Depreciation on Illegal Use
Depreciation is admissible under section 32 for an asset owned by the assessee from the date, it is brought to use. It is in the light of this requirement that it was decided in CIT v. Air Travel Enterprises India Ltd. [2004] 265 ITR 537 (Ker) that depreciation can be allowed only with effect from the date from which the requirement for plying it was obtained. Any prior use cannot be legal, so that such use cannot be recognised for purposes of depreciation. Where the permit is obtained only in the next succeeding year, the assessee cannot be eligible for depreciation, though the asset was apparently used without such permit during the year.

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