TaxTMI 
TaxTMI 
2023 (5) TMI 625
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder Section 143(3) of the Income Tax Act, 1961 (in short 'the Act') dated 24.12.2017. 2. The assessee has raised the following grounds:- "1. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in sustaining the disallowance made by Ld. AO for Rs. 26,66,972/- being half of depreciation claimed by assessee on the finding that business of the assessee suspended during the year under consideration and machinery were used for less than 180 days during the year under consideration. Disallowance so made and sustained for the depreciation on the assessee put to use in earlier years. Disallowance so made and sustained may kindly be deleted. 2. That on the facts and in the circumstances of the case, the Ld. CIT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ance to notices issued to the assessee company attended from time to time and furnished required details/ information which were placed on record. During assessment proceedings books of accounts were produced which were examined on test-check basis. The facts of the case were discussed with the A/R of the assessee company by the AO. 4. The assessing officer noticed that the business of the assessee has been carried on up to July, 2014 only. However, the assessee has paid remuneration of Rs.5,10,000/- to the directors for the whole year. The assessee had also claimed depreciation for full year. Since the business operations have been stopped in July, 2014, the AO took the view that the above said directors' remuneration and depreciation can....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er contra, the ld. Sr. DR relied upon the orders of the ld. CIT(A). 9. We have considered the rival contention and perused the materials available on record. It is the submission of the assessee that the business operation has not been discontinued permanently, but it was only suspended for a temporary period. The Ld A.R also submitted that the business has been revived in the succeeding year. The question that arises for consideration is whether the temporary lull in the business would disentitle the assessee to claim depreciation and other expenses for full year. In this connection, we may refer to the decision of Hon'ble Madras High Court rendered in case of CIT vs. Chennai Petroleum Corporation Ltd. (supra) wherein the Hon'ble High Cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h is a direct decision on this issue. In this case, the Tribunal followed the decision rendered by Hon'ble Delhi High Court in the case of Capital Bus Service 123 ITR 404 and held as under:- "17. Ground No. 3 relates to the disallowance of depreciation on car amounting to Rs. 45.31 lakhs and interest on car loan amounting to Rs. 19.91 lakhs. 18. A perusal of the assessment order shows that these amounts have been disallowed by the Assessing Officer solely on the ground that during the year under consideration, the assessee did not carry out any business activity. The disallowance was confirmed by the ld. CIT(A). 19. Before us, the ld. counsel for the assessee stated that it is incorrect to say that the assessee did not carry out any b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he year under consideration. 22. The Hon'ble High Court of Delhi in the case of Capital Bus Service 123 ITR 404 has held that the only condition for allowability of depreciation is that the business should not have been closed out once for all and that the assessee should demonstrate that hopes of the business being revived are alive and real. 23. In light of the decisions of the Hon'ble High Court as mentioned elsewhere, the assessee was in fact, engaged in furtherance of its business activities and, therefore, it cannot be said that the assessee has closed down its business once for all. Therefore, the assessee is eligible for claim of depreciation. In view of the decision discussed herein above, we are of the view that there is no r....