“put to use”
The decision most relied on for put to use is Challapalli Sugars Ltd. v. CIT (98 ITR 167), cited in 185 judgments on BharatTax.
Leading authorities on put to use
Interest on borrowed capital utilized for acquiring a capital asset is capitalized until business commences. Once business is set up, this interest is deductible under section 36(1)(iii) even if the asset has not yet been put to use, accepting commercial accounting standards in the absence of contrary statutory provisions.
Additional depreciation is allowable under section 32(1)(iia) for new machinery or plant even when put to use for less than 180 days, with the unabsorbed balance available for claim in the subsequent year.
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.
An assessee is entitled to claim the balance 10% of additional depreciation in the succeeding assessment year if the new plant and machinery were put to use for less than 180 days in the previous year.
Payment for human intervention to install or put equipment in place, distinct from human intervention involved in the transportation of calls between networks, does not constitute Fee for Technical Services (FTS) under section 9(1)(vii) of the Income-tax Act.
Interest paid on money borrowed for acquiring machinery is deductible under Section 36(1)(iii) even if the machinery is not put to use in the year of borrowing. This principle applies to the 'for the purpose of business' test for borrowed capital.
The balance 50% of additional depreciation, for new machinery or plant put to use for less than 180 days in the year of acquisition, is allowable in the immediately succeeding assessment year. The second proviso to Section 32(1)(iia) restricts only the allowance for the first year, not the total benefit.
Additional depreciation under Section 32(1)(iia) is available for machinery purchased in a prior year but installed and put to use in the current previous year. Eligibility for the claim depends on the date of installation and use, not just the date of purchase.
