Rate of depreciation on machinery purchased on 31/03/2007

[RAJESH DHANDA]

i purchased a machine from delhi on 31/03/2007. the machine was delivered on 31/03/2007. the case was selected for assessment u/s 143. the assessment was completed in due course . during audit , the ito (audit ) has raised a point that if the machine was purchased on 31/03 from delhi , how it can be put to use on 31/03 itself. i have claimed half rate of depreciation on that machine . advise

[Rama Krishana]

This is question of fact. The statutory provisions of section 32 regarding depreciation makes is mandatory that assets on which deprecation is claimed must be put to use. Since you have purchased the machinery and got the same delivered as on 31.3.2007, the AO has suspected that how could u put the same to use on the same day. Therefore, it is the facts and circumstances only which would help you.

[RAJESH DHANDA]

i know very well that in a case it is very well settled that even if the asset is ready to put to use and it has not been actually used , even then depreciation can be claimed

AI Summary

Depreciation eligibility: asset must be put to use; delivery and factual readiness determine allowable depreciation.
Entitlement to depreciation turns on whether the asset was put to use; immediate delivery and claimed use on the purchase date raise a factual question requiring evidence of readiness, delivery, installation or constructive use to support a half-rate depreciation claim, and resolution depends on the assessing officer's appraisal of those facts.