TaxTMI 
TaxTMI 
1996 (5) TMI 112
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....r relevant to the assessment year under consideration. The Assessing Officer disallowed the depreciation of this truck as the same was not used in the year under consideration. The same is upheld by the CIT(A). Hence this appeal by the assessee. 12. At the time of hearing before us, it was submitted by the ld. counsel for the assessee that from the assessment year under consideration, i.e., assessment year 1988-89, there is thorough change in the system of allowing of depreciation. Now the depreciation is to be allowed on the block of assets and not upon the individual assets. Therefore, the individual assets had lost its identity and it has to be seen whether the assets of a particular block, were used or not. He submitted that the asse....
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....gs, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, the following deductions shall, subject to the provisions of section 34, be allowed. (i) (ii) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed : Provided that where the actual cost of any machinery or plant does not exceed (five thousand) rupees, the actual cost thereof shall be allowed as a deduction in respect of the previous year in which such machinery or plant is first put to use by the assessee for the purposes of his business or profession :" 15. From the above, it is clear that depreciation is to be allowed on the written down value of the block of asse....
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....of that block of assets in relation to the said preceding previous year and as further adjusted by the increase or the reduction referred to in item (i)." 17. Thus, for the assessment year 1988-89, the W.D.V. of any block of assets shall be the aggregate of the W.D.V. of all the assets falling within that block of assets at the beginning of the previous year. From this, the adjustment has to be made for the increase or reduction in the block of assets during the year under consideration. The deduction from the block of assets has to be made in respect of any asset, sold discarded or demolished or destroyed during the previous year. In the appeal under consideration before us, it is an admitted position that none of the asset within the s....
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....ractice of granting the terminal allowance as per section 32(1)(iii) or taxing the balancing charge as per section 41(2) of the Income-tax Act necessitate the keeping of records of depreciation already availed of by each asset eligible for depreciation. In order to simplify the existing cumbersome provisions, the Amending Act has introduced a system of allowing depreciation on block of assets. This will mean the calculation lump sum amount of depreciation for the entire block of depreciable assets in each of the four classes of assets, namely, buildings, machinery, plant and furniture." 18. From the above, it is apparent that the Legislature felt that keeping the details with regard to each and every depreciable assets was time consuming....
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....or each asset. 20. We may clarify our views by giving example, suppose an assessee owns three trucks, the W.D.V. of which is Rs. one lakh each. Thus, at the beginning of the year, W.D.V. of all the three trucks was Rs. 3 lakhs. During the year under consideration, one truck was sold for Rs. 50,000. As per definition of W.D.V. in section 43(6)(c), the W.D.V. shall be Rs. 2.50 lakhs, i.e., Rs. 3 lakhs (-) Rs. 50,000. As per the section 32, the depreciation is allowable on the block of asset and, therefore, the assessee would be entitled to depreciation at Rs. 2.50 lakhs, while the W.D.V. of the two trucks, which are in actual use is only Rs. 2 lakhs. If you accept the submission of ld. DR, the assessee would be entitled to the depreciation....