TMI Blog2012 (2) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... ade operational depreciation is therefore allowable – Decided against the Revenue. - ITA 1132/2011, ITA 1133/2011, ITA 1134/2011 - - - Dated:- 6-2-2012 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V. EASWAR, JJ. For Appellant : Mr. Sanjeev Sabharwal, sr. standing counsel For Respondent : Mr. Anil Sharma, Adv. SANJIV KHANNA, J: (ORAL) 1. These appeals by the Revenue under Section 260A of the Income Tax Act, 1961 pertain to the assessment years 2002-03, 2005-06 and 2006-07 and are directed against the order dated 13.4.2011 passed by the Income Tax Appellate Tribunal ( tribunal‟, for short). 2. Ld. counsel for the appellant-revenue submits that Assessing Officer has rightly disallowed the claim of depreciation on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice that to start machineries specially in the sugar mill, if they are not kept ready for production, takes a minimum 2 to 3 months time to start which is very much costly for the sugar mill during the season time which is hardly 4 to 5 months are required to commence it and therefore, the machineries have to be kept at ready and in working so as to commence the production without any loss of time. Under these circumstances, the claim of depreciation is justified. 4. The CIT(Appeals) and the tribunal, having considered the factual background of the present case, have come to the conclusion that the machinery was actually and in fact ready for use and hence depreciation is to be allowed. The findings recorded by the tribunal read as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 1315 qtls of sugar was produced till that date in financial year 2006-07. It is also submitted that the time lag between the actual re-starting of the mill after the order of Hon ble Delhi High Court has to be considered in the light of this aspect that sugar mill is a seasonal industry and it does not run through out the year. It is submitted that in the intervening period, the plant was ready for use throughout and the same could not be used for the reasons beyond the control of the assessee company and hence, there was passive user of the plant and therefore, as per various judgments of Hon ble Delhi High Court cited above, claim of the assessee regarding depreciation should be allowed. 11. We have heard the rival submissions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r book in which the assessee company has worked out net loss of Rs.1,31,46,774/- after claiming depreciation as per IT Rules of Rs.1,32,69,049/-. The Profit Loss Account of the assessee company for the year ended 31.3.2002 is available on page No.20 of the paper book in which the assessee has claimed deduction on account of administrative and selling expenses of Rs.1,87,864/-, employee s emoluments Rs 1,78,680/-, repairs and maintenance Rs 21,774/- and misc. expenses of Rs. 32,967/-. Neither in the original assessment nor in the re-assessment order passed by the Assessing Officer on 12.11.2007, there is any disallowance out of these expenses claimed by the assessee as noted above. Out of depreciation claim of the assessee also of Rs. 1.32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t used by him in his business so that the net income (total income) is duly arrived at. There is no factual dispute that the assets in question were owned by the assessee. In Machinery Manufacturers Corporation Ltd. v. CIT [1957] 31 ITR 203(Bom), it was observed that the expression used in section 10(2)(vi) of the Indian Income-tax Act, 1922 (hereinafter referred to as the old Act ), corresponding to section 32 of the Act has to be given a wider meaning. The expression includes passive as well as active user. In CIT v. Dalmia Cement Ltd. [1945] 13 ITR 415 (Patna) and CIT v. Viswanath Bhaskar Sathe [1937] 5 ITR 62 (Bom), it was observed that depreciation might be allowed in certain cases even though the machinery was not in use or was kep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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