COMMISSIONER OF INCOM TAX Vs. CHAMUNDESWARI SUGAR LIMITED

JUDGEMENT

(1.) THE respondent-assessee, a Company running a sugar factory for the assessment year 1992-93, installed Pollution Control machinery as per mandate of the Pollution Control Board. The assessee sought for depreciation to the extent of the value of the machinery installed. The Assessing Officer found that the machinery that was installed was found to be defective during the trial runs, therefore, held that the machinery was not used for the purpose of business as required under section 32 of the Income-Tax Act. The Assessing Officer has rejected the request for depreciation. The Commissioner of Income-Tax and the tribunal, in the Appeals, have held that the assessee is entitled to depreciation because the machinery was installed and merely because it did not effectively function is not a ground to reject the depreciation.

(2.) THE State is in Appeal against the order of depreciation. Sri M. V. Seshachala, learned Counsel for the appellants relied on the decision of the Hon'ble Supreme Court in The Liquidators of Pursa Limited Vs. Commissioner of Income-Tax, Bihar, 1954, Income Tax reports - Volume-XXV, page- 265. At page 272, the following observation is made by the hon'ble Supreme Court:

(3.) THE learned Counsel for the appellants also relied on the decision of this Court in Deputy Commissioner of Income-Tax Vs. Yellamma dasappa Hospital, (2007) 290 ITR 353 (Karnataka), to contend that the machinery was defective and non-functional, therefore, cannot be considered as one used for the purpose of business, to warrant depreciation.