TaxTMI 
TaxTMI 
2017 (11) TMI 574
X X X X Extracts X X X X
X X X X Extracts X X X X
....s part of the Block of Asset, which is eligible for depreciation u/s 32 of the Act, whether the depreciation deserves to be computed and allowed with reference to the Written Down Value of such Block of Asset as defined u/s 43(6) of the Act, notwithstanding the actual use of individual asset forming part of block of asset.?" 3. Counsel for the appellant Mr. Jhanwar has taken us to the order of the CIT(A) which reads as under:- "2. Whether assessing officer was justified in disallowing depreciation claim in respect of thread division. 2.1. On perusal of para 2 of the assessment order it is seen that considering closure of thread division an opportunity was given proposing disallowance of depreciation claim in respect of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve considered the case and arguments taken by Sh. Garg quite carefully. It is seen that considering Madras High Court judgment in the case of CIT vs Heera Financial Services Ltd. 298 ITR 247 it is clear that the machineries were kept under forced idleness and therefore, the appellant though a passive user, was deemed to be an active user within the meaning of word "used" and is entitled for depreciation claim u/s 35 of I.T. Act. In the present case due to strike by the employees and sealing by RSEB, though the machineries were ready for use but it was kept in the forced idleness. Further, in the case of Udaipur Mineral Development Syndicate which has been relied upon by A.O. the business of the appellant remained closed while in this case o....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 1988-89 and, therefore, assessee's claim to depreciation pertaining to research and development assets cannot be allowed in view of provisions of Section 32 which require that the assets on which depreciation is claimed must be used in a live business during the accounting period relevant to the assessment" year in question. However, the assessee has raised two fold contentions for sustaining his claim. Firstly, it is submitted that R&D assets did not relate solely to the fast food division of the company but also relates to the manufacture and sale of liquor. R & D division was also rendering services for its liquor business and the liquor business has not been closed at any stage. Therefore, the factual foundation on the basis of wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....5. Apparently, the aforesaid question raises a substantial question as to the interpretation of Section 32 as amended by the Act of 1986 and was in force during the relevant assessment year. 16. However, we are of the opinion that in view of the findings of fact recorded by the learned Tribunal in this regard, this question really does not arise for consideration to affect the final decision. Apparently, as per facts not in dispute, the R&D division, of which the assets were formed part, was not closed albeit it was confined in its activities to the other business of the assessee than fast food. Once this is found the assets relating to R&D cannot be excluded because part of the assessee's business is closed to which also the R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cceed. It is a fact on record that M/s Duracell batteries India Limited amalgamated with the assessee company in A.Y. 2000-01. On amalgamation its plant & Machinery was included in the block of the plant & Machinery of the assessee company. This block was used for the purpose of the business in A.Y.2000-01 & 2001-02. In A.Y. 2002-03 the assessee did not fulfill the condition laid down u/s 72A and therefore the unabsorbed losses and depreciation of the amalgamating company M/s Duracell batteries India Limited which was set off in A.Y. 2000-01 and 2001-02 was withdrawn and offered in income in A.Y. 2002-03. However the fact remain is that plant & Machinery of Duracell battery India Limited merged in the block of assets of the assessee company....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../s. Sonal Gum Industries 322 ITR 542 held that in relation to block of assets it is not possible to segregate items falling with in the block for the purpose of granting depreciation or restricting the claim thereof. Once it was found that the assets were used for the prupose of business, it was not necessary that all the items falling within plant and machinery have to be simultaneously used for being entitled to depreciation. 55. The Delhi High Court in case of CIT V/s. Yamaha Motors India Pvt. Ltd. 226 CTR 304 held that Expression "Used for the purpose of business" in section 32 has to be read harmoniously with the expression "Discarded" occurring in Clause III of sub section (1) thereof. On harmonious reading of these expressio....