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2012 (10) TMI 720 - HC - Income TaxDepreciation in respect of capital construction equipment - disallowance as machinery or equipment kept ready for use in the construction projects, but not actually used - Held that:- Certain machinery and equipment were let out on hire to the contractors and they used them in the construction of the projects. Depreciation was allowed in respect of those equipment and machinery under Section 56(ii). Some machinery and equipment relating to the construction of the projects were not actually put to use, though they were kept ready for use and this factual position is not in dispute. Moreover, though the Tribunal took the view that the equipment and machinery which was not actually put to use related to the power generation and were to be installed after the construction of the projects was completed, the question referred to this Court for opinion shows that the equipment was “capital construction equipment” which was kept ready for use. Moreover, it does not stand to reason that the assessee would invest monies in acquiring power generation equipment long before the construction of the projects is completed. As under Sec 32 two conditions are necessary before an allowance by way of depreciation i.e. ownership of the asset & use of the assets for the purposes of the business interpreted to include a case where the asset is kept ready for use, but is not actually put to use as decided in CIT vs. Refrigeration and Allied Industries Ltd [2000 (8) TMI 37 - DELHI HIGH COURT]. Thus the description of the machinery and equipment which was kept ready for use shows that no power generation equipment was involved the Tribunal erred in rejecting the assessee’s claim for depreciation on capital construction equipment kept ready for use, though not actually used, for the assessment years 1979-80 and 1980-81 - in favour of assessee.
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