DISCUSS the validity of action taken by AO in the matter of disallowance of depreciation.

8 The issue under consideration is whether disallowance of depreciation made by the Assessing Officer with regard to the discarded asset, in arriving at the written down value of the block of assets, is justified. One of the conditions for claim of depreciation under section 32 is that the eligible asset must have been put to use for the purpose of business or profession. The other aspect to be considered is whether merely discarding an obsolete machinery, which is physically available, will attract the expression "moneys payable” appearing in section 43 (6) , so as to deduct its value from the written down value of the block. The facts in the present case are similar to facts in the case of CIT v. Yamaha Motor India Pvt. Ltd. (2010) 328 ITR 297, wherein the Delhi High Court observed that the expression "used for the purposes of the business" in section 32, when applied to discarded machinery, means that it must have been used in the business not only in the relevant financial year/previous year, but also in earlier financial years. The discarded machinery may not be actually used in the relevant previous year, but depreciation can be claimed so long as it was used for the purposes of business in earlier years, provided the block continues to exist in the relevant previous year. Therefore, the condition for claiming depreciation on the discarded machine is satisfied if it was used in earlier previous years for the business. For the purposes of section 43 (6) , “moneys payable” means the sale price, or insurance, salvage, or compensation money payable in respect of the asset. In this case, the machinery has not been sold as machinery or scrap or otherwise disposed of, and it continues to exist. Hence, there is no "moneys payable” in this case, and only "moneys payable" (if any) would be deductible when computing the written-down value of the block to which it belongs. Applying this rationale, the Assessing Officer's action in disallowing 2lakhs, being the depreciation claim attributable to the discarded machinery, on the ground that the asset was not put to use in the relevant previous year is invalid, since the machinery had been put to use in earlier previous years.