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TMI Blog1977 (10) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provisions of s.38(2) of the IT Act, 1961 of a portion of the depreciation admissible under s.32(1)(ii) of the IT Act, 1961 in respect of motor cars owned by the assessee company but admittedly used also for personal purposes by the Directors of the company. The ITO disallowed the sums of Rs.1,050, Rs.1,765 and Rs.2,077 in the respective asst. yrs. 1973-74,74-75 and 75-76 out of the depreciation claim, being of motor car depreciation under s. 38(2) which was upheld by the AAC in appeal. When the issue was considered by the Tribunal, Judicial Member did not agree with the contention of the assessee's representative that the disallowance made under s.40-A (5) would include a portion of the depreciation allowance in respect of the car a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ralised. That apart the provisions of s.38(2) require the ITO (or for that matter the appellate authority) to determine the proportion to be disallowed only having regard to the user of the purposes of the business. When one has regard to the user of the asset for 275 days out of 365 days in the year as in the present case and having regard to the fact that under the rules as they now stand even if the asset was utilised only for one day (if there was no user for private purposes) such asset would have been entitled to the full depreciation, I consider the conclusion which I have arrived at is the conclusion to be drawn. He accordingly allowed as a deduction the amounts disallowed by the ITO and referred to earlier." 4. Before me the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cement factories one of which worked only for a period of two months during the relevant year. The IT authorities contended that the assessee was only entitled to such amount of depreciation allowance under s. 10(2) (vi) as was proportionate to the period during which the factory was actually working. Again in the Andhra Pradesh High Court in the case of Vankedam Lakshminarayana vs. Commissioner of Income-tax(2) had considered s.10(3) of the 1922 Act. At pages 530-531 their Lordships have observed. "We have to deal with another theory propounded by the Tribunal and which is sought to be sustained by the learned counsel for the Department namely that the concept underlying s.10(3) is that the asset used partly for business purposes and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be allowed in proportion to such period" here also there is no such provision and even if the assets were used for business purpose for a day, full depreciation admitted would be allowed. But the words "not wholly used for the purpose of business" would mean that they have not been used exclusively for the purpose of business as shown at page 419 of 13 ITR page 415 referred supra. Similarly in 43 ITR their Lordships have ruled out as quoted earlier, the concept that the asset used partly for business purposes and partly for non-business purposes should be regarded as half the asset used for business purposes. Further as pointed out by the learned Departmental Representative, the learned authors Kanga and Pakjhiwala in their book "The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat of part user for business purposes and non-user for non-business purposes is the effect of s.38(2). From the underlined portion in the phrases in s.10(3) of the IT Act, 1922 and s.38(2) of the IT Act, 1961 on the inspiration drawn by the Accountant Member to hold that the assessee will be entitled to full depreciation whether that difference between the two phrases would make any impact on the issue I hold that since I have expressed my view that the restriction to a proportionate part of the amount of deduction would operate where any building or machinery is not exclusively used for purpose of business or profession and further that any building or machinery or plant would be not exclusively used for the purpose of business if it had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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