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2015 (12) TMI 1890 - AT - Income TaxAdditional disallowance of depreciation enhanced by CIT(A) - “assets” have already entered into the ‘block of assets’ - HELD THAT:- As “assets” in question were forming part of ‘block of assets’ which were used earlier for the purpose of business. The said asset were destroyed / lost in theft in the assessment year 2006-07 and no insurance claim has been received to the assessee. To the extent of the amount of claim made to the insurance company was reduced from the block of assets in the earlier years and accordingly, assessee has claimed depreciation on the reduced written down value. Since the assessee could not receive the insurance claim, the amount of insurance claim was added back and accordingly, depreciation was claimed on this amount. CIT(A) has enhanced the disallowance of depreciation on the ground that the said asset has not been put to use for the business purpose. Such a reasoning given by the CIT(A) for the enhancement cannot be sustained, because now it is quite a settled proposition that if the “assets” have already entered into the ‘block of assets’ and is forming part of the gross block of assets, then deprecation has to be allowed even if the said assets has not been used in the relevant year. This proposition now stands settled by the catena of decisions including that of case of CIT vs G.R. Shipping Ltd [2009 (7) TMI 1169 - BOMBAY HIGH COURT] Otherwise also, if the assessee’s claim for insurance has not been settled and amount has been added back, then the depreciation has to be allowed on such an amount. Accordingly, we direct the AO to grant deprecation in the previous year relevant to AY 2006-07, that is, when it was added back to the block of assets and secondly, rework the deprecation for the assessment year under appeal accordingly. Appeal of the assessee is allowed.
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