Depreciation on plant and machinery purchased on hire-purchase system. - Income Tax - 1097/CBDT

INSTRUCTION NO. 1097/CBDT Dated : September 19, 1977 Section(s) Referred: 32 Statute: Income - Tax Act, 1961 Attention is drawn to the Board's Circular No.9 of 1943 (R/DI F.No 27(4)/IT/43) dated 23rd March, 1943, (printed below) clarifying that depreciation on plant and machinery purchased on hire-purchase system would be admissible at the usual rates if the conditions stated therein were fulfilled. The Board, vide its letter F.No.27 (20)-IT/59 dated 26th June, 1959 (copy enclosed) further clarified that the same basis should be followed for development rebate also. 2. It has now been brought to the notice of the Board that in view of objections raised by Revenue Audit in certain cases some Income-tax Officers are not allowing depreciation and development rebate on machinery purchased on hire-purchase system even though the conditions laid down in the aforesaid circular and letter are fulfilled. 3. The Instructions contained in the circular and letter referred to above have not been withdrawn by the Board and are still in forece and as such, should continue to be followed. This may please be brought to the notice of the officers working in your charge.