Income Tax Depreciation Disallowance Upheld for Shared Boiler

The Court upheld the decision of the Income Tax Appellate Tribunal, ruling in favor of the revenue. The disallowance of depreciation on a boiler shared with sister concerns was upheld under Section 38(2) of the Income Tax Act, 1961, as the boiler was not exclusively used for business by the assessee. The Court distinguished previous decisions involving exclusive business use and dismissed the appeal, finding no substantial question of law.

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Issues involved: Appeal u/s 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal regarding disallowance of depreciation on the use of boiler shared with sister concerns.

Facts: The assessee, engaged in manufacturing glue flakes, claimed depreciation on a boiler shared with sister concerns. Assessing Officer disallowed depreciation due to shared use. CIT (A) deleted the addition, but ITAT allowed revenue's appeal based on Section 38(2) of the Act.

Legal Analysis: Section 32 allows depreciation for assets used for business. Section 38(2) restricts deductions if assets are not exclusively used for business. ITAT upheld disallowance under Section 38(2) due to shared use of the boiler.

Arguments: Assessee's counsel argued for depreciation based on Delhi High Court and Madras High Court decisions. Revenue's counsel supported ITAT's decision, highlighting shared expenses and lack of evidence on surplus steam sale.

Judgment: Court upheld ITAT's decision, stating the boiler was not exclusively used by the assessee. Cited cases were distinguished as they involved exclusive use for business, unlike the shared use in this case. No substantial question of law found, appeal dismissed.

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