JUDGMENT
R.V. Raveendran, C.J.
1. The respondent (assessee) claimed that it installed and put to use a bio-gas plant at the cost of Rs. 90,41,057 in May 1992. In the return for the assessment year 1993-94, it claimed depreciaiton. The Income-tax Officer while passing the order of assessment dated February 29, 1996, restricted the depreciation to 50 per cent, on the ground that the bio-gas plant was commissioned and put to use for less than 180 days, that is only from October 9, 1992. the Commissioner of Income-tax (Appeals) by his order dated August 13, 1996, upheld the disallowance of depreciation of 50 per cent, of bio-gas plant. For this purpose, the Assessing Officer and the appellate authority relied on the statement said to have been made by the representative of the assessee on February 28, 1996, at the time of hearing that the bio-gas plant was commissioned on October 9, 1992, and was put to use from that date. A further appeal preferred by the assessee was allowed by the Income-tax Appellate Tribunal, Indore Bench, by order dated October 4, 2002, with a direction to the Assessing Officer to allow the claim of the assessee regarding depreciation by treating the bio-gas plant as being in use from May, 1992 itself. The Appellate Tribunal accepted the case of the assessee after examination of the documents and held that the bio-gas plant was installed and put to use in May, 1992, as was evident from the assessee’s letter dated May 19, 1992 to the supplier of the bio-gas plant, that during trial runs, it developed some leakage and other problems, that there was some correspondence with the supplier of the plant in July and August, 1992, and thereafter, the plant was repaired and leakage and other teething problems were solved and normal flaring of methane gas started in October, 1992. The Tribunal recorded a finding of fact after examining the relevant documents that the entire equipment has been installed and commissioned and put to use in May, 1992.
2. Feeling aggrieved, the Department filed this appeal Under section 260A of the Income-tax Act contending that the following question of law arises for consideration :
“Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in holding that the assessee-company was entitled to depreciation on bio-gas plant for full year ignoring comprehensive information furnished by the assessee-company itself vide its letter dated February 23, 1996, which contains its own admission with the bio-gas plant was commissioned on October 9, 1992, and also documentary evidence on record clearly proves the bio-gas plant having been operational on October 9, 1992, i.e., after the expiry of half of the previous year relevant to the assessment year in question ?”
3. The question whether the bio-gas plant was put to use for the purpose of business of the assessee from a particular date, is a question of fact. The Tribunal after exhaustive reference to the records (correspondence, bills and other documents) has recorded a finding of fact that the installation and use was from May, 1992. The finding may not, therefore, call for interference.
4. Learned counsel for the Revenue placed reliance on the letter dated October 17, 1992, written by the assessee to the Chairman, M. P. Pollution Control Board, wherein it was confirmed that the normal flaring of methane gas commenced only on October 9, 1992, and which was also confirmed at the time of hearing before the Assessing Officer on February 28, 1996. Therefore, it is contended that the “use” was only from October 9, 1992, though installation was completed in May, 1992, and trial runs were commenced in May, 1992.
5. Section 32 of the Income-tax Act, 1961, provides that in respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of business or profession, deductions provided therein shall be allowed. The question is whether the term “use” refers to the commencement of regular commercial production or whether it would include the period during which trial runs and repairs are made to make it fully operational. It is well settled that the word “used” should be understood in a wide sense, so as to include passive as well as active user (vide the decisions of the Bombay High Court in CIT v. Viswanath Bhaskar Sathe [1937] 5 ITR 621 ; Whittle Anderson Ltd. v. CIT [1971] 79 ITR 613 and the decision of the Delhi High Court in Capital Bus Service Pvt. Ltd. v. CIT [1980] 123 ITR 404). In V. Ramakrishna and Sons Ltd. v. CIT [1984] 149 ITR 554, the Madras High Court held that user of machinery in test production or experimental manufacture was user for the purposes of the assessee’s business. The question was directly considered by the Gujarat High Court in Asst. CIT v. Ashima Syntex Ltd. [2001] 251 ITR 133, and it was held that trial production of a machinery would fall within the ambit of “used for the purpose of business”. The following observations are relevant (page 147):
“There must be use of plant and machinery for the purpose of business as contemplated in Section 32 of the Act. There is thus a thin line between the trial run and actual production, or many a time, the word used is ‘commercial production’. If the machines are installed properly and it gives good result, then one need not wait for any rectification in the system. There may be some cases wherein after commencement of the production, the machine may not give proper results-may be on account of failure of certain parts, may be on account of requirement of certain additional machinery, etc. In such a case, the production obtained at the initial stage would be considered as trial production…..The law does not require that there must be optimum production for granting the benefit. Law only requires that there must be use of plant and machinery for the purpose of business. Use of such words that plant and machinery was run more extensively or was required to be used for larger production is not to be found in the Act or Rules. Whether the plant and machinery were up to the extent of its efficiency is irrelevant for the purpose of deciding depreciation.”
6. It is not in dispute that the plant was installed in May, 1992, and the records clearly showed that on installation, it was commissioned in May, 1992, but on account of certain leakage, during trial run, repairs had to be carried out and regular production started in October, 1992. We, therefore, find that no error in the findings recorded by the Tribunal and no substantial question of law arises for consideration. The appeal is, therefore, dismissed.