Appeal to the High Court — Finding of facts recorded

The Supreme Court was concerned with the block period April 1, 1988, to February 24, 1999. The main contention advanced on behalf of the Department was that for allowance of deduction for depreciation, the asset must not only be owned by the assessee but it must also be used for the purposes of business or profession of the assessee. It was the case of the Department that the word ‘used’ in S. 32 of the Income-tax Act, 1961, refers to actual use of the asset; that having regard to the scheme of the Income-tax Act, 1961, and particularly, after the introduction of the concept of ‘block of assets’, actual use is the only requirement apart from ownership for allowance of depreciation u/s.32. It was also the case of the Department that an important question of law arose for determination before the High Court; that the High Court has failed to examine the said question; and that it had erred in dismissing the tax appeals only on the ground that no substantial question of law had arisen.

The Supreme Court observed that in the present case, the Tribunal had examined the statements of certain witnesses and after analysing the material on record, it had come to the conclusion on facts that there was nothing to show that the machinery, namely, expellers remained idle for the entire block period April 1, 1988 to February 24, 1999. The Supreme Court after having examined the record itself, agreed with the view expressed by the Tribunal on the facts of the present case. The Supreme Court was of the view that hence, it is not necessary for it to go into the larger question of law regarding the connotation of the word ‘used’ appearing in S. 32 of the Income-tax Act, 1961. The Supreme Court dismissed the appeal for the aforesaid reasons. The question of law was however kept open.