- (1.) ON an application under s. 256(1) of the IT Act, 1961, the Tribunal has referred the following questions for the opinion of this Court : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing the claim of assessee of Rs. 54,607 in respect of depreciation, power charges, engine-hire, despite the fact that business remained closed during the relevant accounting year ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the disallowance of claim of expenditure of Rs. 1,51,190 incurred on medical treatment of Shri R.K. Golecha, M.D. in USA, despite the fact that the expenditure was in the nature of "Personal expenditure" of Shri Golecha ?"
(2.) THE assessee-company is engaged in the business of mining of gypsum. THE relevant assessment year is 1984-85. During the course of assessment, the AO, noticed that assessee has claimed depreciation, power charges and engine-hire charges and also claimed expenditure of Rs. 1,51,190 reimbursed to the managing director Shri R.K Golecha, the amount which was incurred on medical treatment in U.S.A. THE AO has rejected the claim of the assessee regarding depreciation, power charges and engine-hire charges as during the relevant year, the business of the assessee remained closed in this relevant year. In appeal before the CIT(A), CIT(A) has allowed the power charges and engine-hire charges but disallowed the amount of depreciation. Similarly, the CIT(A) has disallowed the expenditure of Rs. 1,51,190, which was reimbursed to Shri R.K. Golecha. In appeal before the Tribunal, the Tribunal has allowed the depreciation amount as well as allowed the amount of Rs. 1,51,190 paid to Mr. R.K. Golecha, managing director of the company. Heard learned counsel for the parties. They have also submitted their written submissions. The facts are not in dispute that assessee has claimed depreciation to the tune of Rs. 14,259, power charges to the tune of Rs. 10,348 and engine-hire charges to the tune of Rs. 30,000. There is no dispute on the facts also that in the preceding year, i.e., asst. yr. 1983-84, power charges and engine-hire charges are allowed but depreciation was not allowed. The Tribunal in the year in hand has allowed the depreciation holding that when machinery is ready for production, the assessee is entitled for depreciation. Tribunal has also allowed the deduction of medical expenditure of Rs. 1,51,190.
(3.) CONSIDERING the submissions, when the similar expenditure on power charges and engine-hire charges are allowed by the CIT(A) in the preceding year and that has become final, no interference is called for to that extent. However, depreciation is permissible only in cases where the machinery has been actually used for production. When the machinery in question are not put to use in the year under consideration even for a day and business remained closed, there is no justification to allow the depreciation on such machinery which has not been used even for a day in the whole year. The Tribunal has committed error in allowing the depreciation on a machinery which has not been used even for a day in the previous relevant year in question. The next issue involved in the question referred is whether assessee entitled for deduction of Rs. 1,51,190 which has been incurred on treatment of Mr. R.K. Golecha. This total amount has been incurred not only for payment to the hospital for treatment but that includes to and fro air tickets of Mr. R.K. Golecha and his wife from India to USA. ;