TaxTMI 
TaxTMI 
2020 (6) TMI 294
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....ings u/s 143(3) of the Act, the AO observed that the assessee has claimed depreciation of Rs. 55,23,697/- u/s 32 which includes depreciation of Rs. 54,00,000/- @80% on 'special equipment'. The assessee was asked to justify the claim of depreciation. The assessee vide its reply dated 8.9.2017 and 24.10.2017 submitted that it purchased "fuel oil pump test bench" for Rs. 1.35 crores in March, 2014 which was used in studying the pumping rate and efficiency of the fuel pumping system and it had claimed depreciation @ 40% in A.Y 2014-15 and @80% in A.Y 2015-16 and that as per Appendix-1 of the I.T. Rules, 1962, the asset is eligible for depreciation @ 80%. The assessee further contented that the equipment was used in the financial year 2013-14 an....
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....rs of Pursa Ltd vs. CIT (1954) 25 ITR 265 to disallow the claim of depreciation of Rs. 54.00 lakhs. Aggrieved, the assessee preferred an appeal before the CIT (A) who dismissed the assessee's appeal and the assessee is in second appeal before the Tribunal by raising the following grounds of appeal: "1) The order of the Learned Commissioner (Appeals) is contrary to the facts of the case and law on the points in dispute. 2) The learned assessing officer erred in disallowing the depreciation claimed @ 80% on Fuel oil Pump Test benches u/s 32 of the Income Tax Act, 1961 on the grounds that the Plant and Machinery was not used at any time during the year without considering the provisions of the section which clearly states that depreciation....
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.... purchased in the last week of March, 2014 only and admittedly it was not put to use in the financial year 2014-15 and therefore, the machine could have been put to use in A.Y 2015-16 also and accordingly, the AO has rightly disallowed the claim of depreciation. 6. Having regard to the rival contentions and the material on record, I find that the assessee's claim of depreciation in the year of purchase and use i.e. financial year 2013-14 relevant to A.Y 2014-15 has been allowed by the AO and the asset has become part of the block of assets. It is also not in dispute that the asset has not been used in the relevant A.Y before us or in the subsequent two A.Ys. However, it is not the case of the Revenue that the equipment is not in existence ....
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.... to such conclusion, the Hon'ble High Court observed that the word 'used' in section 32(1) is to be given a wider meaning. The Hon'ble Madhya Pradesh High Court in the case of CIT vs. Premier Industries (India) Limited (2010) 323 ITR 672 (M.P.) held that even if a machine is kept idle but is in a ready to use condition, then depreciation is allowable. The Hon'ble Madras High Court in the case of CIT vs. Chennai Petroleum Corporation Limited 358 ITR 314 held that if the machinery is ready for use but has not been actually used, still then assessee would be eligible for depreciation. Similar view has also been expressed in the following decisions i.e., (1) CIT vs. Oswal Agro Mills Ltd., 238 CTR 113 (2) CIT vs. Oswal Wool....