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TMI Blog2007 (6) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... y had not manufactured the goods? (B) Whether in the facts and circumstances of the case the Income tax Appellate Tribunal was right in law in holding that depreciation on the Plant Machinery is not allowable when assets merged in the block of assets in the earlier year? (C) Whether in the facts and circumstances of the case the Income tax Appellate Tribunal was right in law in disallowing depreciation on Plant Machinery when the trucks were continued to be part of that block of assets, which were used by the company? (D) Whether in the facts and circumstances of the case the Income tax Appellate Tribunal was right in law in holding that depreciation on Plant Machinery is not allowable on the ground of passive use of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery is concerned, it cannot be allowed to the assessee. The moment the assessee stopped the business of manufacturing, the plant and machinery would go out of the block of asset and therefore, and as they are not used for the purpose of business, no depreciation can be allowed to the assessee. This would also be in consonance with the allowance of depreciation only when the assets were used for the purpose of business. This further gets support from the provisions of Section 38(2) of the Act, which authorised the A.O. to disallow depreciation, if the asset were not used wholly or partly for purposes of business. The theory of passive use of the plant and machinery would also not of any help to the assessee. Nothing has been brought on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that it has not clearly expressed in the language it has employed. Section 3 of the Andhra Pradesh Non Agricultural Lands Assessment Act, 1963, speaks of where land is used for any industrial purpose , land is used for any commercial purpose , and land is used for any other nonagricultural purposes . The emphasis is on the words is used . For the purposes of levy of assessment on nonagricultural land at the rate specified in the schedule for land used for industrial purposes, therefore, there has to be a finding as a fact that the land is in fact presently in use for an industrial purpose. It is only land which is actually in use for an industrial purpose as defined in the said Act that can be assessed to nonagricultural assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation is to be allowed even if assets are not used during the present year. If one single asset out of the entire block has been discarded or not put to use by the assesee for its business consideration, for that ground alone partial depreciation cannot be disallowed. It was not a case where the assessee had sold the particular asset at a consideration which could be reduced for the purpose of computing WDV of block of assets as provided in section 43(6) (c). The assessee had discarded a particular asset during year, in question, meaning thereby that particular asset was not put to use during the year. It is true that under section 43(6)(c), it has been provided to reduce the amount of depreciation by reduction of the moneys payable in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not one of setting up a new unit, but the question was of expansion of the unit. The Tribunal had found that 2,63,412 meters of grey cloth was manufactured. Law does not require that there must be optimum production for granting the benefit. Law only requires that there must be use of plant and machinery for the purpose of business. The assessee was entitled to depreciation on the machinery. This case on fact help the revenue as the Court says there must be use of Plant Machinery for the purpose of business. In the case of Vindhyachal Distilleries Pvt. Ltd. (supra) the Madhya Pradesh High Court dismissing the appeal, held that the plant was installed in May 1992, and, the records clearly showed that on installation, it was commissioned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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