9911796707
TMI Blog1997 (12) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... ders of Rs. 15,32,092 on various dates as under:- Bill No. Date No. of Cylinders Amount JMC/63 10-02-1994 200 6,69,760 JMC/65 19-02-1994 90 3,01,392 JMC/70 26-02-1994 150 5,02,320 JMC/71 26-02-1994 12 40,186 2DA/1993-94 15-12-1993 2 7,415.20 ------------------ 15,21,073.20 Add: Transportation 11,019.00 ------------------ 15,32,092.20 ------------------ 3. As the cost of each cylinder was below Rs. 5,000 the assessee claimed the entire cost of purchase of cylinders at Rs. 15,32,092 as depreciation. The Assessing Officer opined that the cylinders were used for less than 180 days and, therefore, only 50 per cent of the total amount of depreciation was permissible. He accordingly allowed depreciation @ 50 per cent amounting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... third proviso to section 32(1)(ii) redundant. He further submitted that there was no necessity for the purchase of 454 new cylinders. He pointed out that during assessment year 1992-93, the assessee has manufactured gas to the tune of 99,170 Cu. Mtr., while in the year under consideration, the assessee manufactured 1,00,136 Cu. Mtr. The increase in the manufacturing is negligible. Thus, there was no necessity of any extra cylinder. In view of the above, he submitted that all the new cylinders purchased by the assessee might not have been put to use during the accounting year relevant to assessment year under consideration and, therefore, the depreciation allowed at 50 per cent of the actual cost of cylinders is quite in order and no interfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to depreciation in the case of any-block of assets and WDV of such block at such percentage which may be prescribed. The first proviso to the above clause provided that in a case where the actual cost of Plant & Machinery is below Rs. 5,000, the actual cost thereof will be allowed as a deduction in the year in which such machinery or plant is first put to use. The third proviso provides that where any asset falling within a block of assets is used, for the purpose of business, for a period of less than 180 days in the previous year, the deduction under this clause in respect of such asset shall be restricted to 50 per cent of the amount calculated at the percentage prescribed under this clause in the case of block of assets comprising su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his business or profession. The important point to be noted in this regard is that this first proviso speaks of the actual cost of plant and machinery and not block of assets. This may be taken to mean that the first proviso allowing the entire actual cost being Rs. 5,000 or less as depreciation in the year in which the as t is first se put to use, is related to individual item of plant and machinery and has nothing to do with block of assets. This inference can be arrived at by using even a different approach as discussed below. ....Therefore, plant and machinery with actual cost of Rs. 5,000 or less is not covered by "block of assets." And if it is not covered by block of assets, then it will not be covered by the third proviso (now se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inery or plant including those costing less than Rs. 5,000 will form part of a block of assets and be allowed depreciation at the specified rate in accordance with rule 5 of the Income-tax Rules" From the above, it is clear that by virtue of omission of first proviso to section 32(1)(ii) all items of plant & machinery costing less than Rs. 5,000 will also form part of block of assets. Therefore, till 31-3-1996, when first proviso was on statute book, items of plant & machinery whose cost does not exceed Rs. 5,000 does not form part of block of asset and actual cost thereof was allowed as a deduction by virtue of first proviso. In view of the above, we hold that the plant & machinery, the actual cost of which is below Rs. 5,000 and which is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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