FAZL ALI, C.J. - This case has been referred to us on the application of the Commissioner of Income Tax for the decision of the following question :-

"On the facts found is the assessee entitled to the full depreciation allowance u/s 10(2)(vi) of the Income Tax Ac "

The assessee, Dalmia Cement Ltd., is a company owing a number of cement factories one of which is Dandot Cement Factory and in as much as during the relevant year of the Dandot Cement Factory worked only for a period of nearly two months a dispute arose between the assessee and the Income Tax department as to whether in these circumstances the assessee was entitled to claim the full amount allowable u/s 10(2)(vi) which runs as follows :-

"In respect of depreciation of such buildings, machinery, plant, or furniture being the property of the assessee, a sum equivalent..... to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed and in any other case, to such percentage on the written down value thereof as may in any case or class of case be prescribed."

The contention of the assessee was that the full amount which is allowable under this provision should be deducted, whereas the department contended that only such amount should be deducted as is proportionate to the period during which the factory was actually working. The Tribunal has accepted the assessees contention and hence this reference at the instance of the Commissioner of Income Tax who dissatisfied with the decision of the Tribunal.

Sub-clause (vi) is obviously to be read with sub-clause (iv) as the words building, machinery, plant or furniture are preceded by the word such. When these two clauses are read together it becomes apparent that the words such building, machinery etc. mean building, machinery etc., used for the purposes of the business, profession or vocation. In Viswanath Bhaskar Sathe v. Commissioner of Income Tax, Bombay, in explaining the meaning of the word used, Beaumont, C.J., observed as follows :-

"I agree with the view expressed by the Commissioner of Income Tax, and in the cases to which he refers, that used denotes actual user, and not merely being capable of being used. But that does not dispose of the question whether, when machinery is kept ready for use at any moment in a particular factory under an express contract from which taxable profits are earned, the machinery can be said to be used for the purposes of the business which earns the profits, although it is not actually worked. To my mind, it is so used. The factories, and the contribution of the assessee to that business was the obligation to keep his machinery ready for actual use at any moment. It is, no doubt, true, as the learned Advocate-General says, that it is possible to give the word used a more limited meaning and hold that it includes only the actual work of the machinery, and it is urged that it is that working which occasions depreciation. But, I think that the word used in this section may be given a wider meaning and embraces passive as well as active user. Machinery which is kept idle may well depreciate, particularly during the monsoon season. It seems to me that the ultimate test, is whether, without the particular user of the machinery relied upon, the profits sought to be taxed could have been made."

These observations with which I agree show that depreciation may be allowed in certain cases even though the machinery was not is use or was kept idle. Mr. Dutt, counsel for the Income Tax department, relied upon Section 10, clause (3), which runs as follow :-

"Where any building, machinery, plant or furniture in respect of which any allowance is due under clause (iv), clause (v), clause (vi) of clause (vii) of sub-section (2) is not wholly used for the purposes of the business, profession or vocation, the allowance shall be restricted to the fair proportional part of the amount which would be allowable if such building, machinery, plant or furniture was wholly so used."

It appears that the Appellate Assistant Commissioner was also of the opinion that this sub-section applied to the present case and he stated in his appellate order that "in as much as the factory worked for two months only therefore two months depreciation is admissible on the proportionate basis." In my opinion, however, this sub-section cannot be invoked in the present case. The words "not wholly used for the purposes of the business, profession" etc., do not mean not used throughout the year or during the whole of the year in question. They mean that the building, machinery etc., have not been used exclusively for the purpose of the profession or vocation, that is to say, they have been used for other purposes also. There is no such provision in the Act as would justify the view that if the machinery is not used throughout the year, then the period for which it has worked should be calculated and depreciation should be allowed in proportion to such period. It was contended by Mr. Dutt that the view suggested by him would be the most equitable view and must have been contemplated by the Act. This, however, is not borne out by the language of the provision which is applicable and if there is any defect in the language, that cannot be made up in the way suggested by the learned counsel.

I would, therefore, answer the question formulated by the Tribunal in the affirmative and hold that the deduction claimed by the assessee has been rightly allowed by the Tribunal. The assessee company will be entitled to their costs which I assess at Rs. 250.

MANOHAR LALL, J. - I agree.

Reference answered in the affirmative.