TaxTMI 
TaxTMI 
2005 (9) TMI 587
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....nery which was not put to use during the previous year relevant to the assessment year 1998-99 and without appreciating the fact that the company was under lock out since October, 1995. 2. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) erred in deleting the addition of Rs. 98,576 being 50 per cent. of the obsolete stock written off". 2. The facts regarding the first ground are that the Assessing Officer disallowed the depreciation on plant and machinery on the ground that relevant plant and machinery was not put to use during the relevant previous year. It was explained to the Assessing Officer that there was lock out/ strike in the factory which resulted in temporary closu....
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....ies and such a temporary lull in business does not amount to closure of business once and for all. On the facts of the case courts have held that the plant and machinery and such other assets during periods of strike or temporary lull fall in the category of passive user and depreciation is allowable. The learned Authorised Representative has cited a series of case law on the point as under : (1) CIT v. Refrigeration of Allied Industries Ltd. [2001] 247 ITR 12 ; [2000] 113 Taxman 103 (Delhi) ; (2) Capital Bus Service P. Ltd. v. CIT [1980] 123 ITR 404 (Delhi) ; (3) CIT v. G. N. Agrawal (Individual) [1996] 217 ITR 250 ; [1994] 75 Taxman 30 (Bom) ; (4) Packwell Printers v. Asst. CIT [1996] 59 ITD 340 (Jabalp....
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....nt year under section 143(3) on plant and machinery and also in subsequent assessment year, under section 143(3) even though conditions remained the same, i.e., the manufacturing activity was stopped for about five years due to lock out/strike and it is only in this year that the Assessing Officer has disallowed depreciation whereas in other years it was allowed by the Assessing Officer either under section 143(3) or 143(1). He relied on case law cited before the Commissioner of Income-tax (Appeals). 5. We have heard the rival submissions and considered the facts and materials on record including the case laws cited by both the parties. The case laws cited by the learned counsel for the assessee and also relied upon by the Commissioner o....
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....plant and machinery has not been actually used, then the assessee would not be entitled for depreciation. The hon'ble Calcutta High Court held in that case as under (headnote) : "Section 32(1) of the Income-tax Act, 1961, lays down two conditions to be satisfied by an assessee before claiming any depreciation. These two conditions are, firstly, that the plant and machinery must be owned by the assessee and, secondly, the plant and machinery must be used for the purposes of business of the assessee. Therefore, under sub-section (1) of section 32, there should be actual user of plant and machinery for the purposes of business. In certain cases of a pooling arrangement or where plant and/or machinery is kept as stand by to provide aga....