TaxTMI 
TaxTMI 
2025 (12) TMI 1770
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...., learned Senior Standing Counsel for the Revenue and Mr.Vijayaraghavan, learned counsel for the assessee/respondent. 4. An assessment was framed on 30.12.2010 for Assessment Year (AY) 2003-04. One of the disallowances was on estimated basis, and pertained to a disclaim of depreciation. The estimate was in relation to three units (i) Cane Separation System in Kattur, Tiruchirapalli, (ii) Chloro Benzene Unit, Nitro Chloro Benzene Plant, Amination and Hydrogenation Unit at Karaikal and (iii) Nitric Acid Plant in Sangareddy, Andhra Pradesh, and on the basis that aforesaid plants/units had not been operated during the financial year relevant to the subject assessment year. 5. Since the assessee had not supplied the complete details in relation to the functioning of the three units as above, the assessing authority completed the assessment, disallowing 60% of the claim of depreciation by the assessee, amounting to Rs. 6.87 crores (approx.), as against the total claim of Rs. 11.46 crores. 6. As against the above assessment, a first appeal was filed. The argument of the assessee was that since the assets relating to the above three units constituted a block of assets, the questio....
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.... [(11) "block of assets" means a group of assets falling within a class of assets comprising- (a) tangible assets, being buildings, machinery, plant or furniture; (b) intangible assets, being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, [not being goodwill of a business or profession,] in respect of which the same percentage of depreciation is prescribed;]' 12. Thus, on and from 01.04.1999, the claim of depreciation of any assessee would be in relation to business assets, either tangible or intangible, that fall within the block of assets. Hence, the question of attribution of a specific asset to a specific unit does not arise, and as and when there were changes to the composition of the block, the value thereof would be adjusted to make way for those changes. 13. The argument of the assessee that the assets comprising the block are not required to correspond to any specific unit/plant is thus correct. As long as the assessee continues in business, which is admitted in this case, the assets in the block are 'put to use' and depreciation is to be granted in respect of that bl....
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....of assets" has to be maintained and not separately for each asset. 33. Having regard to this legislative intent contained in the aforesaid amendment, it is difficult to accept the submission of the learned counsel for the Revenue that for allowing the depreciation, user of each and every asset is essential even when a particular asset forms part of "block of assets‟. Acceptance of this contention would mean that the assessee is to be directed to maintain the details of each asset separately and that would frustrate the very purpose for which the amendment was brought about. It is also essential to point out that the Revenue is not put to any loss by adopting such method and allowing depreciation on a particular asset, forming part of the "block of assets‟ even when that particular asset is not used in the relevant assessment year. Whenever such an asset is sold, it would result in short term capital gain, which would be exigible to tax and for this reason, we say that there is no loss to Revenue either.' 17. We concur with the above observations. In fact, this very issue had arisen for AY 2002-03 and the Tribunal has answered the issue in favour of the asses....
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.... ACIT Vs. SRF Ltd (supra) has held that the ownership and user both are criteria for claiming of depreciation. However, the user criteria has to be fulfilled only when an asset has formed part of the block of assets and once the asset is a part of the block of assets, it would loose its individual cost or WDV and thereafter depreciation has to be allowed on the entire block of assets. The concept was introduced wef 1.4.88. However, if an asset has been discarded then that has to be reduced from the written down value as per this new concept and these details have not been examined by the lower authorities. Therefore in the interest of justice, we set aside the order of the CIT(A) on this issue." 6. The Hon'ble Delhi High Court in the case of CIT v Bharat Aluminium Co LTd (2010) 187 Taxman 111 (Delhi) has held with regard to depreciation in respect of certain assets which were not used during the previous year and which formed part of a block assets as under:- "Once we understand and appreciate this scheme contained in the aforesaid provisions, it is not possible to accept the contention of the Ld.Counsel for the Revenue that unless a particular asset is used for t....