Category: Income Tax

What is the meaning of the expression ‘machinery’

The Kerala High Court adopted the Madras view In Mrs. George Mathew Vs. Commissioner of Income Tax, Kerala and Coimbatore, . Therein their Lordships laid down that:

“the expression ‘plant has a far wider connotation than the expression ‘machinery’; These two expressions are used in the alternative in Section 10 (2) (vi) and (vi-a) of the Income Tax Act so that ‘machinery’ if it is new, though it does not constitute ‘plant’, is entitled to initial and extra depreciations. The term ‘machinery’ has net been defined in the Income Tax Act and in the absence of a statutory definition the word has to be given the ordinary meaning. Further, the term ‘machinery’ should be given the same meaning throughout Section 10(2) (vi) and (vi-a). The term ‘machinery’ is not restricted In the application only to a self-contained unit capable of being put to use in the business.”

What is the meaning of the expression “used for the purposes of the business”

What is the meaning to be ascribed to the expression “used for the purposes of the business” as found in Section 32 of the Income Tax Act, 1961. The provision of Section 32 pertains to depreciation. The contention of the Revenue is that with respect to any machinery for which depreciation is claimed u/s 32, the same cannot be allowed unless such machinery is used in the business and since discarded machinery is not used in the business, therefore, with respect to the discarded machinery no depreciation can be allowed.