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2021 (2) TMI 268 - AT - Income TaxDisallowance of Depreciation claimed on the machineries purchased at the end of the year - assessee has submitted bills of machinery purchased on 26.02.2013 which were installed on 30.03.2012 by engineers of Voltas Ltd. a unit of Tata and the proof of visit for installation and commissioning of engineers were submitted, thus the machine was not only installed commissioned but also subjected to trial run by Engineers of TATA, that was ignored by the ld. CIT(A) - HELD THAT - As per the invoice and certificate issued by M/s. Voltas Limited, it has been certified that the machines were installed and commissioned on 30.03.2013. Thus, from these evidences, it is quite evident the machines were not only installed but ready to use as on 30.03.2013. Once this is an accepted position if the assets in the form of machinery equipment are kept ready for use, then same is eligible for depreciation as per the Income Tax Rules. As in the case of CIT vs. Integrated Technologies Ltd. 2011 (12) TMI 48 - DELHI HIGH COURT upheld the similar principle that it is not necessary that the plant and machinery owned by the assessee should be actually put to use in the relevant accounting year to justify the claim of depreciation and that even if the plant and machinery or other asset is kept ready for use in the assessee's business, the assessee would be entitled to depreciation - we hold that assessee is eligible for depreciation and same is directed to be allowed. - Decided in favour of assessee.
Issues:
Disallowance of depreciation claimed on machineries purchased at the end of the year. Analysis: The appeal was filed against the order passed by the Commissioner of Income Tax for the quantum of assessment for the Assessment Year 2013-14. The assessee raised grounds regarding the disallowance of depreciation claimed on machineries purchased at the end of the year. The assessee, engaged in manufacturing and trading of yarns and garments, added fixed assets worth a significant amount during the year, including machineries. The Assessing Officer disallowed depreciation, stating that the machinery was not put to use by the end of the financial year, as evidenced by certificates issued in the next financial year. The Commissioner (Appeals) upheld this finding. The counsel for the assessee argued that the machines were purchased in February and March and were installed and put to use on 30th March, 2012, supported by invoices and installation certificates. The machines were fully operational on 30th March, 2013, making them eligible for depreciation under the Income Tax Rules. The counsel relied on judgments by the Delhi High Court and the National Thermal Power Corporation case, emphasizing that assets kept ready for use are eligible for depreciation. The Departmental Representative, however, supported the findings of the Assessing Officer and Commissioner (Appeals), citing the certification dates by the Central Excise Department. After considering the submissions and evidence, the Tribunal found that the machines were indeed installed and commissioned on 30th March, 2013, as certified by Voltas Limited. The Tribunal referred to the judgments emphasizing that assets kept ready for use qualify for depreciation. Citing the NTPC case, the Tribunal highlighted the necessity of asset ownership and use for business purposes for depreciation allowance. Following the principles laid down by the High Court, the Tribunal held that the assessee was entitled to depreciation and directed it to be allowed. Consequently, the appeal of the assessee was allowed.
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