2010 (2) TMI 1233 - AT - Income Tax

Summary

Issues involved: Appeal by revenue against CIT(A) order for Assessment Years 2004-05 and 2005-06 regarding depreciation on imported machinery and Visi Refrigerators.

Assessment Year 2005-06:
The revenue contended that the machinery was not used for business purposes as the assessee was not engaged in manufacturing and the machinery was located at another premises. CIT(A) had allowed depreciation based on High Court decisions. The assessee argued ownership of machinery and its essential use in manufacturing fruit juices. The tribunal analyzed the agreements between the assessee and Dynamix, concluding that the machinery was indeed used for the business of the assessee, entitling depreciation.

Visi Refrigerators Depreciation:
The revenue disputed depreciation claim on Visi Refrigerators, alleging lack of business use. The tribunal found that the refrigerators were installed at dealers' premises to maintain product quality, supporting the business purpose. The A.O. failed to prove non-usage, and the presence of refrigerators at various outlets indicated business use, justifying the depreciation claim.

Decision:
The tribunal dismissed both appeals by the revenue, upholding CIT(A)'s decision on depreciation for both imported machinery and Visi Refrigerators for Assessment Years 2004-05 and 2005-06. The decision was based on the machinery's essential role in the assessee's business operations and the business necessity of the refrigerators at dealers' premises.