Depreciation

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ANKIT (Querist)

23 March 2009 Hi,

Please let me know if a business is shutting down temporarily & its assets are not in use for the time being (approx. 8-12 months).

1)Can we provide depreciation on that assets in the books?

2) can we claim depreciation as an expenses while calculting business income for Income Tax purpose?

----Ankit Doshi

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

23 March 2009 1) No
2) No
Citation:- CIT Vs. Oriental coal Co ltd (1994) 206 ITR 682 (Cal). In this case factory of the assessee remained under lock-out throughout the previous year and during that period the plant and machinery had not been actually used for the purpose of the business for a single day,depreciation on machinery was not allowable for the relevant previous year.

ANKIT

ANKIT (Querist)

23 March 2009 Thank You Very Much Sir..But if the assets are used for a single day in a year then what will be the status? and also is there are any further latest Citation available where the decision was in favour of asssessee?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

24 March 2009 If you feel that the 'user' test can be applied in the cited situation pl refer
1)Forest Industries Travancore ltd Vs. CIT (1964) 51 ITR 329(Ker).
2)CIT Va Indian Tea & Timber Trading Co (1996)221 ITR 857 (Gauhati).
3) CIR Vs Nahar Exports ltd (2007) 163 Taxmann 518 (P&H).

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