TMI Blog2007 (6) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 15.12.2006 in ITA No.977/Mds/03 for the assessment year 1997-98 raising the following substantial questions of law, "(a) Whether in the facts and circumstances of the case, the Tribunal was right in allowing depreciation on the film roll leased out which was not used by the lessee and returned in the same year? (b) Whether in the facts and circumstances of the case, the Tribunal was right in allowing depreciation on an asset which was neither used nor kept ready for use, applying the theory of passive user?" under the following facts and circumstances of the case. 2.. The relevant assessment year is 1997-98. The assessee is doing business of hire purchase and leasing finance. For the assessment year, the assessee bought po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , who allowed the claim of the assessee, following the ratio laid down by this Court in Commissioner of Income Tax v. Vayithiri Plantation Ltd. (128 ITR 675), wherein it was held that the assets "kept ready for use" were eligible for depreciation/development rebate. 5. The Tribunal confirmed the order of the Commissioner on the appeal preferred by the Revenue. Hence, the present appeal. 6. The substantial questions of law raised by the Revenue revolves on the pivotal issue as to the application of the theory of passive user for the purpose of allowing depreciation on the assets. 7. In Commissioner of Income Tax v. Vayithiri Plantation Ltd. (128 ITR 675), the issue for consideration, before a Division Bench of this Court, was when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used because of labour unrest, it had to be taken that the machinery had been used for the purpose of business as contemplated under Section 33 of the Act and accordingly, the assessee would be entitled to development rebate. 11.While so holding, the Division Bench, followed the ratio laid down in Commissioner of Income Tax v. Viswanath Bhaskar Sathe (5 ITR 621), Liquidators of Pursa Ltd. v. Commissioner of Income Tax (25 ITR 265) and Whittle Anderson Ltd. v. Commissioner of Income Tax (79 ITR 613).(Bom). 12.In Commissioner of Income Tax v. Viswanath Bhaskar Sathe (5 ITR 621), the Bombay High Court has held that the word 'used' in Section 10(2)(vi) of the Income Tax Act, 1922, has to be given a wider meaning and embraces passive as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Whittle Anderson Ltd. v. Commissioner of Income Tax (79 ITR 613), where the Court had again dealt with the case of machinery owned by a person who had entered into a pooling arrangement regarding cotton ginning and pressing, following the decision of the Apex Court in Liquidators of Pursa Ltd. v. Commissioner of Income Tax (25 ITR 265), held that although two out of four presses which were directly in the pooling arrangement were to remain idle while the two presses worked, it was clear that the owners of those presses, which were idle, had to keep them ready for use at any time and the contingency for their use could also arise at any time, upon the terms of the agreement and with regard to the definition of the word 'used', it was obs ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
