2009 (8) TMI 27

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ets, which have been discarded and written off in the books of accounts for the year under consideration from the WDV of the block of asset? (b) Whether provisions of Section sub-clause (iii) to Section 32(1) R/W Section 43(vi)(c)(B) are applicable to the present case when the assessee had not complied with the primary conditions for eligibility of depreciation? 2. The crux of the matter is: what is the meaning to be ascribed to the expression "used for the purposes of the business" as found in Section 32 of the Income Tax Act, 1961. The provision of Section 32 pertains to depreciation. The contention of the Revenue is that with respect to any machinery for which depreciation is claimed under Section 32, the same cannot be allowed unless .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... - on 1.11.1996. The written down value at the end of the financial year ending on 31.3.1999 was Rs. 2,32,07,141/-. The depreciation claimed during this year was Rs. 58,01,785/-. The depreciation was allowed in the original assessment completed under Section 143(3) of the Act. The Assessing Officer, however, after having recorded reasons, re-opened the assessment under Section 147 of the Act and issued notice under Section 148 to the assessee. The Assessing Officer sought explanation from the assessee as to why the depreciation amount should not be disallowed on the assets written off in the year under consideration since they were not used for the purposes of the business. The assessee claimed that it was entitled to benefit of depreciation .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... tion (iii) of Sub-Section (1). Obviously, when a thing is discarded it is not used. Thus use and discarding are not in the same field and cannot stand together. However, if we adopt a harmonious reading of the expressions "used for the purposes of the business" and "discarded" then it would show that "used for the purposes of the business" only means that the assessee has used the machinery for the purposes of the business in earlier years. It is not disputed that in the facts of the present case, and as discussed above, that the machinery in question was in fact used in the previous year and depreciation was allowed on the block of assets in the previous years. Taking therefore a realistic approach and adopting a harmonious construction, w .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X