TMI Blog2009 (8) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... rded and written off in the books of accounts for the year under consideration from the written down value of the block of assets - Actual user of the machinery is not required with respect to discarded machinery and the condition for eligibility for depreciation that the machinery being used for the purpose of the business would mean that the discarded machinery is used for the purpose of the business in the earlier years for which depreciation has been allowed - 203/2009 & 60/2009 - - - Dated:- 19-8-2009 - A. K. SIKRI and VALMIKI J. MEHTA, JJ. Ms. P.L. Bansal with Mr. Paras Chaudhary, Ms. Anshul Sharma, Advocates, for the appellant. Mr. Vijay Nair, Mr. Lalan Sinha, Mr. Rajat Juneja, Advocates, for the respondent. JUDGMENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excluded whereas the assessee contends that passive use is included. The Revenue relies upon Deputy Commissioner of Income-Tax vs. Yellamma Dasappa Hospital, 290 ITR 353, Commissioner of income-tax vs. Oriental Coal Ltd., 206 ITR 682 and Dineshkumar Gulabchand Agrawal vs. Commissioner of Income-Tax and Anr., 267 ITR 768. The counsel for the assessee relied upon Commissioner of Income-Tax vs. Nahar Exports Ltd., 296 ITR 419, Commissioner of Income-Tax vs. Vir Khanna , 306 ITR 14. 4. The issue, therefore, needs to be looked at from two perspectives, firstly, whether passive use is included in the expression "used for the purposes of the business" and, secondly, whether there is at all any need of use of machinery for the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead of profits chargeable to tax on the aspect of discarded machinery}. 7. On the aspect of passive user, there are two decisions of two Division Benches of this Court in the cases reported as CIT Vs. Refrigeration Allied Industries Ltd., 247 ITR 12 and Capital Bus Services vs. CIT , 123 ITR 404. In this view of the matter, we need not refer the judgments of any other Court as we are bound by the earlier judgments of this Court. In fact, we also agree with the ratio of both the decisions which hold that as long as the machinery is available for use, though not actually used, it falls within the expression "used for the purposes of the business" and the assessee can claim the benefit of depreciation. Looking at the facts from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter allowing inter alia an adjustment for scrap value, yet, on the other hand user would be required of the discarded machinery which use is not possible because of various reasons viz. the age of the machinery, or that it has become obsolete as new technology has come in and so on. We thus hold that the discarded machinery may not be actually used in the relevant previous year as long as it is used for the purposes of business in the earlier years. 9. We, therefore, answer the two questions of law by holding that the ITAT was correct in law in directing the Assessing Officer to re-compute depreciation after reducing the scrap value of the assets which have been discarded and written off in the books of accounts for the year under consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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