Ownership & Use Key: Tribunal allows depreciation on machineries installed at year-end.

The Tribunal allowed the appeal of the assessee, holding that the machineries purchased at the end of the year were eligible for depreciation as they were installed and commissioned on 30th March, 2013, and ready for use in the business. The Tribunal emphasized the need for asset ownership and use for business purposes, in line with previous court judgments, and directed the depreciation to be allowed based on the evidence provided by Voltas Limited.

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Issues:
Disallowance of depreciation claimed on machineries purchased at the end of the year.

Analysis:
The appeal was filed against the order passed by the Commissioner of Income Tax for the quantum of assessment for the Assessment Year 2013-14. The assessee raised grounds regarding the disallowance of depreciation claimed on machineries purchased at the end of the year. The assessee, engaged in manufacturing and trading of yarns and garments, added fixed assets worth a significant amount during the year, including machineries. The Assessing Officer disallowed depreciation, stating that the machinery was not put to use by the end of the financial year, as evidenced by certificates issued in the next financial year. The Commissioner (Appeals) upheld this finding.

The counsel for the assessee argued that the machines were purchased in February and March and were installed and put to use on 30th March, 2012, supported by invoices and installation certificates. The machines were fully operational on 30th March, 2013, making them eligible for depreciation under the Income Tax Rules. The counsel relied on judgments by the Delhi High Court and the National Thermal Power Corporation case, emphasizing that assets kept ready for use are eligible for depreciation. The Departmental Representative, however, supported the findings of the Assessing Officer and Commissioner (Appeals), citing the certification dates by the Central Excise Department.

After considering the submissions and evidence, the Tribunal found that the machines were indeed installed and commissioned on 30th March, 2013, as certified by Voltas Limited. The Tribunal referred to the judgments emphasizing that assets kept ready for use qualify for depreciation. Citing the NTPC case, the Tribunal highlighted the necessity of asset ownership and use for business purposes for depreciation allowance. Following the principles laid down by the High Court, the Tribunal held that the assessee was entitled to depreciation and directed it to be allowed. Consequently, the appeal of the assessee was allowed.

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