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of <h1>High Court affirms Tribunal on depreciation disallowance & interest demand. Assets for business = depreciation. Interest needs assessment order.</h1> <h3>ASSTT. C.I.T Versus S.K. PATEL FAMILY TRUST</h3> ASSTT. C.I.T Versus S.K. PATEL FAMILY TRUST - TMI Issues:1. Disallowance of depreciation on plant and machinery not put to use during the assessment year.2. Validity of demand for interest under section 234B when not levied in the assessment order.Issue 1: Disallowance of DepreciationThe appeal involved the assessment year 1991-92 where the respondent- assessee claimed depreciation on plant and machinery in its toilet soap unit. The Assessing Officer disallowed the depreciation claim as the plant and machinery were not put to use during the year. The Commissioner (Appeals) upheld this view. However, the Tribunal ruled in favor of the assessee, stating that depreciation should be calculated with reference to a block of assets and cannot be disallowed solely because an asset was temporarily not used. The Tribunal referenced previous decisions and held that disallowance of depreciation was unwarranted. The High Court, citing a similar case, upheld the Tribunal's decision, emphasizing that assets used for business purposes are entitled to depreciation, regardless of simultaneous use of all items within the block of assets.Issue 2: Validity of Demand for InterestThe second question pertained to the demand for interest under section 234B when not specified in the assessment order. The Tribunal supported the assessee's contention that interest could not be levied if not mentioned in the assessment order. Citing a Supreme Court decision, the High Court reiterated that in the absence of a specific direction in the assessment order regarding interest, no interest can be levied through a demand notice. The revenue's argument that a computation sheet accompanying the assessment order could validate the demand was not entertained due to lack of evidence supporting such a claim. Therefore, the High Court ruled in favor of the assessee, stating that the demand for interest was unwarranted in this case.In conclusion, the High Court dismissed the tax appeal, upholding the Tribunal's decisions in favor of the assessee regarding the disallowance of depreciation and the invalidity of the demand for interest under section 234B.
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