Depreciation on a truck failed where actual use or readiness for use was not proved by credible evidence.

Depreciation on a truck was denied because section 32 requires proof that the asset was used, or at least kept ready for use, during the relevant previous year. The alleged use was rejected as unsupported by reliable books, receipts, diary entries, or contemporaneous accounts, and the absence of the required fitness certificate and registration during the period showed it was not commercially ready. The assessee therefore failed to establish actual user or passive readiness for use, and the disallowance was upheld.

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Issues: Whether depreciation was allowable on a truck said to have been purchased during the accounting year, and whether the truck was either actually used or kept ready for use for the purposes of the assessee's business.

Analysis: Depreciation under section 32 requires satisfaction of the statutory condition of user or readiness for use in business. A vehicle that had not obtained the requisite fitness certificate and registration during the relevant period could not be treated as fit and ready for use in the commercial sense. The evidence of alleged plies on 29 and 30 March 1981 was disbelieved because it was unsupported by reliable books, receipts, diary entries, or contemporaneous account entries, and the surrounding circumstances made the claim improbable. The record therefore did not establish actual user or passive readiness for use during the accounting year.

Conclusion: The claim for depreciation was not allowable and the disallowance was upheld.

Final Conclusion: The assessee failed to prove entitlement to depreciation on the truck for the assessment year in question, and the departmental view was sustained.

Ratio Decidendi: For depreciation, the asset must be shown to have been used, or at least kept ready for use, during the relevant previous year on credible evidence; uncorroborated and improbable assertions of user will not satisfy section 32.

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