Passive business use of machinery can support depreciation when equipment is kept ready under a profit-linked contractual obligation.

Machinery kept idle but maintained in working order under a contractual obligation essential to earning business profits can still qualify as being "used for the purposes of the business" for depreciation. The expression "used" was treated as requiring actual user, but not necessarily continuous active operation; it may include passive use where the asset is preserved ready for immediate use as part of the profit-earning arrangement. On that basis, machinery and factory infrastructure maintained to secure business profits were regarded as business use, and depreciation was allowable.

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Issues: Whether machinery kept idle but maintained in working order under a contractual obligation, so as to secure business profits, is "used for the purposes of the business" within the meaning of the depreciation provision.

Analysis: The depreciation allowance was linked to machinery that was the property of the assessee and used for the purposes of the business. The expression "used" was treated as denoting actual user, but not necessarily only active working; it was held capable of including passive use where the machinery was maintained ready for immediate use under an express arrangement integral to the earning of profits. The decisive consideration was that the profits could not have been earned without keeping the factory and machinery in working order, and that obligation itself constituted business use.

Conclusion: The machinery was used for the purposes of the business, and the assessee was entitled to depreciation allowance.

Ratio Decidendi: Machinery kept idle but maintained ready for immediate use under a contractual obligation essential to earning taxable profits can be treated as "used for the purposes of the business" for depreciation purposes.

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