National Thermal Power Corpn. Ltd. v. CIT

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The Tax Publishers2013 TaxPub(DT) 0281 (Del-HC) : (2013) 050 (I) ITCL 0251 : (2013) 357 ITR 0253 : (2012) 211 TAXMAN 0505 INCOME TAX ACT, 1961 --Depreciation--Machinery or equipment kept ready for use in construction, but not actually used Allowability--Assessee, in order to enable the contractors to carry out construction work on schedule, purchased some costly construction equipment. Some of the equipments were given an there to contractors and for which hire charges were received, assessee claimed depreciation and was allowed depreciation by assessing officer. However, depreciation claimed in respect of machinery and equipment which were not actually used in the construction purposes was declined and was confirmed by Commissioner (Appeals) and by Tribunal erred in rejecting the assessee's claim for depreciation on capital construction equipment kept ready for use, though not actually used. Income Tax Act, 1961 Section 32 In The DELHI High Court S. Ravindra Bhat & R.V. Easwar National Thermal Power Corpn. Ltd. v. CIT ITR NO.43-44/1998 15 October, 2012 JUDGEMENT *R. V. Easwar, J.* These are two references under section 256(2) of the Income Tax Act, 1961 relating to the assessment years 1979-80 and 1980-81. The following common question of law has been referred to us. 'Whether on the facts and in the circumstances of the case, the assessee is entitled to depreciation in respect of capital construction equipment acquired by the assessee and kept ready for use by the contractor putting up the power plants of the assessee.' 2. The brief facts relating to the references may be noticed. The assessee who is the applicant herein, was incorporated on 7-11-1975 as a public sector undertaking with the main object of development of thermal power in all its aspects including construction, generation, operation and maintenance of thermal power stations and associated transmission network. The entire construction activity of the thermal power stations was entrusted to various reputed contractors by the assessee. The projects were mammoth in size and in order to enable the contractors to carry out construction work on schedule, the assessee purchased costly construction equipment which the contractors were unable to procure and let them out to the contractors for being used by them in construction work. After completion of the construction of the projects, the construction equipment was to be dispensed with as such equipment would not be of any use to the assessee thereafter. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0281 (Del-HC) : (2013) 050 (I) ITCL 0251 : (2013) 357 ITR 0253 : (2012) 211 TAXMAN 0505

INCOME TAX ACT, 1961

--Depreciation--Machinery or equipment kept ready for use in construction, but not actually used Allowability--Assessee, in order to enable the contractors to carry out construction work on schedule, purchased some costly construction equipment. Some of the equipments were given an there to contractors and for which hire charges were received, assessee claimed depreciation and was allowed depreciation by assessing officer. However, depreciation claimed in respect of machinery and equipment which were not actually used in the construction purposes was declined and was confirmed by Commissioner (Appeals) and by Tribunal erred in rejecting the assessee's claim for depreciation on capital construction equipment kept ready for use, though not actually used.

Income Tax Act, 1961 Section 32

In The DELHI High Court

S. Ravindra Bhat & R.V. Easwar

National Thermal Power Corpn. Ltd. v. CIT

ITR NO.43-44/1998

15 October, 2012

JUDGEMENT

R. V. Easwar, J.

These are two references under section 256(2) of the Income Tax Act, 1961 relating to the assessment years 1979-80 and 1980-81. The following common question of law has been referred to us.

'Whether on the facts and in the circumstances of the case, the assessee is entitled to depreciation in respect of capital construction equipment acquired by the assessee and kept ready for use by the contractor putting up the power plants of the assessee.'

2. The brief facts relating to the references may be noticed. The assessee who is the applicant herein, was incorporated on 7-11-1975 as a public sector undertaking with the main object of development of thermal power in all its aspects including construction, generation, operation and maintenance of thermal power stations and associated transmission network. The entire construction activity of the thermal power stations was entrusted to various reputed contractors by the assessee. The projects were mammoth in size and in order to enable the contractors to carry out construction work on schedule, the assessee purchased costly construction equipment which the contractors were unable to procure and let them out to the contractors for being used by them in construction work. After completion of the construction of the projects, the construction equipment was to be dispensed with as such equipment would not be of any use to the assessee thereafter.