TMI Blog1978 (10) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned with assessment year 1969-70. The assessee is a limited company and, in connection with what is referred to on the record as Expoxy Plant, machinery worth Rs. 8,33,032 was purchased in the previous year relevant to the assessment year under consideration but the machinery was not yet installed though it had been purchased by the assessee. The capital employed was worked out so far as Expoxy Plant was concerned at Rs. 7,91,734. The ITO disallowed the claim for the relief under s. 80J of the I.T. Act, 1961, on the ground that the machinery was not yet installed and, therefore, was not in use. Therefore, according to the ITO, this particular amount of capital was not employed in the business. The AAC rejected the contention of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of r. 19A, the aggregate of the amounts representing the values of the assets as on the first day of the computation period, of the undertaking or of the business of the hotel to which the said s. 80J applies shall first be ascertained in the manner set out in the sub-rule and in sub-cl. (ii),in the case of assets acquired by purchase not entitled to depreciation, their actual cost to the assessee is to be taken. Under s. 32 of the I.T. Act, before an assessee can become entitled to claim depreciation, it must be shown that the building, machinery, plant or furniture owned by the assessee has been used for the purpose of business or profession, and the reason behind this is sound because, to the extent to which the building, plant, mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich has not been installed, that should be included on the assets side in computing the capital employed for the purpose of relief under s. 80J. We may point out that the conclusion that we have reached has also been reached by the Calcutta High Court in CIT v. Indian Oxygen Ltd. [1978] 113 ITR 109 and by the Karnataka High Court in Ravi Machine Tools (P.) Ltd. v. CIT [1978] 114 ITR 459. We may also point out that, as indicated by the Calcutta High Court in Indian Oxygen's case, the House of Lords in England in Birmingham Small Arms Co. Ltd. v. IRC [1951] 2 All ER 296, has by a majority interpreted the words " capital employed " to mean the money invested in the purchase price of the assets as distinguished from the actual user of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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