Originally posted by : Aman
	ACIT Vs Chennai Petroleum Corp Ltd....plz read this case..n u cant put me wrong now....

Dear Aman

in that case, machine was installed but due to labour and raw material it was not used.

so court said because it was out of control from assessee but he installed so machine was ready to use. then it depreciation was allowed

case lines:

order to claim depreciation under sec.32 of the Act it is not necessary that toe machinery in question should have been actually used in the relevant previous year for the purpose of business and it is sufficient if the same is kept ready for use during the relevant previous year, though not actually used due to circumstances beyond the assessee’s control

See  in these cases mostly court give decision in favor of assessee, if assessee calim that he want depreciation then he can argue that why I will not use machine for 3 years.  But as the Q says the machine was not used so it is not necessary to claim depreciation.  but he can.  there is a diff in both. so I told it is not necessary as Q demanded

Originally posted by : CA Prashant Gupta
	Originally posted by : Aman ACIT Vs Chennai Petroleum Corp Ltd....plz read this case..n u cant put me wrong now.... Dear Aman in that case, machine was installed but due to labour and raw material it was not used. so court said because it was out of control from assessee but he installed so machine was ready to use. then it depreciation was allowed case lines: order to claim depreciation under sec.32 of the Act it is not necessary that toe machinery in question should have been actually used in the relevant previous year for the purpose of business and it is sufficient if the same is kept ready for use during the relevant previous year, though not actually used due to circumstances beyond the assessee’s control   See  in these cases mostly court give decision in favor of assessee, if assessee calim that he want depreciation then he can argue that why I will not use machine for 3 years.  But as the Q says the machine was not used so it is not necessary to claim depreciation.  but he can.  there is a diff in both. so I told it is not necessary as Q demanded

Okay Mr. Prashant i agree...

The claim of depreciation is to be decided on a case to case basis. 

Passive usage (Ready to use) has been taken as a basis of awarding depreciation in a number of cases under the income tax act. 

As far as accountancy is concerned, As per AS-6, Depreciation is dimunition in value of assets due to efflux of time. Depreciation is to be charged. 

for calculation of dereciation date of purchase is not important rather date when asset is put to use  important

Two different opinion have emerged out as in the case of Dinesh Kumar Gulabchand Agrawal (Bom) where it has been held that Depreciation has to be claimed only if asset is put to use , and just merely ready for use.

It is however to be remarked that if no depreciation is claimed on such asset for a period exceeding 3 years (36 months) without Depreciation being provided, a VERY BIG TAX PLANNING can be made by a COMPANY Assessee, by bringing the capital gain on sale of such asset as such and paying tax at rate of just 20%(applicable on LTCG u/s 112) rather than 30%. 

this is an exceptional case... and more comments regarding the same are required.

In my opinion if new assest is stand by asset and ready to use then assessee can claim the depreciation from 1.12010. Otherwise from put to use. 

Agree with prashant 

Since according  to accepted accounting principle ,depreciation arises out of efflux of time , it would be necessary for the purpose of section 205 of CO. ACT  to provide depreciation even if respect of asset  which are not in use of  during F.Y, if it is propose to declare to pay dividend for that year  

So, one can take deprciation from the date of ready to use  in Companies Act

However, 

For Income tax purpose

"Ready to use date" is no relevance, Asset must be actually used and not ready  to use. further trial run is considered  as use

In case of Dinesh Kumar Gulabchand  Agrawal (bom) & Yellamma Dasppan Hospital(kar)

it  was held that expression used means for the purpose of the business  and not merely ready to use (sec 38)

So,

IN SHORT

As per CO. ACT 1956- Depreciation will taken from the date of ready to use(sec 205)

As per IT ACT-Depreciation will taken from the date of Put to use(sec 38)