question of law despite the Tribunal's rejection of the application.