“user of asset”

The determinative test for whether land is agricultural land or a capital asset is its actual user for agricultural purposes, not merely ownership. An explicit intention to stop cultivation or convert the land to non-agricultural use can cause it to lose its agricultural character, making its sale proceeds chargeable to capital gains tax.

Depreciation under section 32 is allowable even if an asset is not actively used, provided it is kept in a condition of readiness or is put ready for use, as this amounts to passive user.

Expenses incurred during the pre-commencement period of a business are not deductible as business expenses or losses, although such expenses may be eligible for depreciation if they can be capitalized to assets. The interpretation of 'used for the purposes of the business' regarding machinery, plant, or buildings, and whether it includes passive as well as active user, was left open.

Depreciation allowance can be claimed for an asset even if it is not actively used in the business, as the term 'used' encompasses both passive and active user. Machinery kept idle may still depreciate.

An asset can be considered 'used' for business purposes, entitling the assessee to depreciation, even if it was only passively used or kept ready for use. The definition of 'used' for depreciation purposes is broader than actual physical employment.

The expression 'used' in relation to assets for tax purposes can be interpreted to mean 'ready for use', not necessarily actual user. This interpretation can extend even to periods of non-user for a number of years.

Depreciation can be claimed even for assets that are in passive use, meaning they are not actively generating income but are kept in readiness for use.