Thursday, July 21, 2011

An assessee should not be deprived of benefit of depreciation u/s 32 for not running factory

An assessee should not be deprived of benefit of depreciation u/s 32 for not running its factory due to adverse law and order situation

Income-tax : The word `used' appearing in section 32(1) should be interpreted to mean a situation where the machineries which are required for implementing the nature of business the assessee runs, have been kept ready for use for the purpose of business [Section 32 of the income-tax Act, 1961 - Depreciation - Allowance/rate of]

l An assessee doing various manufacturing items may have purchased different machineries having regard to the diversity of the orders he gets or expects to get; in the process, a particular type of machinery may be required for finishing a particular type of a product, if in a given assessment year, the assessee did not get any order of manufacture of that particular item necessitating the use of that particular machinery, for that reason, he should not be deprived of the benefit of depreciation of that machinery although the same was ready for use whenever an order of manufacture of such item would come - [2011] 10 taxmann.com 163 (Cal.)

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