TMI Blog1995 (9) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... ad claimed depreciation @ 100% on ammonia gas transportation tankers on the basis of Item No. III F(4) of the depreciation schedule. The AO called upon the assessee and assessee filed written submission dt. 25th March, 1989 asserting that gas cylinders used by the assessee company were meant for transportation of ammonia gas and were of specialised nature. Ammonia is highly poisonous, taxic and pungent gas and it has to be transported with due care as LPG. The cylinder is constructed under special process duly fitted with various types of safety devices. It was also mentioned that these tankers/cylinders like LPG cylinders are entitled for the same depreciation as allowed to LPG Cylinders. The AO was not satisfied with this contention of the assessee as he was of the opinion that in the relevant bill dt. 24th Jan., 1985 by which assessee company purchased these assets, it was transpired that only ammonia tanker and no gas cylinders were purchased. He accordingly disallowed the claim of the assessee. The learned CIT(A) allowed this claim of assessee against which Revenue is in appeal. 3. It is relevant to point out that the learned representative of the assessee placed before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put to use. He accordingly allowed the depreciation in respect of two trucks which were loaded on 31st March, 1986, treating them as used for business in the year under consideration and rejected the claim of assessee for depreciation in respect of remaining 8 trucks on the ground that these had not been put to use. 7. The assessee took the matter before CIT(A) and same pleas were raised before her. It also contended that assessee was in possession of all the trucks in the year under consideration which were granted fitness certificate and registration by RTO and licence under Indian Explosives Act prior to the end of the accounting year and those trucks were ready for use. It was further mentioned that the vehicles were fitted with gas cylinders of specialised nature and were ready on 14th March, 1986. The assessee company entered into an agreement with Mehta Carriers, Bombay in the first week of February, 1986 and these vehicles were handed over to them from 16th Feb., 1986 on the terms and conditions of the agreement. This again shows that these trucks were put to actual use. No doubt only two trucks were actually loaded and rest of the trucks remained unutilised on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there must be actual, effective and real user in the commercial sense and the user must be so linked with the business that it can be said that there is an immediate nexus between the user and the business, that is, the real business of the assessee. Their Lordships also held further that preparation for user will not amount to user and depreciation was not allowed. Summing up the arguments, learned Departmental Representative concluded that in the absence of actual user of the 8 trucks, as well as absence of any profits earned by those trucks in the accounting year relevant to the year under consideration, depreciation was rightly disallowed by the AO and the learned CIT(A) wrongly placed reliance on the decision of CIT vs. Vayithri Plantations Ltd. as in that case machines could not be used for labour unrest and those were quite different facts. 10. As against it, the learned counsel for the assessee pointed out that as observed by AO the licences were granted to all the ten trucks under Indian Explosives Act, on 25th/27th March, 1986 and they were allowed registration by RTO in the month of February then after 27th March, 1986 all the trucks/tankers should be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Carriers for operational purpose and that was sufficient to infer that all the trucks were put to use. On the basis of this case law, the contention of the learned counsel is that depreciation has rightly been allowed by the CIT(A) and her order requires no interference. 11. At the very outset it is relevant to point out that the earlier case giving out the interpretation of word 'used' is the case of Bhikaji Venkatesh vs. CIT (1937) 5 ITR 626 (Nag) in which their Lordships held that word 'used' appearing under s. 10(2)(iv) and in relation to (vi) of Old Act must mean "actually used" and not "generally used" or as being capable of use. No doubt in the case of CIT vs. Vishwanath Bhaskar Sathe while widening the definition of word 'used' by laying down that it not only embraces the actual user but it embraced passive as well as active user, their Lordships also took note of the earlier decision reported in the same ITR in the case of Bhikaji Venkatesh vs. CIT and distinguished the same on the pretext that in the case before them they had one covenant by which assessee was getting benefit out of these assets which might not have been used in the year under consideration and obligat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee placed all the 10 trucks for operation with M/s Mehta Carriers but that appears to be a recital alone. Clause-18 provides that assessee shall get certificate from the Chief Controller of Explosives and admittedly those certificates were obtained on 25th/27th March, 1986 and question of transporting ammonia prior to these certificates does not arise and this clause of para-2 is meaningless as trucks were not to be treated at the command of M/s Mehta Carriers before they were possessing requisite certificates under Indian Explosives Act, Further cl. 14 provides the mode of calculation of operation of a truck. A minimum of 940 trips in a period of 365 days were to be plied and the same shall be counted from the date of first trip loaded by the operators i.e. M/s Mehta Carriers. Once it has come on record that none of the 8 trucks were loaded the trips shall not start counting nor the assessee will be entitled to get any payment. Accordingly the assessee cannot be allowed to get any benefit out of the case law, relied upon by the learned counsel and by CIT(A) even though howsoever wide interpretation of 'used' for business may be there, the decision of Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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