TMI Blog1996 (6) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... in fact as well as in law in allowing depreciation to the assessee, when the factory did not work during the relevant year ? (3) Whether the Tribunal did not err in law as well as in facts in holding impliedly that there was passive use of machinery during the year ? " However, the Tribunal referred only questions Nos. 2 and 3 for opinion of this court. The facts for the purpose of answering the said questions may be stated as follows : The assessee is a firm registered under the Indian Partnership Act. The firm follows the mercantile system of accounting. Its main source of income consists of purchase and sale of sugarcane and lorry hire receipts. The Assessing Officer, amongst others, found that the assessee in Mikir Hills Khandsa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned standing counsel for the Revenue. None appeared on behalf of the assessee. We requested Dr. A. K. Saraf, learned counsel to assist this court as amicus curiae and Dr. Saraf agreed to assist the court as requested. The contention of Mr. Joshi was that unless the machinery was actually used deductions were not allowable. In this regard, Mr. Joshi drew our attention to section 32(1) of the Act and contended that the section itself was very clear that for claiming deduction for depreciation of buildings, machinery, plant or furniture owned by the assessee and those must be used for the purposes of business or profession. The meaning of the expression " used " appearing in sub-section (1) of section 32 of the Act was very relevant for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ink that the word ' used ' in this section may be given a wider meaning and embraces passive as well as active user. Machinery which is kept idle may well depreciate, particularly during the monsoon season. It seems to me that the ultimate test is, whether, without the particular user of the machinery relied upon the profits sought to be taxed could have been made ; and as I read the agreement in the case, the profits of the assessee during the year under assessment could not have been earned except by his maintaining his factory in good working order, and that involves the user of the factory and the machinery." The Patna High Court in the case of CIT v. Dalmia Cement Ltd. [1945] 13 ITR 415 took a similar view and held thus (page 418) : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual use in the profit-making apparatus the moment a need arose. In CIT v. Vayithri Plantations Ltd. [1981] 128 ITR 675, the Madras High Court held that the expression " used " for the purpose of the business could also be applicable in case of machinery kept in readiness for such user. In CIT v. G. N. Agrawal (Individual) [1996] 217 ITR 250, the Bombay High Court dealt with a case where the question arose whether the assessee was entitled to deduction for depreciation on the written down value of the trucks which were under repair throughout the relevant accounting years but were used for the purpose of the business earlier and later. The only controversy that was raised was as to whether the trucks could be said to have been not used ..... X X X X Extracts X X X X X X X X Extracts X X X X
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