TaxTMI 
TaxTMI 
2007 (6) TMI 156
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....eased out which was not used by the lessee and returned in the same year? (b) Whether in the facts and circumstances of the case, the Tribunal was right in allowing depreciation on an asset which was neither used nor kept ready for use, applying the theory of passive user?" under the following facts and circumstances of the case. 2.. The relevant assessment year is 1997-98. The assessee is doing business of hire purchase and leasing finance. For the assessment year, the assessee bought positive film rolls for a sum of Rs.6,35,982/- on 30.8.1996 and entered into an agreement with M/s. Shivashree Pictures on 30.8.1996 for leasing the films. In the Profit and Loss account for the period ending on 31.3.1997, lease rent was....
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....eady for use" were eligible for depreciation/development rebate. 5. The Tribunal confirmed the order of the Commissioner on the appeal preferred by the Revenue. Hence, the present appeal. 6. The substantial questions of law raised by the Revenue revolves on the pivotal issue as to the application of the theory of passive user for the purpose of allowing depreciation on the assets. 7. In Commissioner of Income Tax v. Vayithiri Plantation Ltd. (128 ITR 675), the issue for consideration, before a Division Bench of this Court, was when the machinery kept ready for use during the relevant accounting year, but could not be used because of labour unrest, could it be taken that the machinery had been taken for use for the purpose of busine....
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....t and accordingly, the assessee would be entitled to development rebate. 11.While so holding, the Division Bench, followed the ratio laid down in Commissioner of Income Tax v. Viswanath Bhaskar Sathe (5 ITR 621), Liquidators of Pursa Ltd. v. Commissioner of Income Tax (25 ITR 265) and Whittle Anderson Ltd. v. Commissioner of Income Tax (79 ITR 613).(Bom). 12.In Commissioner of Income Tax v. Viswanath Bhaskar Sathe (5 ITR 621), the Bombay High Court has held that the word 'used' in Section 10(2)(vi) of the Income Tax Act, 1922, has to be given a wider meaning and embraces passive as well as active user. The machinery which is kept idle may well depreciate, particularly, during the monsoon season. The ultimate test ....
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....e of machinery owned by a person who had entered into a pooling arrangement regarding cotton ginning and pressing, following the decision of the Apex Court in Liquidators of Pursa Ltd. v. Commissioner of Income Tax (25 ITR 265), held that although two out of four presses which were directly in the pooling arrangement were to remain idle while the two presses worked, it was clear that the owners of those presses, which were idle, had to keep them ready for use at any time and the contingency for their use could also arise at any time, upon the terms of the agreement and with regard to the definition of the word 'used', it was observed that even the presses which remained under forced idleness were in use during the entire period of the....