9911796707
TMI Blog1997 (12) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... under:- Bill No. Date No. of Cylinders Amount JMC/63 10-02-1994 200 6,69,760 JMC/65 19-02-1994 90 3,01,392 JMC/70 26-02-1994 150 5,02,320 JMC/71 26-02-1994 12 40,186 2DA/1993-94 15-12-1993 2 7,415.20 ------------------ 15,21,073.20 Add: Transportation 11,019.00 ------------------ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age 124. 5. The learned D.R. on the other hand submitted that the third proviso to section 32(1)(ii) would be squarely applicable and whatever depreciation was permissible, under section 32(1)(ii) or under first proviso thereof, will be restricted to 50 per cent of the normal depreciation, if the asset is used for less than 180 days during the year under consideration. He submitted that if the contention of learned counsel for the assessee is accepted, it would make the third proviso to section 32(1)(ii) redundant. He further submitted that there was no necessity for the purchase of 454 new cylinders. He pointed out that during assessment year 1992-93, the assessee has manufactured gas to the tune of 99,170 Cu. Mtr., while in the year und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this clause in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed under this clause in the case of block of assets comprising such asset. Provided also ** ** 7. From the perusal of the above, it is seen that as per section 32(1)(ii), the assessee is entitled to depreciation in the case of any-block of assets and WDV of such block at such percentage which may be prescribed. The first proviso to the above clause provided that in a case where the actual cost of Plant Machinery is below Rs. 5,000, the actual cost the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by learned Author, Dr. Avdhesh Ojha in his book "Depreciation under Income-tax Company Law". At page 127, he has written- "According to the first proviso to section 32(1)(ii) (Proposed to be omitted by Finance Bill, 1995) where the actual cost of any machinery or plant does not exceed five thousand rupees, the actual cost thereof shall be allowed as a deduction in respect of the previous year in which such machinery or plant is first put to use by the assessee for the purposes of his business or profession. The important point to be noted in this regard is that this first proviso speaks of the actual cost of plant and machinery and not block of assets. This may be taken to mean that the first proviso allowing the entire actual cost bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... block of assets was not in existence. Thereafter sweeping changes were made in the provisions relating to depreciation. 23.2 Further, it was seen that this provision was being misused by claiming 100 per cent depreciation on a large number of assorted items below Rs. 5,000. This enabled the assessees to reduce their taxable profits by claiming 100 per cent write off in the year of purchase. The Finance Act, 1995, has deleted the first proviso to section 32(1)(ii) and all items of machinery or plant including those costing less than Rs. 5,000 will form part of a block of assets and be allowed depreciation at the specified rate in accordance with rule 5 of the Income-tax Rules" From the above, it is clear that by virtue of omission of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 180 days". Thus, the Assessing Officer has. himself accepted the user of all the cylinders for the purpose of business. He has disallowed the 50 per cent depreciation because cylinders were used for less than 180 days. The learned Departmental Representative is a representative of the Assessing Officer. He cannot dispute a fact, which is accepted by the Assessing Officer himself. Therefore, when the Assessing Officer himself has accepted the user of the cylinders, the learned D.R. cannot dispute it. In view of the legal position and the facts as discussed above, we hold that the assessee is entitled to 100 per cent depreciation on gas cylinders purchased and used during the year under consideration amounting to Rs. 15,32,092. Ground Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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