Depreciation u/s 32 is allowable on Assets ‘Ready for Use’: Allahabad HC [Read Order]

In the recent ruling in CIT v. M/S U.P.State Bridge Corporation Ltd, the Allahabad High Court ruled that depreciation is allowable on assets which are ‘ready to use’ under section 32 of the Income Tax Act.

The Revenue approached the High court impugning the order of the ITAT upholding the decision of the first appellate authority by contending that the order was passed without considering the fact that any item can be categorised as either Revenue or Capital but not both at the same time.

The assessee was engaged in the business of construction of bridge. The assessee claimed that in their construction activity, shuttering is an essential item. The assessee, being the complete owner of the shuttering material, claimed depreciation on the same.

The assessee further claimed before the High Court that the same Court, in an earlier decision in the case of the same assesses on the very same issue, held in favour of the assessee.

The bench noted the relevant part of its earlier decision, that“the assessee was the owner of the shuttering which was ready to use. When it is so, then the assessee is entitled for 100% depreciation, as rightly observed by the Tribunal. Therefore, we find no reason to interfere with the impugned order passed by the Tribunal and the same is hereby sustained along with the reasons mentioned therein.”

Dismissing the appeal, the bench said “For the reasons stated therein and having not being placed any otherwise binding law to persuade us to take a different view in the matter, this appeal is decided in favour of Assessee and against Revenue.”

Read the full text of the order below.