TMI Blog2006 (11) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes of business. The Bombay High Court in Dineshkumar Gulabchand Agrawal v. CIT[ 2003 (1) TMI 19 - BOMBAY HIGH COURT] , has ruled that the word used in section 32 of the Income-tax Act, 1961, denotes that the asset has been actually used and not that it is merely ready for use. The expression used , means actually used for the purposes of the business. A special leave petition filed against the said judgment stood dismissed. We are of the view that the kept ready theory is not available to the assessee for the purpose of claiming depreciation when the Legislature has chosen to use the word used we have to give a full meaning to it and avoid reading something not intended by the Legislation. After all, these benefits are prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessing authority concluded that the items of machinery on which depreciation was claimed were not put to use by the hospital and consequently he disallowed the depreciation on the imported machinery to the extent of Rs. 17,70,569 and on Indian machinery to the extent of Rs. 4,25,525 aggregating to Rs. 21,96,094 and an assessment order was passed to that effect. An appeal was filed before the Appellate Commissioner. The Appellate Commissioner directed the assessing authority to allow the further depreciation of a sum of Rs. 21,96,094 over and above what had been allowed by the assessing authority. The Revenue being aggrieved by the appellate order moved the Tribunal. The Tribunal upheld the claim of the assessee holding that when it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of depreciation. The Assessing Officer notices that the firm did not produce copies of prescriptions produced by the professionals. It also noticed that no prescription slips were made available to indicate that there was no recommendation to use these imported items of machinery or indigenous machinery which are under dispute for claim of depreciation. When the same was challenged before the appellate authority, the appellate authority notices that the machinery was kept ready for use but could not be used and that therefore the appellant is entitled for depreciation in terms of his order. He allowed the appeal in part. When the same was challenged by the Deputy Commissioner before the Tribunal, the Tribunal on the ground of keeping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leasing of the vehicle for the purpose of depreciation by the court. That judgment also stands on distinguishable facts. 10. CIT v. Union Carbide (I) Ltd. [2002] 254 ITR 488, is again a judgment of the Calcutta High Court. In the said case, the court went into the question as to whether the trial production could be termed as used for the purposes of section 32 of the Act . That judgment also is not available to the assessee in the case on hand. That was a case in which the court considered the question as to whether the machinery kept ready for use can be given the benefit of depreciation. In that case, it is seen that the Revenue conceded that ready for use would mean passing user of the asset . It was in the light of no contest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mahindra [2003] 11 SCC 749 was a case with regard to refund of entry tax. The court notices that this is not a case where a machine had only been displayed. In other words, the machine was started up and its working was shown. It was, therefore, used and it is of no consequence that the use was not for the purpose for which it was made. On the facts, the court ruled that the said machine was used. None of the case law cited by the assessee is of any help to the assessee in the given situation. On the other hand, there are direct judgments available in favour of the Revenue. 15. Federation of Andhra Pradesh Chambers of Commerce and Industry v. State of A. P. [2001] 247 ITR 36 (SC) ; AIR 2000 SC 2905 is a case that arose from Andhra Prades ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Act is a taxing statute, no court is justified in imputing to the Legislature an intention that it has not clearly expressed in the language it has employed. 17. From these judgments, what is clear to us is that for the purpose of depreciation, machinery has to be actually used in terms of the statute. A kept ready theory is not available in the light of the apex court rulings. 18. After noticing these judgments, the Madhya Pradesh High Court has ruled that the basic concept underlying the allowance of depreciation is that it should result, as consequence of the machinery being actually used or employed in the earning of income. 19. The Calcutta High Court in CIT v. Oriental Coal Co. Ltd. [1994] 206 ITR 682, also noticed Liqu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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