Tribunal grants depreciation on gas cylinders in leasing business, allows deduction for dividend income

The Tribunal allowed the appeal, granting depreciation on gas cylinders used in the leasing business and directing the allowance of deduction under section 80M for dividend income. The assessee successfully argued that the gas cylinders were used in the leasing business, generating substantial rental income, and were not merely stock-in-trade as contended by the department. The Tribunal upheld the assessee's entitlement to depreciation on the gas cylinders and directed the allowance of the deduction under section 80M for dividend income.

---

---

Issues: Disallowance of depreciation on gas cylinders; Claim for deduction under section 80M.

Analysis:
1. Depreciation on Gas Cylinders: The appeal concerns the disallowance of depreciation amounting to Rs. 10,07,016 on gas cylinders by the Assessing Officer for the assessment year 1990-91. The assessee, engaged in the profession of Architects and Consultants, claimed 100% depreciation on gas cylinders used in its leasing business. The department contended that the gas cylinders were stock-in-trade, not entitled to depreciation. The assessee argued that it was in the business of leasing gas cylinders, supported by substantial investments and rental income. The Memorandum of Association authorized leasing activities, and past assessments allowed depreciation. The departmental representative claimed the cylinders were not filled with gas, likening them to stock-in-trade. The Tribunal found that the gas cylinders were used in the leasing business, generating substantial rental income since 1982-83. The sale of some cylinders did not convert them into stock-in-trade, as they were used for income generation, not trading. The Tribunal held that the assessee was entitled to depreciation on the gas cylinders used in its leasing business, rejecting the department's contention.

2. Deduction under Section 80M: The next issue pertained to the assessee's claim for deduction under section 80M for dividend income. The assessee earned a net dividend income of Rs. 14,209 and claimed a deduction under section 80M at 60%. The Tribunal directed the Assessing Officer to allow the deduction as per the assessee's calculation.

In conclusion, the Tribunal allowed the appeal, granting depreciation on gas cylinders used in the leasing business and directing the allowance of deduction under section 80M for dividend income.

---