Tribunal limits depreciation claim on leased assets to 50% due to delayed assembly

The Tribunal upheld the decision to limit the depreciation claim on boilers and windmill leased out by the assessee to 50%. The Tribunal found that the assets must be fully assembled and constituted before delivery to the lessee to qualify for depreciation. As the full-fledged assets were delivered only after the assembling and installation were completed in January and March 1997 for the boiler and windmill, respectively, the depreciation claim was rightfully limited. The appeal by the assessee was dismissed, affirming the lower authority's order.

---

---

Issues:
Depreciation claim on boilers and windmill leased out by the assessee.

Analysis:
The appeal concerns the depreciation claim on boilers and windmill leased by the assessee. The representative for the assessee argued that once the asset is delivered to the lessee, it should be considered as put to use for the assessee's business, entitling them to claim 100% depreciation. The Assessing Officer and CIT(Appeals) limited the depreciation to 50%, stating the asset was not put to use for the required period. The representative emphasized that the act of delivering the asset to the lessee should suffice for considering it as put to use. However, the Departmental Representative contended that the components of the boiler and windmill must be assembled and constituted into a full-fledged asset before delivery to be eligible for depreciation. The authorities found that the full-fledged assets were delivered in January and March 1997, not earlier as claimed by the assessee.

The Tribunal noted that the asset must be brought into existence before delivery to the lessee to qualify for depreciation. The assembling and installation of the components were completed in January and March 1997 for the boiler and windmill, respectively. The full-fledged assets were delivered only after this process. Therefore, the Tribunal upheld the lower authority's decision to limit the depreciation claim to 50%. The appeal by the assessee was dismissed, confirming the lower authority's order.

This judgment highlights the crucial aspect of when an asset can be considered put to use for depreciation purposes in leasing businesses. The decision emphasizes the necessity for the asset to be fully assembled and constituted before delivery to the lessee to qualify for depreciation benefits. The case underscores the importance of establishing the timeline of asset delivery and the completion of necessary processes before claiming depreciation, ensuring the accurate determination of depreciation entitlement in leasing arrangements.

---