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TMI Blog1996 (5) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... re used for three months and thereafter they were moved to Saudi Arabia, where, the appellant was hoping to secure a construction contract. Evidently, no such contract was secured and in August, 1988, the appellant imported the same into India under a scheme which permitted such import by users of machines for projects abroad purchased out of funds generated by the project. The total consideration paid by the appellant for the three used machines was 30,642.00 Kuwait Dinars. The Collector accepted this as the base price and gave 4% depreciation for three months of user of the machines and denied depreciation for two years and nine months on the ground that they remained idle and were not used during the period. Value was determined accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsa Ltd. v. Commissioner of Income-tax, Bihar - AIR 1954 SC 253 and the decision of the Delhi High Court in Capital Bus Service (P) Ltd. v. Commissioner of Income-tax, New Delhi - 1980 Tax Law Reports 756 in which the two former decisions have been considered. In all the three decisions, the provision to the effect building and machinery used for the purpose of business came up for consideration. In the case decided by the High Court of Bombay, the pooling agreement contained a clause which bound the assessee at his own expense to keep his gins and other working plant and machinery in good repair and condition and working order even when the factory was not working so that it may be ready for actual use at any moment. The High Court held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or the Rules framed thereunder. 5. Broadly speaking, depreciation means diminished value of goods. Value may be diminished on account of variety of reasons, such as wear and tear, non-use, obsolescence or the like. Depreciation on account of wear and tear is a well-known concept. So also depreciation on account of obsolescence. The question for consideration is whether depreciation is required to be allowed where machine or equipment are not put to use or remain idle during a particular period. The answer to the question depends on whether the value of the goods would diminish on account of mere non-user or remaining idle. Generally speaking, even mere non-user or idle state can affect the value of goods; the effect of passage of time w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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