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Issues Involved:
1. 100% depreciation on gas cylinders/tankers. 2. 40% depreciation on 10 trucks. Detailed Analysis: 1. 100% Depreciation on Gas Cylinders/Tankers: The first issue pertains to the 100% depreciation allowed by the CIT(A) on gas cylinders/tankers, which was initially disallowed by the AO. The assessee company, engaged in the manufacture and sale of Sodium Metal Chlorina and Chemicals, claimed depreciation at 100% on ammonia gas transportation tankers based on Item No. III F(4) of the depreciation schedule. The AO disallowed this claim, asserting that only ammonia tankers, not gas cylinders, were purchased as per the relevant bill dated 24th Jan., 1985. However, the CIT(A) allowed the claim, and the Revenue appealed against this decision. The Tribunal noted that a similar claim for 100% depreciation on gas cylinders/tankers transporting hazardous ammonia gas had been allowed in the case of Mysore Ammonia Supply Corpn. vs. ITO. The learned Departmental Representative conceded this point, merely relying on the AO's order. Following the precedent set by the Tribunal in the Mysore Ammonia Supply Corpn. case, the Tribunal concluded that the CIT(A) rightly allowed 100% depreciation on gas cylinders/tankers in favor of the assessee. 2. 40% Depreciation on 10 Trucks: The second issue involves the 40% depreciation claimed by the assessee on 10 trucks, which the AO disallowed for 8 out of the 10 trucks. The AO observed that only two trucks were actually used by the end of the accounting year, and thus allowed depreciation only for those two trucks. The remaining 8 trucks were not considered for depreciation as they were not put to actual use during the relevant period. The CIT(A) reversed the AO's decision, allowing depreciation on all 10 trucks. The CIT(A) considered that the trucks were ready for use, having obtained fitness certificates and registration from the RTO and licenses under the Indian Explosives Act before the end of the accounting year. The CIT(A) also noted that the trucks were handed over to Mehta Carriers, Bombay, under an agreement, indicating readiness for use. The Revenue appealed against this finding, arguing that the words "used for the purpose of business" in s. 32(1) of the Act imply actual use, not merely readiness for use. The learned Departmental Representative cited the Supreme Court decision in Liquidators of Pursa Ltd. vs. CIT, which held that "used for the purpose of business" means enabling the owner to carry on the business and earn profits. The Gujarat High Court in CIT vs. Suhrid Geigy Ltd. also emphasized actual, effective, and real user in the commercial sense. The Tribunal examined the arguments and the agreement between the assessee and Mehta Carriers. It found that the trucks were not used for business as required by the relevant statutory provisions and judicial interpretations. The Tribunal noted that no profits were earned from the 8 trucks, and thus, the condition of actual use was not met. Accordingly, the Tribunal reversed the CIT(A)'s decision and upheld the AO's order, disallowing depreciation for the 8 trucks. Conclusion: The Tribunal allowed the Revenue's appeal partially, confirming the disallowance of depreciation for the 8 trucks by the AO. The cross-objection of the assessee, supporting the CIT(A)'s order, was partly allowed to the extent of the 100% depreciation on gas cylinders/tankers.
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