Depreciation on leased plant and machinery allowed where leasing itself formed the assessee's business activity.

Depreciation on plant and machinery owned by the assessee and leased out with a tea estate was allowable as a business deduction because the lease rent was accepted as business income and the letting itself constituted the assessee's business activity. Assets used in the business of leasing are eligible for depreciation, and the owner of leased assets is entitled to claim it where leasing is the business. Depreciation was therefore allowed.

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Issues: Whether depreciation on plant and machinery owned by the assessee and leased out along with the tea estate was allowable as a business deduction.

Analysis: The assets were owned by the assessee and the lease rent from letting out the tea estate with plant and machinery was accepted as business income. The letting of the assets constituted the assessee's business activity, and assets used for the business of letting or leasing are eligible for depreciation. The decision was supported by the settled principle that the owner of leased assets is entitled to depreciation where the leasing itself is the business.

Conclusion: Depreciation of Rs. 1,15,035 was allowable to the assessee.

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