Is Depreciation allowed on Stand by Items also

Dear nikki,

Yes provided they are ready for use -

Use’ means ‘kept ready for use’ and not ‘actual use’ - Allowance for normal depreciation allowance does not depend upon the actual working of the machinery. It is sufficient if the machinery in question is employed by the assessee for the purposes of the business and for no other business and it is kept by him ready for actual use in the profit-making apparatus the moment a need arises - Capital Bus Service (P.) Ltd. v. CIT [1980] 123 ITR 404 (Delhi)/Forest Industries Travancore Ltd. v. CIT [1964] 51 ITR 329 (Ker.).

Further the above thing has been held by various other judgements also........

Dear Nikki,

I should share that there are equally no. of contradictory judgements for this -

Mere preparations for use will not suffice - Mere preparation for use cannot amount to user. 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, i.e., the real business of the assessee - CIT v. Suhrid Geigy Ltd. [1982] 133 ITR 884 (Guj.)/CIT v. Jiwaji Rao Sugar Co. Ltd. [1969] 71 ITR 319 (MP)(App.).

I said only that becos at present assesses are taking benefit of those judgements & claiming depreciation

The asset must have been used for the purpose of business or profession to claim depreciation.

An asset said to be in use when it is kept ready for use - CIT Vs. Geo Tech Construction Corpn.[2000] 244 ITR 452

Depreciation claimed by a transport undertaking spare engine kept in store for use in case of need, eligible for depreciation - CIT Vs. Pepsu Road Transport Corpn. [2002] 121 Taxman 232

Moreover any forced idleness of the machinery can not disentitle for depreciation.