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 Section 256 (1) of the Income-tax 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 income-tax assessments of the assessee-company for the assessment years 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 assessment years 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 assessment years 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 assessment year 1983-84 and Rs. 1,04,038 for the assessment year 1984-85. The Appellate Assistant Commissioner 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. v. CIT.

( 3 ) SECTION 32 (1) of the Income-tax 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 Income-tax Rules, 1962.

( 4 ) 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 assessment years 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-section (1) of Section 32 of the Act.

( 5 ) RELIANCE was placed on behalf of the assessee on the decision in Capital Bus Service (P.) Ltd. v. CIT. The assessee-company, a transport operator maintaining a fleet of buses, kept ready for use four buses for being run on contract basis on occasions such as marriages, private tours and the like. On account of lack of demand, those buses were not actually employed by the assessee for more than 30 days in the previous year relevant to the assessment year 1961-62. The Delhi High Court held that the expression "used for the purpose of the business" comprehended cases where the machinery was kept ready by the owner for its use in its business and the failure to use it actively in the business was not on account of its incapacity for being used for that purpose or its non-availability. The four buses were admittedly in working order and the assessee was keeping them ready for being operated, if and when some touring contracts materialised. They were not actually run on the roads not because they were being repaired or were unfit for use for one reason or the other, but only because there were not enough contracts during the year to ply the buses f

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