1999 (6) TMI 45 - AT - Income Tax

Tribunal: Depreciation allowed on discarded assets for assessment year 1990-91

The Tribunal allowed depreciation on discarded assets of capital nature for the assessment year 1990-91, emphasizing that depreciation should be allowed ... Depreciation Issues Involved: Appeal against disallowance of depreciation on discarded tools and equipments for assessment year 1990-91.Depreciation Disallowance Issue:The Assessing Officer disallowed depreciation on discarded assets of capital nature, stating they were not allowable under the Income Tax Act. The CIT(A) upheld this decision, considering the assets as discarded and not in use throughout the year. The assessee argued that depreciation should be allowed on the block of assets, not individual assets, citing relevant sections. The departmental representative contended that depreciation can only be allowed if the asset is used for business purposes. The Tribunal noted the change in depreciation system from individual assets to block assets effective from 1-4-1988. It emphasized that depreciation should be allowed on the written down value of block assets, not individual assets. Referring to legislative provisions and circulars, the Tribunal concluded that depreciation must be allowed for the entire block of depreciable assets, even if a specific asset within the block is not used during the year. As the scrap value of the discarded machinery was not yet ascertained, the Tribunal directed the Assessing Officer to allow the claimed depreciation.Other Issues:Paragraphs 3 to 6.1 of the judgment involve minor issues not detailed in this summary.