AJIT K.SENGUPTA, J. - (1.) IN this reference made at the instance of the Revenue, the following question has been referred by the Tribunal for the opinion of this Court under s. 256(1) of the IT Act, 1961 : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing depreciation on the plant and machinery of the Barakar Unit of Barakar Engineering and Foundry Works although the said unit was under lock-out throughout the previous year and the assets of the unit had not been used for a single day during the relevant previous year ?"
(2.) THIS reference relates to the IT assessment of the assessee-company for the asst.yrs. 1983-84 and 1984-85. The assessee was carrying on coal mining business which was nationalised in 1973. During the relevant previous year, the assessee-company derived income from carrying on a business in fabrication jobs and handling, etc. The Barakar Unit of the assessee-company was under lock-out throughout the previous years relevant to the asst. yrs. 1983-84 and 1984-85. The assessee-company claimed depreciation in respect of assets at its Barakar Unit. The Assessing Officer found that these assets of Barakar Unit did not work even for a single day during any of the two relevant previous years corresponding to the asst. yrs. 1983-84 and 1984-85. The Assessing Officer, therefore, disallowed the assessee's claim for depreciation on those assets in the sums of Rs. 84,498 for the asst. yr. 1983-84 and Rs. 1,04,038 for the asst. yr. 1984-85. The AAC as well as the Tribunal accepted the assessee's case, following the principles laid down by the Delhi High Court in Capital Bus Service (P) Ltd. vs. CIT (1980) 17 CTR (Del) 155 : (1980) 123 ITR 404 (Del). Sec. 32(1) of the IT Act, 1961, lays down two conditions to be satisfied by an assessee before claiming any depreciation. These two conditions are, firstly, that the plant and machinery must be owned by the assessee and, secondly, the plant and machinery must be used for the purposes of business of the assessee. If the aforesaid two conditions are satisfied, then the assessee is entitled to claim depreciation at the rates specified in the Appendix to the IT Rules, 1962.
(3.) IN the present case, it is not in dispute that the plant and machinery in question were owned by the assessee. The only question for consideration is whether, in view of the fact that the plant and machinery of the Barakar Engineering Unit could not be actually used because of the lock-out prevailing during the two previous years relevant to the asst. yrs. 1983-84 and 1984- 85, it could be said that the plant and machinery had actually been used for the purposes of business as contemplated under sub-s. (1) of s. 32 of the Act.;