TaxTMI 
TaxTMI 
2017 (3) TMI 1034
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....sallowance of depreciation by contending that during the relevant period, no manufacturing activity was done by the assessee, i.e. the machinery was not put to use, therefore, the disallowance was rightly denied to the assessee. 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is a trader-cum-manufacturer of plastic beeds, plastics scraps, etc. The Assessing Officer disallowed the claim of depreciation amounting to Rs. 2,74,521/- on plant and machinery on which no manufacturing activity was carried out, during the relevant year, by the assessee. However, the claim before us is that there was temporary suspension in the manufacturing activity as there was irregular supply of power at the manufacturing unit and further there was adverse market conditions for such manufacturing activities. It is not the case that the assessee completely abundant/closed the business rather the assessee continued in trading activities in the same line of business and due to reasons, beyond the control of the assessee, the manufacturing activity was stopped for a temporary period. It can be said that the business of th....
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....cted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii) or clause (iia), as the case may be : Following third proviso shall be inserted after the second proviso to clause (ii) of sub-section (1) of section 32 by the Finance Act, 2015, w.e.f. 1-4-2016 : Provided also that where an asset referred to in clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business for a period of less than one hundred and eighty days in that previous year, and the deduction under this sub-section in respect of such asset is restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (iia) for that previous year, then, the deduction for the balance fifty per cent of the amount calculated at the percentage prescribed for such asset under clause (iia) shall be allowed under this sub-section in the immediately succeeding previous year in respect of such asset: Provided also that where an asset being commercial vehicle is acquired by the assessee on or after the 1st day of October,....
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.... be, in the ratio of the number of days for which the assets were used by them. Explanation 1.-Where the business or profession of the assessee is carried on in a building not owned by him but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession on the construction of any structure or doing of any work in or in relation to, and by way of renovation or extension of, or improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee. Explanation 2.-For the purposes of this sub-section "written down value of the block of assets" shall have the same meaning as in clause* (c) of sub-section† (6) of section 43. Explanation 3.-For the purposes of this sub-section, the expression "assets" shall mean- (2) tangible assets, being buildings, machinery, plant or furniture; (b) intangible assets, being know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature. Explanation 4.-For the purposes of this sub-section,....
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....he actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head "Profits and gains of business or profession" of any one previous year; (iii) in the case of any building, machinery, plant or furniture in respect of which depreciation is claimed and allowed under clause (i) and which is sold, discarded, demolished or destroyed in the previous year (other than the previous year in which it is first brought into use), the amount by which the moneys payable in respect of such building, machinery, plant or furniture, together with the amount of scrap value, if any, fall short of the written down value thereof : Provided that such deficiency is actually written off in the books of the assessee. Explanation.-For the purposes of this clause,- (1) "moneys payable" in respect of any building, machinery, plant or furniture includes- (a) any insurance, salvage or compensation moneys payable in respect thereof; (b) where the building, machinery, plant or furniture is sold, the price for which it is sold, so, however, that where the actual cost of a motor car is, in accordance with the proviso to clause (1) ....
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.... in future (CIT vs Anand Theaters (2000) 244 ITR 192 (SC), CIT vs Daudayal Hotels Pvt. Ltd. (282 ITR 132)(Guj.)). The position of law is well settled that the depreciation allowance is a normal wear and tear, out of use of the asset/vehicle (CIT vs Crown Products 304 ITR 106 (Guj.)). The Hon'ble Madras High Court in Velimalai Rubber Company Ltd. Vs ITO (1999) 240 ITR 618, 623 (Mad.) held that, where it is found that the assessee is not the owner of the asset in respect of which depreciation is claimed, the assessee is not entitled to claim such depreciation. However, the Hon'ble Kerala High Court in CIT vs Nidish Transport Corporation 185 ITR 669 (Kerala), wherein ,the motor vehicle was purchased by the assessee, use for business purposes, but not registered in the name of the assessee, the assessee was held to be entitled for depreciation. Identical ratio was laid down by Hon'ble jurisdictional High Court in CIT vs Dilip Singh S. Bagga (1993) 201 ITR 995 (Bom.), CIT vs Mirza Ataulla Baig 202 ITR 291 (Bom.), CIT vs Nabdurga Transport Company 235 ITR 158, 160 (All.), Basti Sugar Mills Ltd. (2002) 257 ITR 88, 89,91 (Del.), Hotels Skylark & Restaurant Pvt. Ltd. 221 ITR 283 (Punjab), C....
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....e to 1.89% by rejecting the books of account of the assessee. During hearing, the ld counsel for the assessee, invited our attention to para 5.3 of the impugned order. It was contended that during the relevant Assessment Year, the assessee did trading activities and for Assessment Year 2009-10, same GP was accepted by the Department. It was explained that tax audit report was filed by the assessee but the same was ignored by the Assessing Officer, for which our attention was invited to para 7 of the assessment order. On the other hand, the ld. DR contended that there was no compliance to the notice issued to the assessee and books of accounts were not audited. The estimation of gross profit was defended. 3.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the ld. Assessing Officer rejected the books of accounts of the assessee invoking section 145(2) of the Act and estimated the gross profit at 1.89% on the turnover of the assessee amounting to Rs. 8,22,63,831/-. During the relevant period, the assessee broadly traded in plastic beeds, plastic powder and other related articles. The Assessing Officer while estima....