TaxTMI 
TaxTMI 
2014 (10) TMI 288
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....cts and circumstances of the case, the CIT(A) was correct in allowing the depreciation on 2nd hand machinery without considering the fact that the assessee has failed to produce the WDV of such machinery which was purchase by the assessee. 2. Whether in the facts and circumstances of the case, the CIT(A) was correct in holding that the Assessing Officer was wrong in invoking the explanation 3 of section 43 of the Act." 4. In brief, the relevant facts are that the respondent-assessee is a company incorporated under the provisions of the Companies Act, 1956 and is, inter-alia, engaged in the business of manufacture and sale of automotive tyres, tubes, flaps at its factory located at Waluj Industrial Area, Aurangabad. For the assessment year 1998-99, assessee filed a return of income declaring a loss of Rs. 91,74,27,308/- which was subject to a scrutiny assessment whereby the assessed loss was determined at Rs. 81,83,24,719/- by making certain additions. In so far as the present appeal is concerned the issue relates to a disallowance of depreciation made by the Assessing Officer to the extent of Rs. 1,59,54,775/-. The aforesaid disallowance of depreciation was based on the disal....
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....he order of the Tribunal dated 28.07.2006 (supra) followed by the CIT(A) has since become final. In this context, it is to be noted that the appeal of the Revenue for assessment year 1995-96 before the Hon'ble High Court was dismissed vide its judgement in Tax Appeal Nos.20 to 22 of 2007 dated 18.03.2009. Moreover, the SLP filed by the Revenue against the aforesaid judgement of the Hon'ble High Court has also been dismissed by the Hon'ble Supreme Court vide order dated 30.11.2009. 7. In view of the aforesaid discussion, we find no merit in the present appeal of the Revenue and the same is accordingly dismissed. 8. In the result, appeal of the Revenue in ITA No.1884/PN/2012 is dismissed. 9. The other three captioned appeals vide ITA No.1879, 1880 & 1881/PN/2012 have been preferred by the Revenue against a common order of the Commissioner of Income Tax (Appeals), Aurangabad dated 30.07.2012 which, in turn, has arisen from respective assessment orders dated 10.01.2005, 21.03.2006 & 06.12.2006 passed by the Assessing Officer u/s 143(3) of the Act pertaining to the assessment years 2002-03, 2003-04 & 2004-05 respectively. 10. In all these appeals, the Revenue has....
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....e allowed the claim of the assessee. As per the CIT(A), for the purposes of allowance of depreciation in terms of section 32(1) certain specified percentage is required to be applied on the written down value of each block of assets as at the end of the relevant previous year. Section 2(11) of the Act defines the expression "block of assets" and section 43(6) of the Act defines written down value. On the basis of the aforesaid provisions, the CIT(A) concluded that once various 6 assets are clubbed together and formed a part of 'block of assets' within the meaning of section 2(11) of the Act then for the purposes of allowance of depreciation it is to be considered as one asset. According to him, individual assets lose their identity from the moment each asset becomes a part of the block of assets and an individual asset becomes inseparable in so far as the allowance of depreciation is concerned. In sum and substance, as per the CIT(A), in the concept of the block of assets introduced w.e.f. 01.04.1988, it is not possible to segregate items falling within a block of asset for the purposes of granting depreciation or restricting the claim thereof. In coming to such conclusion,....
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....rsy revolves around assessee's claim for depreciation on block of assets comprising of Plant & Machinery, wherein such block contained certain assets which were retired and considered as impaired assets. In the books of account, assessee claimed the impairment loss as a debit to the Profit & Loss Account. However, in the return of income filed assessee computed depreciation with reference to the block of assets, including the aforesaid impaired assets. The claim has been denied by the Assessing Officer primarily for the reason that such impaired assets were not put to use thereafter. 17. In our considered opinion, the Assessing Officer has not appropriately appreciated the concept of allowance of depreciation in section 32 with the introduction of block of assets w.e.f. 01.04.1988. The depreciation in terms of the block of assets concept is to be allowed on the 'actual cost' or WDV of the particular 'block of assets', even if it is found that a particular asset comprised in the block of asset has not been put to use. The aforesaid proposition is founded on the concept that depreciation is allowable with respect to the block of assets and not the individual as....
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....written down value of the 'block asset'. 32. Once we understand and appreciate this scheme contained in the aforesaid provisions, it is not possible to accept the contention of the learned counsel for the Revenue that unless a particular asset is used for the purpose of business or provision, depreciation is not allowed. No doubt, as per Section 32(1) of the Act, in order to be entitled to claim depreciation, the asset is to be owned by the assessee and it is also to be used for the purpose of business or profession. However, the expression "used for the purpose of business" when applied to block asset would mean use of block asset and not any specific building machinery, plant or furniture in the said block asset as individual assets have lost their identity after becoming inseparable part of the block asset. That is the only manner in which various provisions can be harmonized .................. ................ In the instant case, the PSL equipment was purchased and put to use by the assessee in previous year relevant to the Assessment Year 1990-91 and the same had entered into the block asset in that year. It thus lost individual identity for the allowance of deprec....