Tribunal rules in favor of assessee on depreciation and set-off issues.

The tribunal ruled in favor of the assessee on both major issues. Firstly, it allowed depreciation on the block of assets, despite non-use during the year due to transition. Secondly, it permitted the set-off of unabsorbed brought forward depreciation and business loss, even in the absence of business activity during the year. The decisions of the CIT(A) disallowing these claims were overturned, resulting in a favorable outcome for the assessee.

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Issues Involved:
1. Disallowance of depreciation on plant and machinery.
2. Set-off of unabsorbed brought forward depreciation and business loss.
3. Levy of interest under sections 234AB, C & D of the Act.
4. Initiation of penalty proceedings under section 271(1)(c) of the Act.

Detailed Analysis:

1. Disallowance of Depreciation on Plant and Machinery
The primary issue is whether the assessee is entitled to claim depreciation of Rs. 1,71,24,757/- on plant and machinery during the assessment year 2014-15, despite not using the assets due to the transition and shifting of the power plant.

Findings:
- The Ld. Assessing Officer disallowed the depreciation on the grounds that the plant and machinery were not used for business purposes during the year since the assessee was shifting its plant.
- The CIT(A) upheld the disallowance, emphasizing that the entire block of assets was not used, and therefore, depreciation could not be allowed.

Legal Precedents:
- Nirma Credit & Capital Ltd. v. ACIT [2017] 82 taxmann.com 109 (Gujarat): The Gujarat High Court held that once assets are part of the block of assets, individual usage is not necessary for claiming depreciation.
- PCIT v. Babul Products (P.) Ltd. [2018] 96 taxmann.com 82 (Gujarat): Depreciation cannot be denied if the business is temporarily non-operational due to external factors.
- Swati Synthetics Ltd. v ITO [2010] 38 SOT 208 (MUM.): Depreciation is allowable even if the assets are not used in the given year, as long as they are part of the block of assets.
- DCIT v. Coromandal Bio Tech Industries (I) Ltd. [2012] 20 taxmann.com 520 (Hyd.): Existence of an individual asset in the block of assets itself amounts to use for the purpose of business.

Conclusion:
The tribunal concluded that the assessee is entitled to claim depreciation on the block of assets, even though the plant and machinery were not used during the year due to the transition. The disallowance by the CIT(A) was overturned, and the claim for depreciation was allowed.

2. Set-off of Unabsorbed Brought Forward Depreciation and Business Loss
The second issue pertains to whether the assessee can set off unabsorbed brought forward depreciation and business loss in the absence of business activity during the year.

Findings:
- The CIT(A) disallowed the set-off on the grounds that there was no business activity during the year.

Legal Precedents:
- CIT v Deepak Textile Industries Ltd. [1987] 35 Taxman 92 (Gujarat): Unabsorbed depreciation can be carried forward and set off even if the business related to it has been discontinued.
- Anant Mills Ltd. v Ld. CIT(A) [1994] 206 ITR 582 (Gujarat): Unabsorbed depreciation should be allowed to be carried forward and set off against assessable income of a subsequent year.
- CIT v. Rajratna Naranbhai Mills Co. Ltd. [1994] 208 ITR 597 (Gujarat): The assessee is entitled to set off unabsorbed depreciation against income under other heads even if the business has ceased.
- DCIT v. Dwarka Cement Works Ltd. [2005] 3 SOT 869 (Mumbai): The absence of manufacturing activity in a given year does not preclude the set-off of carried forward losses.

Conclusion:
The tribunal held that the assessee is entitled to set off unabsorbed brought forward depreciation and business loss, even in the absence of business activity during the year. The disallowance by the CIT(A) was overturned.

3. Levy of Interest under Sections 234AB, C & D of the Act
This issue was not specifically adjudicated as it was considered general in nature.

4. Initiation of Penalty Proceedings under Section 271(1)(c) of the Act
This issue was also considered general in nature and did not require specific adjudication.

Final Judgment:
The appeal of the assessee was allowed, with the tribunal ruling in favor of the assessee on both major issues:
1. Allowing depreciation on the block of assets.
2. Permitting the set-off of unabsorbed brought forward depreciation and business loss.

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