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2014 (5) TMI 507 - AT - Income TaxDisallowance of depreciation - Assets other than plant and machinery – No production of manufacture activity – Buildings and other assets were used by the employees engaged in the closure operations of the company - Held that:- Assessee had only been ordered to be closed down by the Government of India but had not gone into liquidation - claim in respect of voluntary separation scheme expenses had been allowed by CIT (A) - it cannot be denied that for implementing the scheme necessary infrastructure must have been maintained by assessee - merely on the ground that the company was directed to be closed down, it could not be inferred that till the time of final closure, no activities were being carried out by the assessee - minimal staff had to be kept for proper survival and security of all the assets of the company. The assessee company being a juristic entity incorporated under the Companies Act, did not cease to exist, merely on passing of the order by Government of India for closure of the company - It had to fulfill all the obligations imposed by the Companies Act till it was finally dissolved - Necessary staff had to be maintained - depreciation had to be allowed though assessee had discontinued its business – Relying upon CIT Vs. Kirti Resorts (P.) Ltd. [2011 (7) TMI 39 - HIMACHAL PRADESH HIGH COURT] - that as long as the company is in existence, it is entitled to depreciation though it has discontinued its business - the AO is directed to allow assessee’s claim of depreciation – Decided in favour of Assessee.
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