depreciation u/s 32

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rahul nagori

rahul nagori (Querist)
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02 May 2010 passive use assets will be allowed for depreciation ?

sivadas chettoor

sivadas chettoor (Expert)
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02 May 2010 Your attention is invited to the judgment in Dineshkumar Gulabchand Agrawal v. CIT [2004] 267 ITR 768 where depreciation had been claimed though the vehicle was not actually used but ready for use. The learned Bench considering the word " used" was pleased to hold that the word denotes actual use and not merely ready for use and in that context observed that the expression " used" means actual use for the purpose of business. A special leave petition filed was dismissed. Looking at the observations in the judgment what will be apparent is that the court understood the expression " used" to mean used for the purpose of the business, however, made distinction with respect to the vehicle which was ready for use.

siva208@yahoo.com

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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03 May 2010 The expression ‘used’ for the purposes of section 32 should have a wider meaning so as to include not only actual user but also passive user.
Citation : - CIT v. India Tea & Timber Trading Co. [1996] 221 ITR 857 (Gauh).

taxindiaconnect

taxindiaconnect (Expert)
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03 May 2010 The question here in seems to be whether an assets which was earlier used, now no longer in use, whether depreciation can be allowed on that. In this understanding, my view is that taxation provisions are very clear on this point. Since the deprecation under income tax Act is allowable on block of asset basis, till the time even a single asset exits in the block depreciation will be allowed on the entire block.

On the point mentioned by My dear friend BC, I agree with him 100% on the meaning of expression "Used" There are plethora of cases where the courts have held that the deprecation is allowable even if the assets are ready for use.

taxindiaconnect

taxindiaconnect (Expert)
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