TaxTMI 
TaxTMI 
2011 (5) TMI 1162
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....in law and in the circumstances of the case in confirming the penalty of Rs 11,13,60,380 u/s.271(1)(c) of the Income tax Act, 1961, as levied by the Assistant Commissioner of Income Tax 9(3), as per penalty order dt.18.6.2010 for disallowing claim of depreciation of Rs 33,08,39,806 made by the appellant." 2. The issue in appeal lies in narrow compass of material facts. The assessee is engaged in the business of gold and silver refinery. During the course of scrutiny assessment proceedings for the relevant assessment year, the Assessing Officer noticed that while the assessee has not yet commenced business of refining gold and silver, and while the assets have not been put to use as such, the assessee has claimed depreciation of Rs 33,08,....
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....nly from the year ending 31.3.2006 due to non-availability of business. It was in effect argued that the assessee had merely suspended its operation due to nonavailability of business and the AO is clearly in error in observing that business had never commenced. The CIT(A), however, did not yield to the submissions of the assessee and he confirmed the action of the Assessing Office. While doing so, the CIT(A) observed that no business operation had commenced in the case of the assessee but "even if it is presumed that the appellant had put up its installations for the refinery, the facts remains that the refinery could not commence its operations till the end of the year 2009-10" and that "the assets thus installed could not be put to use t....
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....essment years 2005-06 and 2006-07, wherein, the depreciation has been allowed. Our attention is also invited to the following details showing area-wise turnover/quantity of gold and silver produced by the assessee: (Amount in Rs) Sr. No Financial year Gold & silver prodn/trade kgs/pounds(p) Gold & Silver sales kgs/pound s Turnover Depreciation as per books 1. 31.3.2000 47,975 p 47,975pT 89,61,39,355 1,09,090 2. 31.3.2001 4,600 p 3,789p 1,89,82,89 26,69,767 3. 31.3.2002 8,757 kgs 8,380 kgs 276,66,50,982 2,61,27,025 4. 31.3.2003 4,539 kgs 4,558kgs 185,71,38,309 3,68,61,374 5. 31.3.2004 522 kgs 521 kgs 28,17,60,632 3,11,43,852 ....
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....ere there is, what may be described as, a passive user of the same in the business. The above survey of the decisions on the subject clearly shows that the consensus of judicial opinion is in favour of adopting the liberal interpretation. We are also of opinion that in the context in which the expression occurs and also having regard to the various types of cases that could arise, the wider interpretation has to be placed on this expression. The decided cases, which have been earlier referred to, have, arisen in different contexts which clearly indicate that the wider and more liberal interpretation of the provisions would in the context of section 10(2)(vi) and (vii) may be appropriate. Though it is true that a machinery ....
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....ing the year to ply the buses for more than 30 days each. This does not mean that so far as the assessee was concerned he did not employ the trucks for the purposes of the business. They were kept ready for operation and they- were there only in the business and for use in that business. In these circumstances, in our opinion, it can be said, without straining the language of the statute and the context in which it is employed, that the buses were used for the purposes of the business throughout the year though they were not actually plied on the roads for more than 30 days. We do not think that the language used in the Rules is inconsistent with this interpretation. The amendment of 1960 is of no particular significance because ev....
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....e is concerned, it does not depend upon the actual working of the machinery. It is sufficient if the machinery in question is employed by the assessee for the purposes of the business and for no other business and it is kept by him ready for actual use in the profit making apparatus the moment a need arises. The test is satisfied in the present case. For the reasons abovementioned, we are of opinion that the assessee in the present case was entitled to grant of depreciation in respect of the four buses which were kept ready for use throughout the previous year although they were not actually used for more than 30 days. The question referred to us is, therefore, answered in the affirmative and in favour of the assessee. 6. Under ....