C.I.T. vs. M/S Ratlam Transport

ITA.No.66/2003 11/01/2016 Shri R.L.Jain, learned Senior Counsel along with Ms. Veena Mandlik, learned Counsel for the appellant. Shri D.S.Kale, learned Counsel for the respondent. Heard on IA No.6577/2015, which is an application for dismissal of appeal. Learned Counsel for the respondent has submitted that on 18.11.2014, this Court has admitted the appeal for final hearing on the following substantial questions of law, which are covered by the dictum of this Court in the case of Commissioner of Income Tax V/s. Premier Industries (India) Ltd. reported in (2010) 323 ITR 672 (MP). Substantial questions No.1 and 2 are as under:- 1. Whether on the facts and in circumstances of the case the ITAT was justified in recalling its order in ITA No.638/IND/95 and reversing the said order in MA No.48/IND/02 after having discussed the issue thoroughly in the body of order. 2. Whether on the facts and circumstances of the case the ITAT was justified in allowing depreciation on vehicle which was not actually put to use in accordance with the provisions of I.T. Act with respect to the depreciation allowable.” The Division Bench of this Court in the case of Commissioner of Income Tax V/s. Premier Industries (India) Ltd. Decided the following which reads as under :- “Mr. G.M.Chaphekar, learned senior counsel for the respondent, per contra, has submitted that once machine has been brought for a particular purpose connected with the activities of the assessee and the same has not been discarded and is kept ready for use, the assessee becomes entitled to depreciation in accordance with the provisions of the Act. In support of this submission, learned senior counsel has brought to our notice a decision of the Tribunal in Speed Automobiles P. Ltd. v. Asst. CIT (2004) 32 ITC 531 as upheld by a Division Bench of this court in CIT v. Speed Automobiles Pvt. Ltd. (2004) 32 ITC 537. Reference has also been made to the decision of the Kerala High Court in CIT v. Geo Tech Construction Corporation (2000) 244 ITR 452 which also takes the view that when the machine is kept ready for use, the assessee is entitled to depreciation on the principle of passive user. Similar view of the Delhi High Court in CIT v. Refrigeration and Allied Industries Ltd. (2001) 247 ITR 12 has been pressed into service. The impugned order of the Tribunal has taken the view that if the asset is not sold, discarded or demolished or destroyed during the previous year, the assessee becomes entitled to depreciation. In this view of the matter, the Tribunal has allowed the depreciation on the Tetrapack machine of the assessee. Since keeping the machine in readiness is a finding of fact, we have to proceed on the assumption that the Tetrapack machine of the assessee was kept in readiness for use. In these circumstances, it would be deemed to have been used within the meaning of expression contained in section 32 ibid. The questions of law hereinabove stated are thus, answered against the revenue and in favour of the assessee. There shall be no order as to costs of this appeal. A signed copy of this order be retained in each appeal.” Division Bench of this Court while answering the questions against the revenue has held that the depreciation on the Tetrapack machine, be allowed even if the same is kept ready for use. In view of the aforesaid, both substantial questions of law are hereby decided against the revenue and in favour of the assessess as the same is covered by the dictum of this Court. Appeal is accordingly dismissed. No costs. (P.K.Jaiswal) (Jarat Kumar Jain) ns Judge Judge