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Issues involved: Interpretation of deduction under section 32 of the Income-tax Act for purchase of bottles leased out as a business.
Summary: The High Court of Andhra Pradesh addressed the issue of whether the Tribunal was correct in allowing the deduction under section 32 of the Income-tax Act for the purchase of bottles leased out as a business. The petitioner argued that the deduction should only apply to en bloc purchases exceeding Rs. 5,000, not for single bottles. The Tribunal relied on a previous court decision to classify the bottles as "plant" eligible for depreciation. The court examined the relevant provisions of section 32(1) and the first proviso, which specified conditions for allowable deductions based on the cost of machinery or plant. In a previous case, it was established that bottles used in the business were considered essential tools and thus qualified as "plant" for depreciation purposes. The court concluded that individual purchases of items integral to the business could also qualify for depreciation if they were deemed essential for business operations. Therefore, the court upheld the Tribunal's decision and dismissed the petition seeking a reference. The judgment emphasized that the key factor in determining eligibility for depreciation under section 32(1) is whether the article in question is considered "plant" for the purpose of the business or profession. The court rejected the argument that deductions should only apply to bulk purchases, stating that individual items integral to business operations could also qualify for depreciation. The decision was based on the interpretation that items essential for conducting business activities, such as the bottles in this case, could be classified as "plant" and thus eligible for depreciation under the Income-tax Act.
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