9911796707
TMI Blog1994 (1) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... -out throughout the previous year and the assets of the unit had not been used for a single day during the relevant previous year ?" This reference relates to the income-tax assessments of the assessee company for the assessment years 1983-84 and 1984-85. The assessee was carrying on coal mining business which was nationalised in 1973. During the relevant previous year, the assessee-company derived income from carrying on a business in fabrication jobs and handling, etc. The Barakar Unit of the assessee-company was under lock-out throughout the previous years relevant to the assessment years 1983-84 and 1984-85. The assessee company claimed depreciation in respect of assets at its Barakar Unit. The Assessing Officer found that these asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nery had actually been used for the purposes of business as contemplated under sub-section (1) of section 32 of the Act. Reliance was placed on behalf of the assessee on the decision in Capital Bus Service (P.) Ltd. v. CIT [1980] 123 ITR 404 (Delhi). The assessee company, a transport operator maintaining a fleet of buses, kept ready for use four buses for being run on contract basis on occasions such as marriages, private tours and the like. On account of lack of demand, those buses were not actually employed by the assessee for more than 30 days in the previous year relevant to the assessment year 1961-62. The Delhi High Court held that the expression "used for the purpose of the business" comprehended cases where the machinery was kept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is actually carried on and the profits of which are assessable under section 10(1). The word 'used' has been read in some of the pool cases in a wide sense so as to include passive as well as active user. It is not necessary, for the purposes of the present appeal, to express any opinion on that point on which the High Courts have expressed different views. It is, however, clear that in order to attract the operation of clauses (v), (vi) and (vii), the machinery and plant must be such as were used, in whatever sense that word is taken, at least for part of the accounting year. If the machinery and plant have not at all been used at any time during the accounting year no allowance can be claimed under clause (vii) in respect of them a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's factory did not work, though he received his share of profits out of the pool. It was held by the Nagpur High Court that the assessee was not entitled to depreciation on the machinery and plant because they were not used for the purposes of business. On the other hand, in CIT v. Viswanath Bhaskar Sathe [1937] 5 ITR 621 (Bom), the assessee owned a ginning factory and was a member along with the owners of other ginning factories on a pool. During the year of assessment, the factory was not employed in the work of ginning in accordance with the pooling agreement, though he received his share of profits. The assessee was, however, under an agreement bound at his own expense to keep his gins and other working plant and machinery in good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two previous years relevant to the assessment years 1983-84 and 1984-85 now in reference before us. As already stated earlier, one of the conditions specified in sub-section (1) of section 32 for grant of depreciation is the actual user of plant and machinery for the purposes of business in certain cases like a pooling arrangement or where plant and/or machinery is kept as stand-by to provide against breakdown, even a passive user may entitle the assessee to claim depreciation under section 32 because in both these cases, the machinery is kept ready for use in the factory. But, in this case, the Barakar Engineering Unit remained under lock-out throughout the two previous years relevant to the assessment years 1983-84 and 1984-85. During the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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