Case Law Details
RELEVANT PARAGRAPH
2. The crux of the matter is: what is the meaning to be ascribed to the expression “used for the purposes of the business” as found in Section 32 of the Income Tax Act, 1961. The provision of Section 32 pertains to depreciation. The contention of the Revenue is that with respect to any machinery for which depreciation is claimed under Section 32, the same cannot be allowed unless such machinery is used in the business and since discarded machinery is not used in the business, therefore, with respect to the discarded machinery no depreciation can be allowed.
3. Both the appellants and the respondents have predicated their arguments on the ground that whether passive use is included or excluded from the expression “used for the purposes of the business ” as found in Section 32. The Revenue contends that passive use is excluded whereas the assessee contends that passive use is included. The Revenue relies upon Deputy Commissioner of Income-Tax vs. Yellamma Dasappa Hospital, 290 ITR 353, Commissioner of income-tax vs. Oriental Coal Ltd., 206 ITR 682 and Dineshkumar Gulabchand Agrawal vs. Commissioner of Income-Tax and Anr., 267 ITR 768. The counsel for the assessee relied upon Commissioner of Income-Tax vs. Nahar Exports Ltd., 296 ITR 419, Commissioner of Income-Tax vs. Vir Khanna, 306 ITR 14.
4. The issue, therefore, needs to be looked at from two perspectives, firstly, whether passive use is included in the expression “used for the purposes of the business ” and, secondly, whether there is at all any need of use of machinery for the business when machinery has been discarded in the previous year and such machinery formed part of a block of assets.
7. On the aspect of passive user, there are two decisions of two Division Benches of this Court in the cases reported as CIT Vs. Refrigeration & Allied Industries Ltd., 247 ITR 12 and Capital Bus Services vs. CIT, 123 ITR 404. In this view of the matter, we need not refer the judgments of any other Court as we are bound by the earlier judgments of this Court. In fact, we also agree with the ratio of both the decisions which hold that as long as the machinery is available for use, though not actually used, it falls within the expression “used for the purposes of the business” and the assessee can claim the benefit of depreciation. Looking at the facts from this point of view, an actual user is not required as has been contended by the Revenue.
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