Depreciation requires actual use or readiness for use; an unregistered, unfit truck was not eligible.

Depreciation under section 32 requires the asset to be used for business or, at minimum, kept ready for use during the relevant year. A truck purchased but not registered, without a fitness certificate, and not lawfully capable of being plied was neither actually used nor ready for use. Taking the vehicle for inspection and constructing its body before registration did not satisfy the statutory condition. The claim for depreciation therefore failed because the legal impediment to road use meant the asset was not available for business use in the relevant previous year.

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Issues: Whether depreciation under section 32 of the Income-tax Act, 1961 was allowable on a truck which had been purchased during the year but was not registered and was not actually used in the relevant previous year, though it was taken for inspection and body construction before registration.

Analysis: Depreciation under section 32 requires the asset to be used for the purposes of business. Actual daily use is not necessary, but the asset must at least be kept ready for use, meaning it must be fit for use and free from legal impediment to being put on the road. On the facts, the truck was not registered during the relevant year, the fitness certificate had not been issued, and the vehicle could not lawfully be plied. Its being produced for inspection or having a body constructed before registration did not amount to use or readiness for use. The position was not one of forced idleness, and the requirements of section 32 were not satisfied.

Conclusion: Depreciation was not allowable; the claim failed.

Ratio Decidendi: For depreciation to be allowed, the asset must be used, or at least kept ready for use, during the relevant year, and a vehicle that cannot lawfully be plied because it lacks registration and fitness is neither used nor ready for use.

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