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TMI Blog2013 (6) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.143(3) on 14/12/2010 by ACIT(OSD)-1, Range-4, Abad, disallowing depreciation of Rs.8,39,656 is wholly illegal, unlawful and against the principles of natural justice. 2. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) of the IT Act dated 14.12.10 were that the assessee- company is in the business of construction of long distance oil/gas pipelines on contract basis. For the year under consideration, as per the revised return, the total income was declared at Rs.2,17,07,120/-. It was noted by the AO that the assessee had shown hire income of Rs.1,10,84,777/-. The hire charges were stated to be received from Essar Construcitons India Ltd. and Maytas Infra Ltd. Since the assessee had shown the rental inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company is disallowed and added back to the total income of the assessee." 4. When the matter was carried before the first appellate authority, the action of the AO was confirmed primarily on the ground that the prime condition to claim the depreciation is that the machinery should be used for the business of the assessee. In the absence of the use of the machinery for the purpose of the business of the assessee, but the income was received as hiring income, the action of the AO was affirmed. 5. With this brief background, we have heard both the sides and also perused the orders of the authorities below. We are not in agreement with the view of the Revenue Department. The admitted factual position is that the assessee is in the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hired-out those machinery and shown hiring income at Rs.1,10,84,777/-. By showing this income, the assessee has not given any loss to the Revenue, rather by showing this income the Revenue got benefited. This is not the case of the Revenue that the machineries in question have not at all been used by the assessee for the single day during accounting period under consideration. In a situation when a machinery has been used, for any period in a financial year for the purposes of the business of the assessee, then the assessee is entitled for the depreciation u/s.32(1) of the Act. So the result of this discussion is that whether the machinery is rented out or not; had no consequence on the allowance of depreciation on the machinery which had f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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