Actual use requirement for depreciation: assets idle during the year do not qualify for depreciation allowance.

The article clarifies that the phrase "used for the purposes of the business" in clause (vi) requires actual use of buildings, plant or machinery during the relevant year; the ordinary meaning and statutory context disallow reading "used" as merely capable of use or generally available. Applying contextual construction and prior authorities on depreciation, assets idle throughout the year do not attract the depreciation allowance; considerations such as insurance treatment support distinguishing actual use from mere availability. The operative effect is that no depreciation allowance arises where the assets were not actually used in the year in question.

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Issues: Whether under Section 10(2)(vi) of the Income-tax Act the assessee is entitled to an allowance for depreciation where the buildings, machinery or plant were not actually used in the business during the year though the assessee received share of profits from a pooling arrangement.

Analysis: The Court examined the meaning of the phrase "used for the purposes of the business" in Section 10(2)(vi) read with clause (iv) of the same subsection and applied ordinary meaning and statutory context. The Court rejected the contention that "used" meant "capable of being used" or "generally used", referring to the plain meaning of "used" as actually used and to the need to construe Section 10 in light of the Act's overall scheme and provisos governing multi-year allowances. The Court relied on precedents where machinery, plant and buildings not actually used in the relevant year could not attract depreciation allowance, and held that considerations such as insurance rates support distinguishing actual use from mere availability or non-use during the year. The admitted fact that the assessee's factory and machinery were idle during the year therefore precludes an allowance under clause (vi).

Conclusion: The words "used for the purposes of the business" in clause (vi) of Section 10(2) mean actually used; where buildings, plant or machinery were not actually used during the year no allowance for depreciation can be granted. The reference is answered against the assessee.

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