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TMI Blog2012 (10) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... unal took the view that the equipment and machinery which was not actually put to use related to the power generation and were to be installed after the construction of the projects was completed, the question referred to this Court for opinion shows that the equipment was “capital construction equipment” which was kept ready for use. Moreover, it does not stand to reason that the assessee would invest monies in acquiring power generation equipment long before the construction of the projects is completed. As under Sec 32 two conditions are necessary before an allowance by way of depreciation i.e. ownership of the asset & use of the assets for the purposes of the business interpreted to include a case where the asset is kept ready for u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and maintenance of thermal power stations and associated transmission network. The entire construction activity of the thermal power stations was entrusted to various reputed contractors by the assessee. The projects were mammoth in size and in order to enable the contractors to carry out construction work on schedule, the assessee purchased costly construction equipment which the contractors were unable to procure and let them out to the contractors for being used by them in construction work. After completion of the construction of the projects, the construction equipment was to be dispensed with as such equipment would not be of any use to the assessee thereafter. 3. In the relevant previous years, the assessee used some constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the years under reference. 4. Before the Tribunal the assessee had contended that the income shown by way of hire purchase was properly assessable under the head profits and gains of business and it was wrongly assessed under the head income from other sources . This claim was rejected by the Tribunal, holding that the income by way of hire charges cannot be considered to arise out of an activity of business. The Tribunal also dealt with the claim of the assessee that even if the equipment or machinery remained idle, though they were kept ready for use, they would be eligible for depreciation. The Tribunal opined that though in theory the claim was allowable, it cannot be allowed in the present case because the machinery and equipme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... survey equipment, water tankers, drilling machines, compressors, auto workshop equipment etc. None of the items of machinery represents power generation equipment which was required to be installed only after the construction of the three projects was completed. No such case had been made out by the Assessing Officer whose only ground of disallowance was that machinery or equipment kept ready for use in the construction projects, but not actually used, was not entitled to depreciation. The Tribunal had no material before it to take the view that the machinery kept ready for use, but not actually put to use, was to be installed after the projects were completed and did not represent equipment or machinery meant for construction of projects. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady for use and this factual position is not in dispute. Moreover, though the Tribunal took the view that the equipment and machinery which was not actually put to use related to the power generation and were to be installed after the construction of the projects was completed, the question referred to this Court for opinion shows that the equipment was capital construction equipment which was kept ready for use. Moreover, it does not stand to reason that the assessee would invest monies in acquiring power generation equipment long before the construction of the projects is completed. In any case the description of the machinery and equipment which was kept ready for use shows that no power generation equipment was involved. 7. In the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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