TMI Blog2006 (5) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... r dt. 20th Jan., 1998, is erroneous: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in allowing the depreciation and investment allowance, when the commencement of production was not proved by the assessee ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in allowing wages and interest paid to RFC, which also include personal interest, when the commencement of production was not proved and the claim was otherwise also inadmissible? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in giving the finding that assessee had commenced commercial production during the year under consideration? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute the sale amount stated in P L a/c nor did he dispute placing of order for purchase of raw material. But he did not agree that the manufacturing activity started on 1st Oct., 1987, solely on the premise that the assessee could not on admitted facts have commenced commercial production on 1st Oct., 1987 and concluded that the machinery though acquired in September, 1987 and installed during previous year was not used at all in the previous year relating to assessment year. Hence, the assessee was neither entitled to depreciation under Section 32 nor to investment allowance under Section 32A because necessary precondition for claiming such allowance that the machinery must be used for the business of the assessee during the previous yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at commencement of commercial production by the assessee during the relevant previous year is not a condition for allowing deduction as investment allowance or depreciation. Therefore, putting emphasis on the commercial production as on 1st Oct., 1987 was wholly irrelevant for the purpose of considering claim of the assessee to depreciation on the machinery acquired and installed in the previous year for the purpose of his business and his claim for investment allowance on that basis. 8. Even from the order of CIT(A) it is clear that assessee has clearly stated that during these proceedings he has put the machine in use for two days to commence trial production. The production which came out was of substandard quality. Therefore, further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t into trial production, but when he did not get the standard product he did not take further production. This justified meager turnover. In these circumstances the findings reached by the Tribunal remain findings of fact based on relevant consideration. The whole burden of Revenue's contention is emphasis on showing date of commencement of commercial production, which was wholly irrelevant for the purpose of considering deduction on account of depreciation and investment allowance. What is needed is that, the machines must be used for assessee's business. Whether the assessee is able to successfully commence commercial production or commercial production is delayed on account of defect in trial production does not affect the allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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