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TMI Blog2017 (11) TMI 1607X X X X Extracts X X X X X X X X Extracts X X X X ..... said to have been set up. Mere breakdown of machinery or technical snags that may have developed after the trial run which had interrupted the continuation of further production for a period of time cannot be held ground to deprive the assessee of the benefit of depreciation claimed - Decided in favour of assessee. - Income Tax Appeal No. 421 of 2015 - - - Dated:- 6-11-2017 - A. S. Oka And A. K. Menon, JJ. Mr.Suresh Kumar for the Appellant Mr.J.D.Mistry, Senior Advocate a/w. Mr.A.K. Jasani for the Respondent JUDGMENT ( Per A. K. Menon) 1. In this appeal under section 260A of the Income Tax Act, 1961 being aggrieved by the order dated 27th August, 2014 in ITA/4771/Mum/2005 by which the revenue's appeal was dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal, the Commissioner of Income Tax (Appeals) confirmed the disallowance finding that there was a long gap between the first trial run, subsequent trial runs and commercial production. The CIT (Appeals) confirmed the disallowance by concluding that the user of the assets during the year should be actual, effective and real user in the commercial sense and that some technical snag had developed in the plant and therefore the trial run was stopped. 5. The Tribunal found that there was no merit in the action of the authorities below in denying the claim of depreciation and the Tribunal relied upon an order of this Court in CIT vs. Industrial Solvents Chemicals Pvt. Ltd., (Mumbai) 119 ITR 615 In the facts of that case it was found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of manufacture of 'Clinker', the assessee would be entitled to claim depreciation. The Tribunal also relied upon the decision of the Gujarat High Court in ACIT vs Ashima Syntex 251 ITR 133 (GUJ) which held that even trial production would fall within the ambit of used for the purpose of business and once used the assessee could not be deprived of the benefit of a claim for depreciation merely on the basis that the period of use was very short. 7. The Tribunal followed the decision of this Court in Industrial Solvents (supra) and held that once the plant commenced operations and a reasonable quantity of product is produced, the business is set up even if product was substandard and not marketable. In the case of Industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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