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2009 (2) TMI 84 - HC - Income TaxDepreciation disallowed on ground that entire factory building and all the items included in the block of plant & machinery were not actually put to use by amended provisions individual items included in the block are not to be considered separately Once the factory building or block of assets are put to use for business it is not possible to restrict the depreciation by stating that only a portion thereof has been put to use Tribunal is right in granting depreciation
Issues:
Interpretation of the concept of block of assets for depreciation under the Income-tax Act, 1961. Analysis: The High Court of Gujarat was presented with a question regarding the correctness of the Tribunal's decision confirming the order directing the Assessing Officer to grant depreciation, even though the assets were not used in the relevant year. The Assessing Officer had rejected the depreciation claim on the grounds that the assets were not utilized during the year under consideration. However, both the Commissioner (Appeals) and the Tribunal found that depreciation is allowable on all assets falling within a block of assets as per the Income-tax Rules, 1962, without the need to consider individual items separately. The Tribunal upheld this view. The Court noted that the Assessing Officer did not claim that the assets were not used at all, and emphasized that once assets like the factory building are put to use, depreciation cannot be restricted based on partial usage. Similarly, in the case of a block of assets, items within the block cannot be segregated for depreciation purposes. The Court clarified that as long as the assets are utilized for business, it is not required for all items within the block to be simultaneously used to claim depreciation. Ultimately, the Court found no legal flaw in the approach taken by the Tribunal and the first appellate authority. Consequently, the Court answered the question in favor of the assessee and against the revenue, disposing of the reference with no order as to costs.
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