ORDER KHAWAJA FAROOQ SAEED, J.- This appeal arises out of CIT(A)'s order No. CIt/Z-I/634/88 dated 25-04-1988. The appellant agitates against disallowance of initial depreciation on air conditioner amounting to Rs.5,125/-. The assessee has also agitated credit of taxes amounting t Rs.
1,18,802/-. The assessee has opted to be absent despite proper service of notice. The appeal is therefore disposed off on merit.
2. The facts of the case are that assessee a private limited company has been disallowed initial depreciation amounting to Rs. 5,125 on account of Air-conditioner used in business office. The disallowance made by the to was without any reason while the additions have been made under the provision of section 59(1 )/59(3). It is not the case, of the assessee that the addition does not come within the referred section as if it is established that the claim of the assessee was not admissible under third schedule of the Income Tax Ordinance, the provision of section referred would be attracted. The assessee argued before the learned CIT(A) that initial depreciation is allowable on all plants and machinery used for business profession and vocation. The, attention of learned CIT(A) was invited to the relevant provision which reads as under:- "Initial depreciation - (1) where any building has been newly erected, or any machinery or plant has been installed in Pakistan at any time between the first day of July, 1976. And the thirtieth day of June, 1988 (both. Dates inclusive), further depreciation allowance in respect of the year of erection or installation or the year in which such building, machinery or plant is used by the assessee for the first time for the purpose of his business or the profession or the year in which commercial production is commenced, whichever is the later, shall be at the following.
The learned CIT(A) observed that the provision was only applicable if the Air-Condition plant becomes a part of the Industrial plant and is being used only for industrial establishment. The relevant part of his order is as follows:- "A careful reading of the rule reveals that initial deprecation is an incentive for new investment in building, machinery and plant for the purpose of adding to the national industrial output. In the present case, as discussed with the learned A.R. The appellant does not own or possesses any factory. The Air- Conditioner was meant for office alone. The initial depreciation is therefore not admissible. Under different circumstances when Air-Conditioner plant is a part of the integrated industrial plant, the initial depreciation is that case will allowable."
While going through the impugned provision of law we do not find any language which gives the impression that initial depreciation is only applicable in respect of machinery and plant being used only for commercial production of some business. For emphasis we go back to the relevant part which starts from:- "As used by the assessee for the first time for the purpose of his business or profession or the year in which commercial production is commenced. "The language Clearly speaks of allowance of initial depreciation. 'On plant and machinery used for (a) business or (b) the profession or ' as used by the assessee for the first time for the year in which commercial production is started.'
3. The above impressions are disjunctive and not conjunctive. The plain impression would therefore be that machinery and plant used by a professional for use in office shall be entitled to initial depreciation. It is also a settled principle that initial depreciation is allowable on all the assets in the year of its first use if otherwise it qualifies for depreciation under law. It may be worth mentioning here that CBR also accepts this principle as is evident from circular No. 22 of 1957 dated October 2, 1957, wherein corresponding provision of the repealed act has been explained as follow:- "It was brought to the notice of the Board that initial and additional depreciation allowances are not allowed by some Income-tax Officers, in respect of Meters, Overhere, Mains and Underground Cables in electric supply undertakings. The Board requested the Commissioner of Income-tax to report whether this was true and also invited their opinion on the admissibility of initial and additional depreciation allowances in respect of these assets of an electric Supply undertaking.
The replies received from the Commissioners confirm the information, the Board had received.
Most of the Commissioners are unanimous in their opinion that initial and additional depreciation allowances should be admissible in respect of these items. This view is the only correct view in law.
Meters, Overhead Main, and Underground Cables, constitute 'plant'. There is no dispute on this point, Normal depreciation is always allowed on this equipment. And once it is conceded that an asset is machinery or plant and the normal depreciation is admissible, allowance for initial and additional depreciation follow as a corollary subject only to the conditions that they have not been previously used in Pakistan and that they have been, installed during the period specified in section 10(2)(vi) and Rle 8(2) of the Income-Tax Rules."
4. Coming back to the impugned case since it is not the case of the Department that the Air- Conditioner is not converged under the definition of the machinery and plant and that the assessee does not have any other short coming under the law, we, do not find any reason for disallowance of initial depreciation on the use of Air-Conditioner in the first year of its installment being in office use of the assessee. To further elaborate we add that even if the Air-Conditioner is installed in an office or shop which is in business use. The initial depreciation shall be allowed subject to fulfillment of other conditions. -j;;
5. The Second issued regarding effect of tax does not call for any interference as the learned CIT(A) has already issued directions for its allowance after verification of the claim and challans. The assessee appeal is, therefore, allowed to extent and manner as mentioned above.