2011 (9) TMI 127

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....ignoring that as per the IT Rules 60% depreciation is allowable only on computer and computer software and not on computer peripherals and accessories.   2. In the facts and circumstances of the case the learned CIT (A) has erred in law and on facts in deleting addition of Rs.816858/- on account of disallowance of depreciation on assets with the holding company ignoring that once the individual asset is not put to use, which is pre-requisite condition for availing depreciation u/s 32 of the Income Tax Act, 1961, the same becomes ineligible/disqualified for block of assets on which depreciation is allowed as per Rule 5 and Appendix IA of the Income Tax Rules, 1962, but shall continue to remain the part of the block of assets for all ....

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....m an integral part of the computer system. In fact, the computer accessories and peripherals cannot be used without the computer. Consequently, as they are the part of the computer system, they are entitled to depreciation at the higher rate of 60%."   5. Therefore, finding no merit in Ground No.1, we dismiss the same.   6. So as it relates to ground No.2, it was noticed by the Assessing Officer that Schedule 3A indicated that the fixed assets amounting to Rs.7.54 million were lying with the ultimate holding company. The assessee claimed to be the owner of those assets. The Assessing Officer asked the assessee to explain as to why the depreciation on the said asset should not be disallowed as they are not used by the assesse....

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....ry on 1st June, 2002 and depreciation claimed was allowed by the Assessing Officer in the earlier years also. The concept of block of asset has been introduced in the Income-tax Act, 1961 from 01.04.88 and once the asset merges into block of asset, the individual asset lost its identity. Thus, the user of individual asset is not required and relevant factor would be the use of block asset and he made reference to the decision of Hon'ble Delhi High Court in the case of Bharat Aluminium Co. Ltd. vs. CIT in which it was held that once the asset had fallen under a particular block of asset, even if the same was not used during the relevant year, the depreciation cannot be disallowed.   7. The learned DR relying upon the findings recorde....