TMI Blog2021 (3) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... her held that it would amount to passive use and would qualify for depreciation.- Decided in favour of assessee. - T.C.A.No. 269 of 2011 - - - Dated:- 1-3-2021 - Hon'ble Mr. Justice M. Duraiswamy And Hon'ble Mrs. Justice T.V. Thamilselvi For the Appellant : Mr. T. Ravikumar Standing Counsel For the Respondent : Mr. Venkatanarayanan JUDGMENT M. DURAISWAMY, J. Challenging the order passed in I.T.A.No.1186/Mds/2010 in respect of the Assessment Year 1999-2000 on the file of the Income Tax Appellate Tribunal, Chennai, ''B'' Bench (for brevity, the Tribunal), the Revenue has filed the above appeal. 2.1 The assessee company M/s. Lakshmi General Finance Limited got merged to M/s. Sundaram Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kept ready for use, it would not e sufficient to claim depreciation. The Special Leave Petition filed before the Hon'ble Supreme court was also dismissed by the Apex Court. 2.4 Subsequently, the assessee filed an appeal before the Income Tax Appellate Tribunal, challenging the order passed by the Commissioner of Income Tax (Appeals) and the Tribunal rejected the case of the assessee and observed that even though the production of electricity was negligibly small, the facts remained that production had started. The Tribunal held that the assessee is entitled to 50% depreciation on two windmills, but remitted the issue of actual quantification to the Assessing Officer. Challenging the order passed by the Income Tax Appellate Tribunal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd on 31.03.2005. Further, statement was recorded from the Executive Engineer of the Board under Section 133(b) of the Act, wherein he appears to have stated, generation not started but work is over. Armed with this statement, the assessing officer stated that production of electricity as on 31.3.2005 was less than one unit and at best could be treated as trial production and the assessee having not produced electricity before 31.03.2005, cannot be stated to have put the wind mill to use for the purpose of business. It is not in dispute that the certificate issued by the competent authority states that electricity was generated on 31.3.2005, however the amount of electricity which was generated was only 0.080 units. This, according to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of business. In CIT -Vs- Escorts Tractors Ltd 56 Taxmann.com 333(Delhi) , the plant and machinery kept ready for use was held to be enough to grant depreciation. In CIT -Vs- Southern Petrochemical Industries Corporation Ltd 311 ITR 202 (Mad) , the claim for depreciation on spare parts, which were stand-by items, was held permissible. In CIT -Vs- Geo Tech Construction 244 ITR 452 (Kerala) , it was held that an asset can be said to be in use when it is kept ready for use. It is beneficial to refer to paragraph 5 of the said judgment, which reads as follows. 5.Section 32 of the Act deals with depreciation. There is no requirement that the assets should be used for the whole of the assessment year in question. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requiring the active employment or the actual working of a machinery, plant or building in the business. On the other hand, the wider meaning will include not only cases where the machinery, plant, etc., are actively employed but also cases where there is, what may be described as a passive user of the same in the business. An asset can be said to be in use when it is kept ready for use. 8. In CIT -Vs- Refrigeration Allied Industries Ltd 323 ITR 672 , the machineries were kept under good working condition so that it could be used at any moment, all expenses relating to the said machinery (cold storage) were allowed to be claimed as depreciation. In CIT -Vs-Shahbad Co-op Sugar Mills Ltd 12 Taxmann.com 421 (Punjab Haryana) , ..... X X X X Extracts X X X X X X X X Extracts X X X X
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