Depreciation can be allowed even if the machinery is not put to use

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ITO V/s. Tropicana Beverages Company(ITAT Delhi)- when it is established that the machinery on which depreciation has been claimed by the assessee, had been provided by the assessee to Dynamix for the purpose of manufacturing the product of the assessee, necessarily the machinery was used for the purpose of the business of the assessee. That being so, “used for the purposes of the business” in section 32 of the Act is applicable to the assessee.

The words “used for the purposes of the business” in section 10(2)(iv) of the Indian Income Tax Act, 1922, which expression is the same as that employed in section 32 of the I.T. Act, 1961, under which the assessee has made the claim of depreciation in the present case, meant that the machinery and plant is used for the purpose of enabling the owner to carry on the business and earn profits in the business; and that therefore, the assessee was entitled for claiming depreciation.